A Skills-Based Approach to Career Transitions: Identifying Pathways for Workers and Communities Facing Economic Disruption
Matthias Oschinski and Steven Tobin
Canada is facing a range of challenges that will drive economic transformation at the national, regional and local levels. The relationship with the United States, its largest trading partner, is changing. Investment in defence is growing. Global energy markets are shifting as investment in clean energy and electrification is rising. The changing climate and geopolitical tensions are creating new risks for supply chains. And automation and artificial intelligence are increasingly being adopted in manufacturing and resource sectors.
A 2025 report by the Institute for Research on Public Policy (IRPP) argues that Canada needs a smarter industrial strategy to successfully navigate change. Part of this success lies in understanding the importance of place: national industrial priorities are implemented in specific places, where local assets, infrastructure, labour markets and institutions shape whether investments succeed and who benefits.
This brief builds on the IRPP report’s recommendations and findings from the IRPP’s multi-year Community Transformations Project. We examine how Canada’s industrial policy connects national priorities with regional and local economic development, and where gaps remain. We then consider how place-based industrial policy could address those gaps.
Many of the assets and industries central to Canada’s national priorities — from diversifying trade and developing major projects to building defence industrial capacity — are concentrated in particular communities and regions. So are key economic development opportunities in areas such as critical minerals and clean electricity. Major projects and other priority areas, including housing and infrastructure, also depend on place-specific capacity, supply chains and institutions.
These geographic patterns and local conditions matter for both economic performance and equity. From an economic performance perspective, progress toward national goals depends on the ability to address local barriers to development. It also hinges on the ability to draw on assets, skills and innovation beyond major urban and well-established industrial centres, including in smaller cities, rural areas, northern regions and Indigenous traditional territories. From an equity perspective, national investments and major projects do not automatically translate into strong local benefits, broader regional resilience or more equitable outcomes. Their benefits and risks can be unevenly distributed across places and people.
Place-neutral policy is not necessarily neutral in effect. Investment and support can disproportionately flow toward regions that already have stronger industrial ecosystems, research institutions and access to capital.
Place is already reflected in parts of Canada’s industrial policy system. However, links to regional and local economic development remain uneven and limited. Gaps arise at three levels:
In Canada, responsibility for accounting for differences across regions and places often falls to Regional Development Agencies (RDAs) and subnational governments, while place-based approaches remain insufficiently integrated into national strategies and policies.
A more place-based approach to industrial policy could help address these gaps by bringing top-down and bottom-up approaches together. In practice, industrial strategies and major projects with significant regional and community implications should consider local assets, barriers and priorities in industrial policy decisions. These efforts should be supported by the human, financial and institutional capacity needed to translate national investment into local outcomes.
The IRPP recommends a comprehensive framework to address these gaps at three levels: industrial policy strategy, implementation and community capacity.
Designing industrial strategies and major projects with these regional and local conditions in mind can help ensure communities capture a reasonable share of the benefits without bearing a disproportionate share of the associated risks.
Governments should identify early where place-based elements are needed and adapt policy design accordingly. This can be done through differentiated eligibility, project size thresholds, financing and cost-sharing terms for public funding and tax incentives, complementary local investments and supports, and major project planning that addresses potential local and regional benefits, risks and capacity needs. This process should draw on the knowledge and expertise of regional and local actors, including Regional Development Agencies, Community Futures Organizations (CFOs), municipal economic development offices, Indigenous economic development corporations, colleges, workforce development bodies, local unions and community innovation hubs.
For major federal industrial policy initiatives with significant regional or local implications, Regional Development Agencies should have a standing role in program design, project assessment or implementation, as appropriate. Regional Development Agencies should work with provincial, territorial, Indigenous and municipal governments, communities and local economic actors, including economic development organizations, sector and technology associations and cluster organizations, to identify significant local opportunities and the barriers that limit them. They should also work together to help connect those priorities to the federal programs and policy tools that can support them. This would formalize and strengthen functions that Regional Development Agencies already perform.
They should support innovation and entrepreneurship that reflect the distinct assets, knowledge and economic opportunities of rural, northern and Indigenous communities. Capacity funding should include multi-year support for economic development staff and strategic planning, funds for feasibility and early project development work, and technical support to prepare proposals and manage implementation. Communities hosting or affected by major projects should also receive capacity funding early in project planning so they can identify priorities, assess options and negotiate local and regional benefit arrangements before key decisions are finalized.
Industrial policy is playing a more prominent role in Canada’s response to a changing economic and geopolitical environment. Shifting trade relationships, growing defence commitments, the global energy transition, climate-related supply chain disruptions and the diffusion of automation and artificial intelligence are reshaping the conditions for growth and competitiveness in Canada.
These shifts are often framed as national or sectoral challenges, but they also have a spatial dimension. The economic transformations underway, and the national priorities emerging in response, ultimately converge in places. They interact with the assets, industries and capabilities in specific communities and regions. National economic transformations affect, and are experienced by, communities and regions differently.
This policy brief is the fourth in a series under the IRPP’s Community Transformations Project examining how to better support communities and workers across Canada through economic transformations. Previous briefs focused on community-led economic development, place-based skills development, and community-wide supports for mass layoffs and major closures. This brief turns to industrial policy and examines how place can shape both national economic performance and local outcomes. It also builds on the recommendations of an IRPP (2025a) report that argues Canada needs a smarter industrial strategy to successfully navigate economic change.
In this brief, we use “place” as a working term for the subnational geographies — like communities, regions, industrial clusters and other functional economic areas — where people and economic activity are connected (McCann, 2023; OECD, 2020a). These places do not always align with existing administrative boundaries. Labour markets, supply chains, infrastructure networks and other economic relationships often link multiple municipalities or regions, making functional economic geographies an important complement to administrative ones (OECD, 2020a). Different places also bring together different combinations of natural and physical assets, workers and skills, firms, infrastructure, institutions, knowledge and networks that shape their economies and economic opportunities (McCann, 2023; OECD, 2025a).
This spatial dimension of economic transformation has implications for both national economic performance and the distribution of its benefits and costs (Barca et al., 2012; OECD, 2025b). From an economic performance perspective, national ambitions depend in part on mobilizing assets and opportunities across places and on the local conditions that shape how effectively they can be used (OECD, 2026a). From an equity perspective, economic transformations can create benefits, risks and adjustment pressures that are distributed unevenly across communities and populations (figure 1).
