Trends in Employment and Economic Growth

What drives the economy?

Given the role that goods industries have played in the development of BC's economy, and the role they still play in some communities, it's not surprising that many people view the goods sector as the engine that keeps that economy running smoothly. However, as more and more attention and resources shift toward service sector activities, the degree to which these industries determine our economic fortunes is changing.

Recent economic events in BC highlight this effect. North American economies went through a somewhat rocky period around the turn of the century when world markets for many products such as wood and paper softened at the same time that high tech industries went into a free fall. BC's forest sector was particularly hard hit by the downturn. In 2001, the goods sector shrank, as industries shed jobs and their output and GDP fell. However, BC's economy continued to grow, but a slower than-usual pace.

Why did this happen? The reason is that service industries were less affected by the conditions that caused the slowdown in the goods industries, and they continued to grow. The economy wasn't as healthy as it would have been if the goods industries had been in better shape, but it still grew, because the demand for services isn't tied directly to the fortunes of the goods industries.

You can think of the service sector as a bit of a buffer: it insulates the economy from some of the ups and downs that are driven by world demand for commodities such as wood, paper, metals, gas and other resource products. This isn't always to our benefit.

Less dependence on resource industries means we're not as likely to feel the full effect of downturns in the volatile resource industries, but it also means that when they are booming, the spin-off benefits aren't as noticeable either. An economy that's highly service-oriented will usually experience steady but slower growth than one that's more reliant on volatile resource industries.

There are more ups and downs in the goods sector than in the service industries

Goods and services are interdependent

Even though there isn't a direct linkage between the goods and service sectors, it's important to remember that they are interdependent to a certain degree. Some service industries wouldn't exist without the goods sector. Likewise, some goods industries would not be able to function the way they do without services to support them.

Some of these relationships will be discussed in more detail later. It's important to understand them, because if you know about the relationships among industries, you'll be better able to predict how changes in people's tastes, habits and need, which ultimately drive the economy, could affect them. Understanding these relationships will allow you to make more informed choices about your future prospects in the industry you work, or are thinking about working, in.