Executive Summary

The Western Diversification Program (WDP) is Western Economic Diversification Canada's major program. The WDP provides support to projects that develop and diversify the Western Canadian economy. The WDP works to make strategic investments designed to enhance and strengthen the economy in Western Canada. This program also creates economic and/or employment benefits within Western Canada. The goals of the WDP include the following:

• Strengthened innovation that connects research strengths with industry commercialization;
• A competitive and expanded business sector;
• Increased economic activity that improves viability, prosperity, and quality of life;
• Improved business climate; and
• Economic research in innovation, entrepreneurship, and sustainable communities.

The WDP was last evaluated in 2003. The current evaluation is being conducted in accordance with the requirement in the 2003 WDP renewal that the department completes an evaluation of the WDP before the expiry of the program in July 2009. The scope of the current evaluation covers the period from 2003 to 2007. During the time period being covered by this evaluation, the department expended over $390 million under the WDP.

The evaluation methodology integrates the use of multiple lines of evidence and complementary quantitative and qualitative research methods. This methodology is a means to ensure the reliability of results being reported and the validity of information and data collected. The research methods included:

1. literature and document review;
2. administrative data review;
3. file review;
4. key informant interviews;
5. funding recipient survey;
6. case studies; and
7. focus groups.

The evaluation focused on four main areas: relevance, success, cost-effectiveness, and design and delivery. Limitations in the data collection impacted on the ability of the evaluation to adequately addressed cost-effectiveness and to some extent the longer-term success of the program.

Relevance

To what extent does the Western Diversification Program remain a relevant program to impact economic diversification and development in Western Canada?

The WDP aligns with Western Canada’s current economic development and diversification needs. This conclusion is supported by the literature/document review and key informant interviews. The WDP is seen as a necessary tool, given the current circumstances of the western economic community. Few gaps were identified in the program model, and the program is viewed as responsive to changing economic needs.

Key informants were of the opinion that the WDP model possesses the flexibility to respond to change. In addition, key informants cited the WDP’s ability to change when needed as a mechanism to reassess program gaps and/or program modifications.

Under the broader WDP terms and conditions, the department uses a variety of sub-components and agreements to achieve the objectives of the program. These sub-components respond appropriately to specific needs while reflecting the overall objectives of the WDP.

There are several other economic development programs in Western Canada. However, these programs tend to focus on only one or two aspects of economic development and diversification activities that are localised, while the WDP focuses on a broader range of economic impacts that covers all of western Canada. The WDP was seen to complement, rather than duplicate, these other programs.

All stakeholders agreed that a further rationale for a continued role for the federal government was the need to decrease reliance on natural resources and to diversify even those provincial economies that are currently experiencing strong growth. The majority of the stakeholders were confident that the federal government’s current role and responsibilities with respect to economic development were appropriate, although they did provide suggestions for clarifying, expanding, or reducing the role.

The report includes one recommendation related to relevance:

The department needs to maintain the current flexibility within the WDP in future design and delivery of the program.

Success

Have the WDP demonstrated that planned results have been achieved as expected for the project funding?

Data analysed from the recipient survey, case studies, and key informant interviews demonstrate that WDP achieved results in each of the department’s strategic outcomes. Key informants mentioned a wide range of impacts resulting from the WDP to date. Importantly, most key informants felt that project outcomes could be attributed to the WDP given that the projects could not have gone forward without funding and other support services from the program and its staff.

Strategic Outcome: Policy, Advocacy and Coordination

Results from the file review indicated that economic research projects undertaken within the WDP resulted in increased awareness and understanding of Western issues. Some of the results were used in key departmental policy decisions. Case study respondents spoke positively about the WDP leading to awareness and dialogue about Western issues.

Findings indicated that work in this strategic area resulted in improved coordination of federal economic activities in the west. In the opinion of key informants, awareness and understanding of western issues can be attributed to the work of the department, including relationship, advocacy, and capacity building. Most key informants expressed the opinion that the department has played a substantial role in increased dialogue within federal departments, between the federal and provincial levels of government, and between the federal government and local communities.

Strategic Outcome: Community Economic Development

This strategic area accounted for the majority of activities undertaken by the WDP during the period under evaluation. Funding recipients agree that they have engaged in activities that impact community planning, community economic development and economic adjustment. The administrative data shows more than 1,500 WDP projects targeted this area during the evaluation period. The results of the evaluation support that WDP-funded programs contribute to community planning, economic development and adjustment to mitigate economic crisis.

The file review and the administrative data demonstrated results from projects within this strategic outcome. Examples of results include:

• Enhanced community services;
• Increased capacity in community organizations;
• Increased training to individuals; and
• Developed community partnerships.

