Thunder Bay a link to ‘Heartlandia’ – by Livio Di Matteo (Thunder Bay Chronicle-Journal)

The Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario. This column was originally published on June 01, 2009.

Economics Matters

For much of its economic history, Thunder Bay’s lake head role made it a transshipment point and transportation node that enabled it to reap the benefits of east-west economic flows – in particular, the grain trade. Thunder Bay’s role as the gateway to the west is about to get an important boost given the continued economic growth in western Canada and particularly the central interior North American economic region of Heartlandia.

Heartlandia – comprising Northwestern Ontario, Manitoba, Saskatchewan, North and South Dakota and Minnesota – is a region at the cross roads of the North American continent and indeed the world.

Heartlandia covers 2.4 million square kilometres with a population of nearly 9 million people and a GDP of about US$405 billion. This economic region contains agricultural production activities, food processing, forestry, petroleum, potash, uranium, coal, mineral and hydroelectric resources as well as substantial manufacturing, research and service capacity.

In addition, Heartlandia contains vital road, rail and airport hubs that would be complemented by three ocean-going ports – Churchill, Duluth and Thunder Bay – as well as the Mississippi route down to the Gulf of Mexico. As recent shipments of reactors and wind turbines to the western oil sands demonstrate, the Port of Thunder Bay is an important gateway to the commodity economy of the west as both an entry and exit point for goods.

The interior resource regions of the North American continent have had a recurring economic history of boom and bust ever since the days of the fur trade when the cross-border region that includes Manitoba, Saskatchewan, Northwestern Ontario, Minnesota and the Dakotas were part of a global fur trade network. The agricultural settlement boom of the nineteenth and early twentieth century was followed by another bust and the rest of the twentieth century was marked by relatively slow economic progress even when conditions in the key agricultural sectors were good.

The population of North Dakota, for example, currently is smaller than its peak reached just before the Great Depression. Similarly, Northwestern Ontario, Manitoba and Saskatchewan have seen their populations since the Great Depression grow at a lower rate than Canada as a whole. Indeed, for much of this region, it often seemed that when it came to the benefits of economic growth, it was always winter and never Christmas. Indeed, political alienation from the east is a recurring theme as common in North Dakota as it is in Northwestern Ontario.

The commodity boom and rise in agricultural prices since the 1990s as well as the rise of cross-border trade in this region has created a new surge of growth and optimism. Even in the wake of the recent global economic downturn, with the exception of Northwestern Ontario, much of this area continues to experience substantial economic growth as a result of a diversified economy rooted in economic fundamentals such as sound lending practices, resource processing, transportation and new knowledge intensive economic activities.

Moreover, much of the economic activity in this central North American region is increasingly integrated with much of the trade consisting of inputs into each other’s production chains.

Canada is the most important destination for exports from Minnesota, North and South Dakota. In 2008, Canada took 29 per cent of Minnesota’s exports, 51 per cent of North Dakota’s and 34 per cent of South Dakota’s.

Meanwhile, Manitoba, Saskatchewan and Northwestern Ontario are even more dependent on the American market. In 2006, about 77 per cent of Manitoba’s exports were to the United States while two-thirds of Saskatchewan’s exports were to the United States. Northwestern Ontario is even more dependent on the United States with over 90 per cent of its exports destined for that market.

In order to translate this new growth into long-term success, the next step is more co-operation on a regional cross-border level.

Some first steps towards a broader vision of regional cooperation were taken in October 2008 at Grand Forks with the U.S.A./Canada Economic Summit, which had several presentations on the economy of the North American heartland region. It is time for this region – termed Heartlandia – to take the next steps towards a more formal process of cross-border cooperation akin to what has been underway in the Pacific Northwest for almost 20 years. Indeed, this fall there will be another cross-border summit in Winnipeg that will take more steps towards a regional cross-border organization.

What does Thunder Bay need to do? First, it must support any formal Heartlandia concept and make sure its political leaders are involved in the process so that Thunder Bay can signal its presence and interest. While Thunder Bay is already considered the eastern terminus for Winnipeg’s Centreport project, it must not take its participation for granted.

Second, Thunder Bay must become the steward and advocate for projects that will boost its role as one of Heartlandia’s transport conduits. Key to this must be advocacy for the four-laning of the Trans-Canada from Thunder Bay to the Manitoba border and Highway 61 south to Minnesota to complement the planned four-laning eastwards to Nipigon. Fully developing the road inputs into the harbour area will enhance the ability of the Port of Thunder Bay to grow as a locus of activity.

Finally, Thunder Bay needs to realize that while our eastern links are important, given the economic shift underway in Canada towards western Canada, we must also look west as that is where our economic destiny lies.

Livio Di Matteo is Professor of Economics at Lakehead University. Visit his web page for more insights at: http://economics.lakeheadu.ca/dimatteo/dimatteo.html

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