The Two Economies of British Columbia

In recent years metropolitan or Greater Vancouver has continued to shift its economic base from manufacturing to service activities. In particular, economy has considerably strengthened its interdependent complex of advanced or producer services, which consist of business management services (e.g., accounting, engineering, legal and management consulting) and those services rendered by finance, insurance, and real estate agencies. While a shift in employment from goods-producing activities to service activities has also occurred in Rest of Province (hereafter ROP) economy, increase has not been as marked, nor has it been so focused on producer services. Increasingly, economy of British Columbia is becoming divided between two distinct segments : service-oriented urban economy of metropolitan Vancouver and resource-based hinterland economy of remainder of province, particularly interior of B.C. (i.e., rest of province excluding Vancouver Island, which is dominated by public-sector oriented economy of Greater Victoria). Further, as Ley and Hutton have observed (1987, p. 414), this difference in economic structures between two regions gives rise to the possibility of incipient divergence in economic evolution of metropolitan region and peripheral regions of province. The objective of this paper is twofold. First, an effort is made to document difference between economic structures of two regional economies and to examine their recent performances with respect to growth and stability. It is hypothesized that service-orientation of Greater Vancouver economy results in a greater measure of economic stability as well as a significantly greater growth potential. The second objective of paper is to outline principal components of what we believe to be an appropriate policy response to potential of a growing divergence between economies of two B.C. regions.