Canada’s current national priorities, including trade diversification, accelerated major project development and enhanced defence industrial capacity, draw on assets and productive systems across the country (Prime Minister of Canada, 2025). These national priorities are advanced through economic development in critical minerals, defence, clean electricity, energy exports, advanced manufacturing and artificial intelligence (Department of Finance Canada, 2025a; Karpinski & Carré, 2026; Natural Resources Canada [NRCan], 2026a).
Many assets and systems underpinning those priorities are geographically concentrated. Mining activity and investment, including in critical minerals, are concentrated in particular provinces, territories and mining centres (Karpinski & Carré, 2026). Provincial and territorial electricity systems reflect different regional resource endowments (NRCan, 2026a). And trade diversification depends on specific ports and transportation corridors (Department of Finance Canada, 2025a). The federal government’s current portfolio of major projects further reflects this pattern, with nationally significant investments spanning mines, ports, energy infrastructure and trade corridors, located where assets and opportunities are concentrated (Department of Finance Canada, 2025a; Major Projects Office [MPO], 2026a).
The economic value of these assets also depends on the conditions surrounding them (Karpinski & Carré, 2026; OECD, 2025c). Major investments require workers with the appropriate skills, transportation and energy infrastructure, housing and community services, suppliers, access to capital, and institutions that can support training, innovation and implementation. These surrounding conditions can influence project competitiveness and the extent to which investment generates wider economic activity (Karpinski & Carré, 2026; OECD, 2025b, 2025c). Evidence from mining regions, for example, shows that workforce capacity, infrastructure, suppliers and local institutions can influence both project competitiveness and regional economic outcomes (OECD, 2025c).
Research on industrial clusters also reflects this relationship between economic performance and local productive systems. Wolfe and Southin (2026) draw on a wide body of cluster research to highlight the association between geographically concentrated networks of firms, specialized suppliers and knowledge institutions, and outcomes including productivity, innovation and new firm formation. Earlier Canadian research finds that the concentration of related industries in city-regions is associated with higher incomes and employment growth (Spencer et al., 2010). Research on eight Canadian ICT (Information and Communications Technology) clusters highlights the importance of both local factors — including civic associations and networks among firms and institutions — and external connections to knowledge, customers and markets in shaping cluster dynamism and competitiveness (Lucas et al., 2009). Geography alone does not determine economic performance, but the economic and institutional systems surrounding firms and investments can shape their ability to contribute to broader national economic objectives.
When local assets are underused, economic potential can remain unrealized; mobilizing those assets more fully can contribute to the national economy (OECD, 2025b). Rural areas, for example, account for around one-quarter of Canadian economic activity. But if the rate of new business creation in Canada’s rural areas had matched that of urban areas in 2018, there would have been approximately 8,100 additional rural businesses (OECD, 2024). While a variety of factors may contribute to lower rates of business creation in rural areas, the estimate illustrates the potential for increasing economic activity outside large urban centres.
Taken together, these dynamics mean that local assets and conditions matter beyond regional economic development: they can shape how effectively Canada is able to mobilize the resources, productive systems and investment opportunities on which national economic ambitions depend.
But local conditions also matter beyond national economic performance. They can shape how communities experience economic transformation.
The IRPP’s Community Transformations Project shows that the adjustment pressures associated with broader economic changes can be highly uneven across places. The IRPP’s analysis identifies 68 Canadian communities among the most susceptible to workforce disruption associated with the global energy transition, based on their dependence on large-emitting industries or globally traded sectors undergoing transformation (Chejfec et al., 2025). A similar analysis of local employment in sectors with a high proportion of exports to the United States identified 19 communities as among the most susceptible to workforce disruption from both changes in U.S. trade policy and the global energy transition (Chejfec, 2025; Yassin et al., 2026). Susceptibility does not predict that job losses will occur; rather, it identifies places where disruption, if it occurs, could have a greater impact. Many of these communities are on average smaller, rural or remote and less economically diversified than those not susceptible (Chejfec et al., 2025; Jackson, Samson, & Chejfec, 2025).
Research from the United States suggests that geographically concentrated trade shocks can also have political consequences: greater local exposure to Chinese import competition was associated with shifts in electoral outcomes, including increased ideological polarization (Autor et al., 2020).
Uneven exposure to disruption is one side of how economic transformation is experienced across places. The distribution of new economic opportunities is another. An investment can advance national objectives, such as increasing output, exports, energy security or supply chain resilience (Department of Finance Canada, 2025a; Karpinski & Carré, 2026), without delivering proportionate benefits to the community where it occurs (Krawchenko, Earley, & Shaw, 2026; OECD, 2025c; Söderholm & Svahn, 2015). Therefore, the presence of a major investment in a community does not, by itself, determine the extent to which the resulting employment, income and economic activity are connected to the surrounding economy.
Local benefits can depend on whether workers, businesses and Indigenous communities are able to participate in the economic activity that an investment generates. Employment and skills development, local procurement and supplier relationships, and Indigenous participation and ownership influence the extent to which income, business activity and economic value are linked to the surrounding economy (OECD, 2025c; Söderholm & Svahn, 2015). Evidence from mining regions shows that the strength of local employment and supplier linkages, as well as Indigenous participation and benefit-sharing arrangements, can influence how broadly the economic gains associated with resource development are distributed (OECD, 2025c; Söderholm & Svahn, 2015).
Communities can also face challenges in accommodating investment and population growth. Housing, transportation, utilities and public services can influence whether workers are able to live locally and whether growth strengthens rather than strains the surrounding community (OECD, 2025c). The IRPP’s profile on Neepawa, Manitoba, shows how rapid growth associated with agri-food investment generated employment and business opportunities while simultaneously increasing demand for housing, schools, health services and infrastructure (IRPP, 2026a). Economic growth can therefore bring substantial local benefits while also creating costs and pressures that can be concentrated in the communities experiencing that growth.
