We should emulate Texas’s economic recalibration after the mid-1980s global oil price slump. Being an oil-producing state, Texas’s unemployment and deficit skyrocketed and its government extrapolated that it had to diversify the economy. In the last three decades, Texas pursued advanced technology and manufacturing, aerospace, life sciences, biotechnology, defense contracting and computer technology.
Today, oil-related revenue makes up only 10 per cent of Texas revenue compared to 20 per cent in the 1980s, and Texas, with eight per cent of America’s population, has created almost one-third of all private-sector jobs in America in the last 15 years.
It is imperative for Newfoundland and Labrador to diversify its economy through an extensive review of other economies that diversified from a single industry. Although we lack the immense population and the proximity to other big markets that Texas has, that does not mean we cannot effectively use some of their initiatives.
The Texas technology fund provides resources for eligible companies and universities. Through this fund, the mountainous city of Lubbock in northwestern Texas, with a population of 300,000, has established four universities that focus on research and development and the commercialization of new technology and health science initiatives.
Lubbock offers global corporations such as Vestas Wind Systems opportunities to partner in the technology its universities develops.
Corner Brook and Stephenville have a closer proximity to the rest of North America, so the Grenfell Campus and the region’s two College of the North Atlantic campuses could be at least half-recalibrated to develop and market similar technology and heath initiatives.
Texas provides several types of grants to fund a variety of projects. Texas’s enterprise fund provided economic incentives to attract Facebook’s first major expansion outside of California and 3,600 new jobs from Apple.
Facebook is expanding its services in the developing world and could be interested in establishing an operation in a region like Newfoundland and Labrador. With our educated population and viable time zone that is more accessible to most of the developing world than the rest of North America, our own enterprise fund could entice a company that is pursuing a major global outreach.
The oil-producing nation of Norway has a $905-billion oil fund even though they have also been affected by over four decades of rising and falling oil prices. Norway achieved this through decades of collecting a high tax rate from its oil revenues and investing it.
The approximately $400-million infrastructure spending grant that Ottawa is allocating to our province is apparently exclusively earmarked for infrastructure. Our provincial government should ask that one quarter to one third of that fund, along with gradually increasing revenue from gradually increasing global oil prices, be allocated to innovative economic initiatives similar to a business development enterprise fund and stock investments.