The Lower Mainland stands to gain the most from a boost in B.C.'s natural resource economy, according to a study by the former chief economic analyst of Statistics Canada.
A 10-per-cent boost in the sector would create 29,561 new jobs in B.C. and 55 per cent of those jobs would be in the Lower Mainland, with the rest spread across the province, Phillip Cross concluded in a report commissioned by Resource Works.
Cross said the result in part is because developing natural resource creates more jobs in services than in the primary industry, 12,778 versus 8,793.
As well, he said the Lower Mainland has a substantial presence in two key resource industries, agriculture and the processing of resources by manufacturing.
"Just over 50 per cent of the jobs in the primary industries (agriculture, forestry, fishing and mining) are outside Vancouver Island and the Lower Mainland," Cross said in a paper entitled The Seven Myths of the B.C. Resource Economy: Revealing the High Impact of a Vital Sector.
"However, the Lower Mainland reaps 66.1percent of all the services jobs flowing from the growth in resource output. As a result, the Lower Mainland alone adds 8,563 jobs in the services sector."
Vancouver Island garners 16.3 per cent of the service jobs while the rest of B.C. gains only 17.6 percent of the growth in services.
"This reflects the location of most of the professional and financial services in big cities as well as the importance of the Lower Mainland as a transportation hub, especially for exports," Cross said.
Among the other "myths" Cross disputes is that the real money is in manufacturing. Instead, he said, the largest benefit lies in service jobs, which increase more than twice as much as manufacturing jobs "although certain manufacturing industries like wood, paper and primary metals expand during a resource boom."
"People often confuse moving up the stages of processing from resource extraction to
manufacturing with moving up the value-added chain," Cross said. "In most instances,manufacturing represents less value-added as a percent of output, not more."
The phenomenon is sometimes presented in terms of the "Smiling Curve," which plots the value-added by stage-of-processing and finds a U-shaped curve.
"It shows that, for most goods, the most value-added occurs in activities related to
extraction, such as construction and the transport of oil and gas by pipeline," Cross said. "Value-added is also high for services, such as transportation or financial and business services required by the resource sector.
"Manufacturing lies in the middle of the production process, where value-added is lowest."
Cross spent 36 years at Statistics Canada, the last few as its chief economic analyst.
Resource Works is a new non-profit organization dedicated to conducting research and raising public awareness about the natural resource sector to British Columbians.
Cross's report and a more in-depth version, can be found at www.resourceworks.com/publications.html.