The extent of local benefits can also depend on whether communities can connect major investments to broader economic development. The extent of these connections can differ substantially across places depending on their existing firms, workforce, infrastructure and institutional capacity. Research on civic capital highlights how local networks and governance arrangements linking firms, governments and civic organizations can support collective action around regional economic opportunities, with different forms of collaboration emerging across local contexts (Creutzberg et al., 2024; Nelles & Wolfe, 2024; Wolfe, 2026a). Stronger connections to local supply chains and related economic activity can create opportunities for local firms and entrepreneurs and allow the effects of an investment to extend beyond the project itself, whereas weaker linkages can limit the amount of economic activity that remains in the surrounding region (OECD, 2025c; Söderholm & Svahn, 2015).
Place is not absent from Canadian industrial policy. But it is unevenly integrated across jurisdictions and throughout the architecture of industrial policy. Table 1 shows how place can be integrated into this architecture.
The extent to which place is incorporated varies across jurisdictions, with some provincial industrial approaches integrating it more strongly than others. At the federal level, where many of Canada’s largest-scale industrial policies sit, place is unevenly integrated. Even where policies and programs have substantial regional and local implications, they often give limited consideration to regional and local economic development (Krawchenko & Arcand, 2026; OECD, 2025a). The result is an underlying structural disconnect between national industrial priorities and local economic development (OECD, 2025a; Wolfe & Southin, 2026). The disconnect is reflected in three gaps:
An industrial strategy guides a co-ordinated group of policy instruments to achieve specific policy objectives (Criscuolo, Gonne, et al., 2022). These objectives can include economic growth, trade diversification, productivity and innovation, as well as social objectives, the energy transition, resilience to supply chain and economic disruptions, and economic development in particular sectors or places (Department of Finance Canada, 2025b; Krawchenko & Arcand, 2026; Krawchenko, McCann, et al., 2026).
An analysis of 61 federal, provincial and territorial industrial strategy documents from 2015 to 2025 finds that “place” is unevenly reflected in Canadian industrial policy (Krawchenko, McCann, et al., 2026). The analysis assesses the high-level strategy documents against 14 criteria spanning five dimensions — vision, instruments, governance, social justice and geography (box 1).
Among the jurisdictions assessed, the federal government has the largest portfolio of industrial strategies. But the analysis finds its strategies score below the provincial and territorial average on place-based orientation.
Figure 2 (Panel A) shows the distribution of weak, moderate and strong place-based orientation scores across jurisdictions. Of the 12 federal industrial strategies assessed, only two had a strong score on place-based orientation. Federal strategies are less likely to identify specific regions, clusters or local systems and use policy tools that reflect regional and local differences in implementation (figure 2). Place-based orientation of industrial strategies also varies across industrial sectors (see Appendix A). For instance, the analysis finds that, on average, strategies covering sectors such as agri-food, forestry and advanced manufacturing integrate place to a relatively greater degree than those that cover other sectors like fossil fuels, innovation and digital technologies (Krawchenko, McCann, et al., 2026).
Some provincial portfolios show that industrial strategies can incorporate strong place-based elements. Eight of Quebec’s 11 industrial strategies score strongly on place-based orientation; four of British Columbia’s six strategies do so as well. Together, the two provinces account for nearly half of the assessed strategies that score strongly on place-based orientation (figure 2). Two top-scoring strategies illustrate what this looks like in practice.
Figure 2 (Panel B) compares each jurisdiction’s average (mean) place-based orientation score with its average across the other 13 non-place assessment criteria covering vision, policy instruments, governance and social justice (the non-place composite). The dashed lines show the averages across all provincial and territorial strategies for each of these measures, providing a benchmark for comparing jurisdictions.
Federal strategies score below the provincial and territorial average on place-based orientation (1.83 versus 2.29), but above the provincial and territorial average on the other non-place criteria taken together (2.22 versus 2.02). This contrast suggests that place-based orientation is a particular gap in federal industrial strategies, even though they score comparatively well on other aspects of strategy design overall. On individual criteria, federal strategies score higher than the provincial and territorial average on competitive framing, social justice recognition and procedural justice, but lower on some operational elements of strategy design.
Provincial portfolios also vary in how they score on other non-place aspects of strategy design. Quebec, British Columbia and Ontario all score above the provincial and territorial average on place-based orientation. On the other 13 criteria combined, Quebec and British Columbia score above the average, while Ontario scores below it. In particular, Ontario’s strategies score lower on combining financial incentives with regulatory requirements and on specifying how proposed measures will be funded.
Across the 61 strategies analyzed, 14 have a weak place-based orientation. On average, these strategies score about 17 per cent lower on the non-place composite (the mean score across the other 13 assessment criteria of the strategy design) than those with strong place-based orientation (figure 3). The degree of place-based orientation in strategies appears to be associated with their overall quality on other dimensions, including operational components, the use of mixed incentives and accountability mechanisms.
An uneven focus on place also extends into the architecture of delivery and implementation across federal institutions and instruments. A scan of the federal industrial policy toolkit (see Appendix B) finds that tools with the most capital to spend are often not those with the strongest local development mandate.
Canada has federal institutions with regional or local economic development mandates, including Regional Development Agencies (RDAs) and the independent Community Futures Organizations (CFOs) they support. These institutions generally operate at a smaller scale than major industrial policy programs. Major federal industrial policy programs, on the other hand, are often organized around other criteria like sector, investment size, asset class or firm-level financing. Federal policy development and program decisions also have no consistent mechanism for drawing on the knowledge and expertise of local and regional institutions (Wolfe & Southin, 2026).
These two parts of the policy system are therefore not consistently integrated or co-ordinated (Samson et al., 2025) (see Appendix B). In a federation, weak policy co-ordination across orders of government can be a source of missed opportunities because national programs cannot deliver their full benefits without alignment with regional institutions and local conditions (Bradford, 2017; Conteh, 2020; Wolfe & Southin, 2026).
Promising local ideas and innovations, including in rural and remote communities, can also fall between the cracks if no formal mechanism connects local economic development opportunities with different levels of industrial planning at the provincial, territorial and federal levels (Wolfe & Southin, 2026). A project may extend beyond the mandate or capacity of conventional regional development programming, but remain too small, early-stage or locally specific for national industrial policy programs (Atlantic Canada Opportunities Agency [ACOA], 2023; OECD, 2026b; Prairies Economic Development Canada [PrairiesCan], 2025a).
