The new model for economic development in the North

There is growing consensus in the North that to be truly healthy and prosperous, communities must reduce their dependence on government. In order to do so, they must become economically viable. 

Increasingly, the path towards viability is seen to lead through the Economic Development Corporation (EDC). In this way, the EDC has quickly become the model for aboriginal community development in the North and throughout the country.  This phenomenon will have huge and lasting significance for aboriginal communities and for the country as a whole.   

Aboriginal EDCs are typically business arms of First Nations, Metis or Inuit governments. They are community-owned businesses that invest in, own, and/or manage subsidiary businesses with the goal of using their profits to benefit the Aboriginal citizens they represent. 

The Canadian Council for Aboriginal Business (CCAB) estimated in their 2011 survey of EDCs that there are 260 aboriginal EDCs in Canada, 20% of which are located in NWT alone. They are becoming bigger, smarter, and more successful and will be a key factor in closing the economic gap between aboriginal and non-aboriginal Canadians in the coming generation.

The EDC model provides important benefits as well as challenges. Among the benefits, they:

• Allow aboriginal communities to integrate traditional values of sharing, interdependence and community with Western or capitalist models of business development.
• Provide space and incentive to respect community and environmental needs that pure for-profit ventures generally lack. 
• Create revenue streams to support social programs in their communities.
• Pool community capital to provide a level of investment funding needed to participate in the large scale resource developments that dominate northern economies, which individuals from aboriginal communities have always lacked.

Among the many challenges, they:

• Concentrate power in the hands of a few band members. (Although many have made efforts to separate business and politics, the small size of many communities, the lack of highly skilled personnel able to manage such corporations, and the extensive family connections within any aboriginal community make this separation difficult.) 
• Leave little space for individual entrepreneurship in aboriginal communities as the EDC monopolizes viable business opportunities.
• Promote a reliance on mining, energy and construction sectors which favour male employment.

The EDC model, like any business model, has its pros and cons. But their success in recent years, especially with the mining boom, favours their expansion. This can be seen as extremely good news as aboriginal communities integrate into the national economy, develop their own revenue streams, and become a growing and vital source of employment for non-urban aboriginal people. 

It is also a model that should be looked at seriously in the rest of the country. The biggest failure of the capitalist system is that it fails to take into account social and environmental costs. EDCs are much more effective at bringing these factors together in their business models.

But there is a caveat. Good governance requires democratic institutions, and democracy requires taxation: inasmuch as it is true that there should be no taxation without representation – the slogan of the original tea party – there can be no representation without taxation. 

If communities become reliant on their EDCs to raise community revenues and provide community services, the dependence will be transferred from AANDC to the EDC. Eventually, to be accountable, governments, even aboriginal ones, need to be reliant on their constituents; not the other way around.