CENTRE FOR NEWFOUNDLAND STUDIES TOTAL OF 10 PAGES ONLY MAY BE XEROXED (Without Author's Permission) National Library Bibliotheque nationale 1+1 of Canada du Canada Acquisitions and Acquisisitons et Bibliographic Services services bibliographiques 395 Wellington Street 395, rue Wellington Ottawa ON K1A ON4 Ottawa ON K1A ON4 Canada Canada Your file Votre reference ISBN: 0-612-93035-1 Our file Notre reference ISBN: 0-612-93035-1 The author has granted a non­ L'auteur a accorde une licence non exclusive licence allowing the exclusive permettant a Ia National Library of Canada to Bibliotheque nationale du Canada de reproduce, loan, distribute or sell reproduire, preter, distribuer ou copies of this thesis in microform, vendre des copies de cette these sous paper or electronic formats. Ia forme de microfiche/film, de reproduction sur papier ou sur format electronique. The author retains ownership of the L'auteur conserve Ia propriete du copyright in this thesis. Neither the droit d'auteur qui protege cette these. thesis nor substantial extracts from it Ni Ia these ni des extraits substantiels may be printed or otherwise de celle-ci ne doivent etre imprimes reproduced without the author's ou aturement reproduits sans son permission. autorisation. In compliance with the Canadian Conformement a Ia loi canadienne Privacy Act some supporting sur Ia protection de Ia vie privee, forms may have been removed quelques formulaires secondaires from this dissertation. ont ete enleves de ce manuscrit. While these forms may be included Bien que ces formulaires in the document page count, aient inclus dans Ia pagination, their removal does not represent il n'y aura aucun contenu manquant. any loss of content from the dissertation. Canada Regional Economic Development by Crown Corporation: The Case of Cape Breton By © David Jackson A thesis submitted to the School of Graduate Studies in partial fulfillment of the requirements for the degree of Master of Arts Department of Political Science Memorial University of Newfoundland September 2003 St. John's Newfoundland and Labrador Abstract Cape Breton Island provides a clear case of economic expansion, contraction, and diversification throughout the last half of the 20th century. During this time, both the Government of Canada and the Government of Nova Scotia used Crown Corporations (state own enterprises) to implement a series of policies to promote economic development in a climate of growing unemployment with declining resource-based industries. There has been uncertainty as to whether Crown Corporations have helped or hindered the diversification of Cape Breton's economy. Some Crown Corporation where better at this task, while others provided limited benefits to the economy and squandered critical government funds with no return on investment. Using various theories on regional economic development, the role of Industrial Estates Limited, the Cape Breton Development Corporation, the Sydney Steel Corporation, and Enterprise Cape Breton Corporation is examined. 11 Acknowledgments My years of study at St. Francis Xavier University provided inspiration for studying the plight of Cape Breton Island and what really happened to its industries. When the opportunity presented itself to switch academic programs, I combined this inspiration with my studies. I want to thank all my friends from Cape Breton Island who drew my attention to the plight of their communities. I want to thank Dr. David Close of Memorial University of Newfoundland, and his graduate committee for accepting my application into the Master of Arts program in Political Science. Dr. Peter Boswell acted as my thesis advisor, and to him, I am forever indebted. Dr. Boswell has been superbly patient, a wonderful editor, and opened my mind to alternative models of economic development that I would never have considered. Dr. Christopher Dunn has also provided me with world class advice, providing me with new perspectives and the proper tools to strengthen the work. Ms. Ruby Banfield, the department secretary, has also been of great assistance in her administrative role printing and distributing my work for review. I would also like to thank Memorial University of Newfoundland for providing a research fellowship during the time of my studies. I would also like to thank my interview subjects for providing information and perspectives that really closed a lot of gaps in the work. These include Roger Angel, Gary Fancey, Ronald Lawrence, Robert W. Manuge, Ken Montgomery, D.A. Landry, and Dennis Wallace. 111 Thanks also goes out to the Angus L. MacDonald Library at St. Francis Xavier University for providing me with access to rare documents in the papers of Rev. Andy Hogan, the first NDP Member of Parliament from Nova Scotia. Lastly, I would like to thank my parents, Albert and Marita Jackson, and my aunt and uncle, Cathy and Robert Parsons. They provided me a firm grounding and encouragement to continue with the difficult work necessary. lV Table of Contents Abstract .......... ............................................................... ...... .ii Acknowledgements .. ............................................ .................... .iii List ofTables ................................................ ........................ vii L1st. o fp1gures· ........................................... ..............................v111 ... List of Abbreviations ............................................................... ..ix List of Appendices .....................................................................x Chapter 1 Introduction ............................................................. 1 Chapter 2 Industrial Estates Limited 2.1 Introduction ..................................... ....................... 9 2.2 The Plan of Operation ................................................ 10 2.3 Distribution .................... ........................................ 13 2.4 Good, Bad, and Really Bad Investments ........................... 15 2.5 End Game .... .......................................... ............ .....21 2.6 Conclusion ..............................................................22 Chapter 3 Cape Breton Development Corporation 3.1 Introduction . ...... ............... ..................... ............ ... ...26 3.2 The Decline ofDosco ..... ............................................. 26 3.3 The Start ofDevco ................................... ............... ...29 3.4 Money down the pit ........................................... ...... .. 31 3.5 More Mines .......................................................... ... 35 v 3.6 Identity Crisis ...........................................................39 3. 7 Profits and Phase Out ................................................. .41 3.8 Conclusion ............................................................... 43 Chapter 4 Sydney Steel Corporation 4.1 Introduction .............................................................47 4.2 The Options .............................................................. 49 4.3 Profits and Losses ... ............................ ...... .................52 4.4 Modernization, Part 1 ............................................... .. .54 4.5 Modernization, Part 2 .................................................. 56 4.6 Last Chance for Hope ..................................................58 4.7 Conclusion ...............................................................60 Chapter 5 Enterprise Cape Breton Corporation 5.1 Introduction ...............................................................63 5.2 The Difference .............................................. .............65 5.3 Growing Pains ........................................................... 66 5.4 Employment .............................................................68 5.5 Towards a Knowledge-based Economy .............................. 70 5.6 Conclusion ................................................................72 Chapter 6 Conclusion .................................................................. 75 Bibliography ............................................................................ 84 Appendices .............................................................................. 89 VI Tables Table 1.1 Unemployment Rate Comparison ............................... .. ..9 1 Table 2.1 Distribution ofiEL Funds 1957-1971. .............................94 Table 2.2 IEL Assisted Companies in Cape Breton..... .................... .. 95 Table 2.3 IEL, 20 Years ofDeficits ...... .........................................96 Table 3.1 Devco Facts and Figures ....................................... ...... ..98 Table 4.1 Sysco Funding & Announcements in Relation to Elections . ..... 102 Table 5.1 Enterprise Cape Breton Corporation Facts and Figures .......... 10 4 Vll Figures Figure 1.1 Institutions and Variables ..................................................... 89 Figure 1.2 Unemployment Rate Comparison ............................................91 Figure 1.3 Unemployment Rate Comparison ........................................ ....92 Figure 2.1 IEL, 20 Years ofDeficits ........................................ .......... ....97 Figure 3.1 Employment at Devco ......................................................... 99 Figure 3.2 Loss (Profit) on Coal Production (2002 dollars) .......................... 100 Figure 3.3 Money Spent on the Industrial Development Division (2002 dollars).lOl Figure 4.1 Employment at Sysco ........................................................ 103 Figure