These examples illustrate how gaps in federal programming can leave regionally or locally significant projects underserved:
Conversely, a major project may advance a national priority while leaving local workforce, housing, infrastructure, suppliers, Indigenous participation or diversification needs as an afterthought (Barca et al., 2012; Krawchenko, Earley, & Shaw, 2026).
By design, Regional Development Agencies reflect regional economic differences and maintain deep local networks with municipalities, firms, Indigenous organizations, post-secondary institutions and others in the ecosystem (Bradford, 2017). They also deliver some nationally co-ordinated industrial policy programs at the regional level (see Appendix C) (ISED, 2026b). In addition, Regional Development Agencies support a national network of Community Futures Organizations that are governed by local boards and provide local business support, financing and, in some cases, workforce development co-ordination (Jackson, Samson, & Chejfec, 2025).
Canada’s Regional Development Agencies have demonstrated strengths, including their ability to adapt national programs to regional contexts. The 2023 evaluation of REGI — a national program that is delivered through Canada’s seven Regional Development Agencies — found that firms receiving support through its business scale-up and productivity stream outperformed comparable firms that did not receive REGI support on revenue (18.3 per cent higher), employment (12.8 per cent higher) and export growth (13.5 per cent higher) (ACOA, 2023). The Federal Economic Development Agency for Northern Ontario (FedNor), for example, tailored the REGI program to its region by expanding eligibility to a wider variety of organizations, lowering investment maximums, focusing on regional innovation centres and offering targeted manufacturing streams (FedNor, 2024). Regional Development Agencies also deployed COVID-19 recovery and tariff-response programming through existing regional networks (see Appendix C).
However, the role of Regional Development Agencies in major industrial policy is constrained by scale (ACOA, 2023). Programs they deliver often support local infrastructure, small and medium-sized enterprises, tourism, community development and innovation ecosystems (see Appendix C) (ISED, 2026b; Samson et al., 2025). Compared with the largest federal industrial policy tools, these programs generally support smaller-scale and targeted projects (see Appendix B). More recently, the federal government expanded the use of Regional Development Agencies to deliver national priorities, including tariff response, defence-related investment and local infrastructure (FedDev Ontario, 2026a; Housing, Infrastructure and Communities Canada [HICC], 2026; ISED, 2026c, 2026d).
The REGI evaluation also identifies operational capacity pressures, including concerns about sufficient human resources for ongoing project monitoring and opportunities to improve approval timeliness and referral services (ACOA, 2023).
In addition, performance frameworks that guide Regional Development Agency spending tend to focus on firm- or program-level outputs (Samson et al., 2025). A review of the top 10 per cent of Regional Development Agency expenditures between 2019 and 2023 shows that some of the most common performance indicators included metrics such as the number of businesses and organizations supported, total cash invested in a project and the value of total investments generated (Samson et al., 2025). While useful, these indicators do not measure whether communities are becoming more economically diversified, more resilient to industrial disruption or better positioned to capture benefits from major projects (Bramwell et al., 2019).
Instrument design determines whether eligibility rules, thresholds, selection criteria and conditions account for where investment lands and how local economies are affected. Spatial considerations can be binding (i.e., built into eligibility or delivery), or soft, where geography matters through project location, cluster or resource location, Indigenous engagement or the inclusion of geographic factors in project scoring, but does not determine eligibility (Austin et al., 2018). Place-neutral design is not necessarily neutral in effect. Where spatial conditions are absent or have a limited role in eligibility, selection decisions or program delivery, support can disproportionately flow toward regions that already hold strong industrial ecosystems, research institutions and access to capital (Barca et al., 2012; McCann & Ortega-Argilés, 2015; OECD, 2024).
We assessed how spatial conditions feature in Canada’s largest federal industrial policy instruments by examining the OECD’s 2023 Quantifying Industrial Strategies (QuIS) database and selected federal programs not captured by QuIS.
What the 2023 QuIS ranking reveals
We reviewed the 10 largest targeted federal instruments by reported spending and financing amounts from the QuIS database (Criscuolo, Lalanne, & Díaz, 2022; OECD, n.d.).
Six of the top 10 largest instruments do not include a binding spatial condition that targets investments to specific geographies or places (see table 2 and Appendix D). Five have no meaningful spatial condition, while one — the Clean Fuels Fund — incorporates place more softly, where funded projects are tied to specific locations, but eligibility is not restricted to particular regions or community types.
Among the four that do have binding spatial conditions, the form varies:
While regional delivery is a meaningful spatial condition, it is not the same as a fully place-based design. It anchors program delivery to a defined region and allows support to be tailored to regional conditions. But it does not necessarily distinguish among communities within that region or require particular local benefits from funded projects (ACOA, 2023; OECD, 2025a, 2025b).
The scale of these instruments is also notable. None of the four highest-ranked instruments in the 2023 QuIS ranking — Farm Credit Canada (FCC) loans to manufacturing, the Clean Technology Investment Tax Credit, the Strategic Innovation Fund’s Net Zero Accelerator, and the Film or Video Production Services Tax Credit — has a binding spatial condition. The Atlantic Investment Tax Credit ranks fifth, while the three REGI entries appear eighth through 10th. In this 2023 snapshot, binding spatial conditions are found in smaller instruments in the ranking rather than in those with the largest reported amounts of federal spending or financing (see Appendix D).
What other programs show
We supplemented the 2023 QuIS ranking with a scan of selected federal programs and investment vehicles either introduced after 2023 or otherwise not captured in the QuIS top 10 ranking. Our supplementary scan shows a range of spatial features, from binding regional delivery or eligibility targeted to rural, remote or Indigenous communities, to softer forms of project, resource, corridor or cluster geography. Yet, even where spatial features are present, they often reflect where a program is delivered or a project is located, rather than systematically differentiating support according to local conditions or development priorities (table 2):
We also examined how place is reflected in selected major public financing institutions.
Taken together, these examples show that place is not absent from major industrial policy instruments and institutions, but is incorporated unevenly. Regional and local considerations may enter through project or resource geography, Indigenous or northern priorities, or particular streams of support, without consistently shaping core eligibility rules, financing terms, project-scale thresholds or connections to regional and local economic development institutions.