Key informants generally agreed that community economic development has been well addressed in the WDP model. Ways in which the model was said to have addressed community economic development was through some of the multi-party agreements as well as other work in rural areas and with Aboriginal communities.

It was suggested that some communities simply cannot be made sustainable through these sorts of programs, and that infrastructure is often more important for some smaller communities.

Strategic Outcome: Entrepreneurship and Innovation

Entrepreneurship accounted for a little over a quarter of the expenditures and projects. Both job and business creation is occurring in WDP-funded projects, although potentially at a higher rate than the administrative data supports.

Funded projects indicated the achievement of successful partnerships and strategic linkages, which all stakeholders believe support entrepreneurship. To many informants, partnership development was noted to be a core aspect of economic diversification. By promoting partnerships, the program was said to improve knowledge transfer, create new investment opportunities, and increase collaboration between sectors and levels of government. Successful partnerships were mentioned to have been brokered between provincial governments and the private sector, with Chambers of Commerce, and with various members of the business community.

The following entrepreneurship results were evident:

• Jobs created or maintained; and
• Businesses created, maintained, or expanded.

Innovation was a strong undertaking in both the expenditures and projects completed. Evidence from the evaluation indicates technology has been a key area of recent investment with such activities as: training; science and technology programs; involvement in building research centres; and technology commercialization and adoption work.

Key informants expressed the opinion that the WDP has a strong focus and a long-term interest in innovation, and that results in the area of innovation have already been demonstrated. These results include partnerships with universities, and work in the fields of life sciences, fuel cells, nanotechnology, health, environment, and wireless technologies. This success is attributed to strengths of the WDP model, which allow for the flexibility to support infrastructure and support services aimed at innovation, strong work with not-for-profits and other organizations, and core funding for technology linkages.

By funding research and development, the program was said to provide innovative approaches to traditional ways of doing business. Research and development was also said to support new technologies, improve the role for post-secondary institutions in government programs, develop new products, and improve collaboration with local industry and researchers. WDP funding was considered to be especially important in the development of the life sciences cluster.

The report includes three recommendations related to success:

• The department should improve performance measurement processes to capture linkages between strategic outcomes and program activities.
• The department should develop a system to follow-up on projects after WDP funding ends to track long-term benefits.
• The department should continue to use the WDP to strengthen existing and develop new partnerships.

Cost-Effectiveness

Does the WDP remain a cost-effective approach to economic diversification and development in Western Canada?

For every dollar spent under the WDP, a further $1.82 is leveraged from project partners (for certain sub-components). In total, 417 partners contributed matching funds to projects by the WDP from 2002 to 2007. It is important to note that not all sub-components are required to leverage funds while some have leveraging built into the agreements.

Funding relationships mostly included partnerships with other levels of government, with the majority of funding organizations located in the provincial government. Funding recipients have a number of partners (some projects with multiple partnerships) and, for the most part, these partnerships are not first time relationships.

Opinions expressed by stakeholders indicate that WDP provides value for tax dollars. Direct and indirect benefits from the WDP in areas, such as bringing products to commercialization, reflect the value Canadians derive from the WDP. It was not possible to estimate the full extent to which program delivery reflects “value for money” due to the lack of similar programs for comparison.

Design and Delivery

Does the design and delivery of the WDP program remain appropriate?

Overall, the program design and delivery does remain appropriate. However, some modifications to the current design and delivery were suggested.

Survey recipients and key informants involved in projects reported that departmental staff provided useful consulting, counselling and advice. Information on the WDP and the approval process was easily accessible and program officers were available to answer questions and provide helpful information about the monitoring and payment process. Funding recipients agreed that reporting time and effort was reasonable. Suggestions for improvements primarily dealt with monitoring and measuring success, and included a focus on clarity and streamlining of the approval and reporting process and creating a better awareness of the program.

The department has created an effective management structure for the various sub-components and sub-agreements, but stakeholders see room for improvement. The WDP has a risk management structure that works to ensure accountability and achievement of goals and outcomes, while at the same time supporting the work of partners and networks.

Key informants expressed the view that that the biggest single gap in reporting mechanisms is the tracking of long-term impacts of the WDP’s investment. Information pertaining to in-kind contributions was not always identified from the files. The evaluation showed that long-term results of projects are generally not tracked after WDP funding ends. The program needs a system to track long-term results.

On improvements to the reporting system, key informants provided the following suggestions:

• Build capacity, especially in smaller organizations to enhance reporting requirements.
• Provide clarity on reporting requirements especially on outcomes and indicators.

The report includes two recommendations related to design and delivery:

• The department should improve the monitoring process to ensure that client reporting demonstrates results achieved against project indicators.
• The department should improve databases to ensure that all pertinent information is collected and updated.