Recent federal initiatives point toward promising co-ordination across regions, levels of government and mandates:
Canada does not lack the building blocks to better align national industrial priorities and policy with regional and local economic development. It has regional and local development institutions with deep community knowledge and some federal-provincial-territorial co-ordination forums. However, there is a tendency to shift responsibility for accounting for differences across regions and places to Regional Development Agencies rather than integrating place-based approaches into national strategies and policies (Krawchenko & Arcand, 2026).
Existing initiatives do not yet amount to systematic linkages between major industrial commitments and local or regional development plans. They do not consistently provide mechanisms through which community knowledge can shape, from the outset, key industrial decisions with substantial local or regional implications. They also have not yet established consistent formal mechanisms through which regional and local actors can connect locally identified opportunities for large-scale economic development with federal industrial policy programs.
Local organizations — including municipal economic development offices, Indigenous economic development corporations, colleges, workforce development bodies, local unions and community innovation hubs — often hold a deep understanding of local investment opportunities, infrastructure gaps, skills needs and supplier capacity, particularly in areas relevant to their respective roles (ACOA, 2023; Jackson, Samson, & Chejfec, 2025). Having local knowledge, however, is not the same as having the capacity to act on it. Local organizations, particularly in rural and Indigenous communities, also need sufficient staff capacity, planning and governance capabilities, leadership and networking skills, access to finance, and the ability to build partnerships and regional alliances to advance economic development priorities (OECD, 2020b, 2020c).
These capacities are uneven across communities. Smaller firms, rural and northern regions, and Indigenous communities face structural disadvantages in participating in national industrial policy processes — particularly when they lack human or financial capacity, and therefore struggle with grant applications and reporting requirements that are easier for large firms or well-resourced municipalities to manage. In some smaller communities, economic development responsibilities may rest with very limited staff capacity (in some cases, a single staff member). In rural Canada, 85 per cent of firms employed fewer than five people between 2010 and 2019 (OECD, 2024). Indigenous Peoples and communities have also had difficulty accessing many industrial policy programs because of their minimum scale or competition from applicants with greater capacity (IRPP, 2025a).
Federal and provincial innovation policies have also historically emphasized research and development conducted through universities and research clusters, which are disproportionately concentrated in large metropolitan areas (Bramwell et al., 2019; OECD, 2024). In some rural and northern areas, limited access to universities and colleges can reduce the reach of innovation systems built around these institutions (OECD, 2024). Rural and northern communities have fewer post-secondary institutions and local youth may leave to pursue education, training or employment opportunities elsewhere, which can weaken the long-term capacity for innovation and economic diversification (Jackson, Samson, & Chejfec, 2025; OECD, 2020b). Canadian research on university-industry knowledge transfer emphasizes that regional innovation depends on research capacity, firms’ ability to absorb and apply knowledge, and the partnerships and intermediaries connecting them with research institutions (Bramwell et al., 2012).
Large-scale programs and policies designed to strengthen Canada’s industrial competitiveness may inadvertently favour regions that already possess strong industrial ecosystems, infrastructure and access to capital (Nathan & Overman, 2013; OECD, 2025a; OECD, 2025a, 2026a; Pinheiro et al., 2022). Castle and Phillips (2022) observe that many federal technology-focused innovation initiatives target sectors in major cities, while similar provincial and territorial approaches can give less attention to innovation in rural, resource-based industries.
Concentrating additional investment in major urban centres can also intensify local pressures on housing, transportation and infrastructure, creating additional costs and constraints for workers, firms and communities. In Toronto, high housing costs can constrain worker mobility and access to employment opportunities, while congestion can further limit mobility within the city (Canada Mortgage and Housing Corporation, 2025; City of Toronto, 2026). In Vancouver, further expanding trade capacity requires additional industrial land and container-handling and rail capacity, with existing infrastructure constraints risking greater congestion and higher shipping costs (Government of Canada, 2026c).
Similar tensions can arise between nationally significant infrastructure and local urban conditions. In Halifax, port-related truck traffic contributes to traffic congestion, noise pollution, poor air quality and vibration, while also raising pedestrian safety concerns in downtown Halifax (Halifax Regional Municipality, 2023). The Halifax Port Authority is developing an inter-terminal rail project that aims to shift container movements from road to rail, thereby helping to reduce port-related truck traffic through downtown Halifax, and the related congestion and emissions (Port Halifax, 2026).
Regions with weaker institutional innovation capacity may also be less able to attract and absorb public and private investment, while less investment can in turn constrain development of the institutions, networks and expertise needed to support future innovation and investment (OECD, 2024; Oughton et al., 2002; Pinheiro et al., 2022). The regional innovation paradox describes the tension between regions’ greater need for innovation investment and their limited capacity to absorb it (Oughton et al., 2002). Addressing this paradox requires building local capacity alongside other major industrial investments, rather than assuming it will emerge as an outcome of investment alone.
Some existing federal and provincial programs in Canada show promising ways to support different forms of capacity alongside industrial and economic development. These examples remain dispersed across jurisdictions and programs and do not form a systematic approach to building local capacity:
A more place-based approach to industrial policy could help address gaps in the current suite of industrial policies. Place-based policies intentionally target specific locations. Tailored policies provide greater support to a place to improve long-term economic and well-being outcomes (OECD, 2025b). A place-based approach goes beyond directing funding or industrial investments to a particular location. It deliberately takes account of differences in local contexts and opportunities, seeks to mobilize local assets, and co-ordinates across levels of government and policy areas. It can also address local market failures and other barriers that may differ across places (OECD, 2025b).
Italy’s National Strategy for Inner Areas (SNAI), a nationwide, place-based regional development policy targeting functionally peripheral municipalities, illustrates this approach. An evaluation of the strategy finds that it increased the number of local business units by about two per cent on average, while short- to medium-run effects on employment, population and housing prices were limited (Mariani, 2025). Positive business effects were concentrated in municipalities classified as intermediate under Italy’s inner areas framework, particularly those with lower market accessibility, existing industrial specialization and stronger administrative capacity. These findings suggest that the effectiveness of place-based interventions depends on where investment is targeted as well as on pre-existing local conditions (Mariani, 2026).
The OECD (2025a) describes place-based industrial policy as an approach that can support national competitiveness and place transformation — broader changes in a place’s economy, institutions and capacity to pursue new development paths — by aligning national sectoral priorities with local capabilities. Krawchenko and Arcand (2026) identify place-based thinking as one of five key elements of robust industrial policy. They describe it as recognizing and addressing differences in economic conditions, including assets, opportunities and challenges across places and regions.
The balance between national and local direction of place-based industrial policies can vary. In more nationally led (top-down) approaches, governments start by identifying strategic sectors or objectives and direct support toward places with relevant opportunities and capabilities. In more bottom-up approaches, regional and local governments and stakeholders start from the strengths, needs and opportunities of a place and identify economic activities that can contribute to broader national competitiveness and priorities. Increasingly, place-based industrial policy combines national direction with locally driven collaboration. This approach gives regional and local actors greater roles in identifying priorities and shaping implementation within broader national objectives and funding frameworks (OECD, 2025a). Research on regional innovation policy also emphasizes that collaboration should extend beyond initial priority-setting, with governance networks bringing together governments, firms and industry associations, post-secondary institutions, innovation intermediaries and civic organizations to support policy learning, monitoring and adaptation (OECD, 2020d).
Top-down and bottom-up approaches need not be mutually exclusive. As figure 4 shows, place-based industrial policy sits at the intersection, connecting national strategic priorities, major funding and policy tools with regional and local assets, capabilities, opportunities and priorities (Krawchenko, McCann, et al., 2026; OECD, 2025a). It also gives regional and local actors a role in identifying opportunities that may not be visible through national or sectoral approaches alone. Regional and local actors can also help identify and address barriers that can leave local assets unused or underutilized, limit the effectiveness of investments, or constrain communities’ ability to participate in and benefit from the resulting economic activity (Hoicka et al., 2026; Krawchenko, Earley, & Shaw, 2026; Krawchenko, McCann, et al., 2026; OECD, 2025a, 2025b; Wolfe & Southin, 2026).
The relevance of place varies across industrial policy interventions. Place-based elements are most relevant where local conditions materially shape implementation and outcomes, including in major projects and areas such as infrastructure, skills and innovation. Regional and local considerations are important where industrial activity can carry direct implications for local labour markets and housing, supplier participation, Indigenous partnerships and the extent to which communities retain benefits over time (Krawchenko, Earley, & Shaw, 2026; OECD, 2025a).
International experience reflects a range of place-based approaches in industrial policy. The OECD identifies five broad routes for place-based industrial policy that differ in whether sectoral priorities are set nationally or locally, how places are targeted, and how funding and governance are organized. These routes range from nationally driven approaches to those that are more locally driven. In nationally driven approaches, national priorities are targeted to selected places or opened to competition among places through targeted place-development models like special economic zones. In locally driven approaches, place priorities operate within national frameworks or through decentralized implementation (OECD, 2025a). These routes are not mutually exclusive, and different approaches can coexist within the same national industrial policy system (OECD, 2025a).
To examine how these approaches are structured in practice and what lessons they may offer Canada, we scanned selected international models and positioned them along an illustrative spectrum — from more nationally led models, where central governments set strategic priorities and tailor their implementation to particular places, to more regionally or locally led models, where places identify priorities based on their own capabilities within broader national or supranational policy and funding frameworks (figure 5). Our scan illustrates different ways jurisdictions connect national industrial priorities with regional and local development, including differences in how regional and local actors participate, how funding is connected to local strategies and which institutions co-ordinate implementation. Appendix E summarizes our scan and the evidence used to characterize each model.
These models are not templates for Canada to replicate exactly. Instead, they illustrate different ways to connect national industrial priorities with regional and local development. Across the models, national direction can coexist with regional or local priority-setting. Formal processes can link local priorities to larger funding and policy decisions. And implementation depends on institutions that can co-ordinate across levels of government and adapt support to local conditions (OECD, 2025a). A comparison of Biden-era place-based policy in the United States and EU Smart Specialisation argues that nationally or supranationally (beyond national borders) designed policies depend on regional governance arrangements capable of connecting top-down priorities with bottom-up, place-based processes (Wolfe, 2026b).
Three examples in particular illustrate these different approaches to place-based industrial policy and can provide lessons for addressing the gaps we identified in Canada’s policy system.
The United Kingdom’s Modern Industrial Strategy is a nationally led model that incorporates place into strategy and implementation. The strategy identifies eight growth-driving sectors, while recognizing the clusters and places where relevant capabilities are concentrated. It also gives regional and local institutions a role in shaping place-specific priorities and implementation (Krawchenko, McCann, et al., 2026; U.K. Department for Business and Trade, 2025). This builds on a broader tendency in U.K. industrial strategies to combine place-sensitive strategy design with relatively strong policy instruments (Krawchenko & Arcand, 2026). However, the approach is still evolving, and it is too early to assess the outcomes of the associated governance changes (Krawchenko, McCann, et al., 2026).
The European Union’s Smart Specialisation framework shows a more regionally led model that formally connects national or regional priority-setting with supranational funding (Directorate-General for EU Regional and Urban Policy, n.d.; European Parliament & Council of the European Union, 2021). National or regional strategies identify research and innovation priorities through an entrepreneurial discovery process that brings together stakeholders from the business, academic and research, civil and government spheres (Radovanovic & Bole, 2024). For the 2021-27 period, good governance of a national or regional Smart Specialisation strategy is an enabling condition for funding under two specific objectives of the European Regional Development Fund: research and innovation capacity and skills for smart specialization, industrial transition and entrepreneurship (European Parliament & Council of the European Union, 2021). These governance requirements include having a responsible institution, stakeholder co-operation, monitoring and evaluation and, where relevant, actions to manage industrial transition (OECD, 2025a; Radovanovic & Bole, 2024). The Smart Specialisation framework provides a formal structured route from regionally identified strengths and priorities to larger funding decisions.
France’s Territoires d’industrie is a more locally driven model within a national industrial framework. The program is explicitly framed as a strategy of industrial renewal “by and for territories” (par et pour les territoires) (Agence nationale de la cohésion des territoires [ANCT], n.d.). Its 183 designated industrial territories develop action plans based on local needs through partnerships between elected officials and industry, within broader national reindustrialization priorities. The program supports implementation by co-funding local project managers and regional co-ordinators, providing engineering support and helping identified projects access national investment programs, including France 2030 (ANCT, n.d.; Direction générale des Entreprises [DGE], 2023a; Ministère de l’Économie, des Finances et de la Souveraineté industrielle, énergétique et numérique, 2023; OECD, 2025a). This illustrates how locally developed priorities can connect to national financing and implementation support while building the local capacity needed to develop and co-ordinate projects. Territoires d’industrie operates alongside France’s Pôles de compétitivité, which connect firms, universities and research organizations to support collaborative innovation (OECD, 2026d).
The IRPP’s Community Transformations Project shows how major economic transformations, including the global energy transition and changes in U.S. trade policy, can affect communities differently across Canada (Chejfec, 2025; Chejfec et al., 2025). Our community profiles, based on local interviews, complement statistical analysis with local perspectives on the assets, barriers, capacities and priorities that shape how communities experience economic transformation and their ability to participate in emerging opportunities (IRPP, n.d.).
Viewed through a place-based industrial policy lens, these community profiles can help illustrate how national priorities intersect with local assets, barriers and economic conditions in different ways across communities. A community may have a skilled workforce, natural resources, industrial infrastructure or a strategic location that could contribute to national objectives, while facing constraints related to financing, infrastructure, research capacity, workforce development or access to markets. For example, Estevan, Saskatchewan, has an experienced energy workforce, existing transmission infrastructure and emerging critical mineral potential, but its local research capacity and access to capital are limited (IRPP, 2025b). In Nova Scotia, Cape Breton has offshore wind potential and marine skills, but it also has gaps in deepwater port infrastructure and specialized skills (IRPP, 2025c).
Different assets, opportunities and barriers therefore require different combinations of policy tools (OECD, 2026a). Table 3 provides examples of what these combinations could look like in practice, drawing on insights from the IRPP community profiles published in 2025 and 2026 as part of the Community Transformations Project. These examples are illustrative, not prescriptions for particular communities. They show how place-specific assets and barriers can point to different combinations of investment, policy tools and institutional support that advance national priorities while strengthening regional and local economic development.
The Institute for Research on Public Policy recommends a comprehensive framework to address the gaps we identified in Canada’s existing industrial policy system at three levels: strategy, implementation and community capacity (figure 6).
These three levels reinforce each other. Place should be built into industrial strategy, carried through the institutions and policy tools that shape implementation, and supported by community capacity to translate national investment into local outcomes.
This collaboration should begin at the planning stage and continue through implementation and evaluation, with clear mechanisms to connect policy and investment decisions to relevant regional and local economic development plans and priorities. Governments should tailor the form and degree of place-based elements in strategy and implementation to the policy objective and the significance of those regional and local implications.
Governments should identify early in policy or project design where place-based elements are needed and which elements are appropriate, drawing on regional and local knowledge to assess relevant opportunities, barriers and risks (OECD, 2025a, 2025b). Federal, provincial and territorial governments should use industrial strategies and sector plans to identify the relevant regions, clusters or local economic systems, the capabilities and barriers that matter for delivery, and where differentiated or complementary policy measures may be needed (OECD, 2025a).
Where warranted, they should incorporate these considerations in industrial policy and major project design by varying program rules, financing terms and funding conditions, making complementary investments and providing supports.
The United Kingdom’s Modern Industrial Strategy (see Appendix E) illustrates this approach by concentrating place-based efforts in city-regions, high-potential clusters and strategic industrial sites, and aligning national industrial priorities with 10-year Local Growth Plans in England (U.K. Department for Business and Trade, 2025).
Governments in Canada should work together to adapt, where necessary and possible, existing industrial policy instruments by varying eligibility rules, project size thresholds, selection criteria, financing and cost-sharing terms, timelines or administrative requirements to reflect differences in project scale, costs and delivery conditions across places. Governments should consider regional economic significance alongside absolute project size when setting program thresholds and terms, including a project’s importance to regional employment and supply chains, role in a strategic cluster or local economic system, and contribution to economic diversification (OECD, 2025a).
Some existing Canadian programs show that differentiation can be feasible:
Capital investment programs
For capital investment programs, governments could lower project size thresholds, offer more favourable financing terms or provide non-repayable support for projects meeting defined place-based criteria. For example:
Infrastructure programs
For infrastructure programs, governments and public financial institutions could build on existing approaches and, where needed, further tailor project size thresholds, financing terms and cost-sharing requirements for rural, northern, Indigenous or other places facing distinct local conditions.
Federal departments should combine industrial policy financing with complementary infrastructure, skills, innovation and demand-side measures to respond to barriers and opportunities in a particular place rather than applying the same package everywhere. Demand-side measures can include procurement, off-take agreements or market-based standards.
For major projects, all levels of government should work together, in collaboration with communities and regional and local economic development actors, early in the planning stage. This early collaboration helps ensure that place-based considerations shape project design and complementary investments, rather than being an afterthought (Krawchenko, Earley, & Shaw, 2026; Wolfe, 2026a).
They should identify expected local and regional benefits, risks and complementary investment needs. Where appropriate, these elements should be reflected in project conditions, funding agreements or implementation plans. Depending on the project and local context, this could include local supplier development and procurement, workforce and training measures, housing or transportation investments, Indigenous participation and ownership, community-benefit mechanisms, and environmental and cumulative-effects governance (Krawchenko, Earley, & Shaw, 2026).
A potentially promising development is the federal government’s Responsible Data Centre Development Principles, which set out expectations for early engagement with host communities and Indigenous rights holders, lasting local benefits, and transparency about electricity, water and infrastructure impacts (ISED, 2026g). The principles recognize important local considerations. However, the key question is whether and how these considerations will systematically inform project design and investment decisions from the outset.
The Major Projects Office (MPO), building on the information it already collects, should add a systematic and more standardized assessment of expected regional and community outcomes, local pressures and complementary investment needs to its project assessment process.
Recent proposals to strengthen MPO assessment similarly emphasize standardized project information, clearer consideration of distributional impacts and better tracking of project interdependencies, including associated transportation infrastructure (Jones & Fariha, 2026).
Governments could also formalize these measures through place-based implementation agreements (Wolfe, 2026a). These agreements could include regional and local objectives, complementary measures and investments, responsibilities across governments and local partners, funding commitments and delivery timelines (Yassin et al., 2026).
The IRPP has previously recommended that governments establish Community Transformation Agreements to co-ordinate roles in highly susceptible communities and align local economic development and workforce, infrastructure and community social supports with locally identified priorities, opportunities, assets and barriers (Yassin et al., 2026). In Spain’s coal-dependent regions, Just Transition Agreements have brought national, regional and local governments together with unions, businesses and other local actors to co-ordinate investment, employment and training, site restoration and economic diversification within a common regional framework (Instituto para la Transición Justa & Ministry for the Ecological Transition and the Demographic Challenge, 2023; Yassin et al., 2025).
The federal government has proposed enabling Regions of National Interest under Bill C-39, building on an earlier proposal for Federal Economic Zones. Under the proposed process, designation would follow regional impact assessments that include consultation with Indigenous Peoples. Certain developments identified through those assessments could be considered pre-approved subject to conditions and mitigation measures (Government of Canada, 2026e, 2026f).
If implemented, regional assessments could identify cumulative environmental, social and economic effects, impacts on Indigenous Peoples and their rights, and broader regional development needs before individual projects advance. Regional assessments under the Impact Assessment Act can examine impacts from multiple projects and activities and cumulative effects within a region. They can also provide early opportunities for Indigenous and public participation and support regional planning and development plans (Impact Assessment Agency of Canada, 2025a, 2025b). Using regional assessments in this way could help decisions about individual projects be informed by the conditions, cumulative pressures and development priorities of the wider region, rather than considering each project in isolation.
Governments should evaluate place-based elements against the regional and local outcomes they are intended to achieve, rather than simply tracking whether funding was allocated or a spatial condition was applied. For industrial strategies, programs and major projects with explicit place-based objectives, performance frameworks should specify the expected outcomes, baseline conditions and a focused set of relevant indicators from the outset. Monitoring, evaluation and continuous learning should be built into the policy cycle so that governments can adjust investments and approaches as evidence emerges (IRPP, 2025e; OECD, 2025b).
Depending on the policy objectives and local context, indicators could include:
These illustrative indicators draw on OECD (2025b, 2025c).
A common core of indicators can support program comparability, while place- and project-specific measures can capture locally relevant outcomes (IRPP, 2025e; OECD, 2025b). Regional and local partners should help develop those indicators. For example, under European Union funding rules, national and regional Smart Specialisation strategies must be supported by monitoring and evaluation tools to measure progress toward their objectives. Having these tools in place is a requirement for fulfilling the EU’s Smart Specialisation enabling condition — a set of criteria that the European Commission must confirm has been met before it can reimburse member states for expenditures under the relevant research, innovation and skills objectives of the European Regional Development Fund (European Parliament & Council of the European Union, 2021).
Governments should also use monitoring and evaluation findings to update and adapt place-based strategies as conditions change. New Zealand provides an example in Taranaki, a region transitioning from a long-standing oil-and-gas base. The Taranaki 2050 Roadmap and its subsequent Action Plan were designed to be updated as local conditions evolved. When oil and gas activity declined faster than anticipated, some medium-term goals were realigned with changing local realities (Jackson, Yassin, & Gu, 2025; Venture Taranaki, 2024).
The federal government should give Regional Development Agencies a more formal role in connecting national industrial policy with provincial, territorial, Indigenous, regional and local economic development priorities. Regional Development Agencies should work with provincial, territorial, Indigenous and municipal governments, communities and local economic actors to identify local opportunities and the barriers that limit them. They can also work together to help connect those priorities to federal programs and policy tools that can support them (OECD, 2025a, 2025b).
A more formal role for Regional Development Agencies would build on functions they already perform. In their current role, these agencies tailor federal programs to regional contexts, develop regional and local knowledge, build relationships with economic development actors and help address gaps left by other programs (ACOA, 2023). Regional Development Agencies also draw on regional networks and sectoral knowledge and play a role in multilevel governance (Bradford, 2017). Some agencies like the Atlantic Canada Opportunities Agency (ACOA) also provide non-financial support through advice, pathfinding and convening (ACOA, 2023). Research on provincial and territorial innovation policy has similarly recommended a stronger role for Regional Development Agencies in co-ordinating and directing strategic investments (Castle & Phillips, 2022).
For major federal industrial policy initiatives with significant regional or local implications, the relevant Regional Development Agency should have a standing role in program design, project assessment or implementation, as appropriate. Federal departments should establish protocols specifying when Regional Development Agency involvement is triggered, what regional evidence and partner input the agency should provide, and how that input is considered in the decision-making process. These protocols should also establish channels through which local economic development organizations, sector and technology associations, and cluster organizations can bring regional knowledge and ongoing initiatives into federal program design and implementation through Regional Development Agencies (Conteh, 2020; OECD, 2020d).
Regional Development Agency input should identify significant regional opportunities, including opportunities for local businesses to supply major projects and develop related economic activities. The input should also identify complementary needs, such as workforce and supplier capacity, enabling infrastructure, housing and community service needs, access to financing or other place-specific constraints, that may materially affect whether an investment succeeds and generates broader regional benefits (OECD, 2025a, 2025b).
Where a regionally significant opportunity requires engagement with several federal programs, departments or institutions, the relevant Regional Development Agency should be able to convene a multi-departmental project table to develop a co-ordinated federal pathway. The federal government could initially link these tables to major federal investment and co-ordination mechanisms with significant regional implications, including the Strategic Response Fund, the Major Projects Office, the Global Innovation Clusters, and future national industrial strategies or funds (ISED, 2026a, 2026e; MPO, 2026a). The Regional Development Agency role would complement these institutions’ mandates by providing regional intelligence, identifying complementary needs, connecting relevant actors and helping co-ordinate federal tools.
The Prairie Project Table provides an emerging Canadian model for this approach. Prairies Economic Development Canada (PrairiesCan) convenes participating federal departments to co-ordinate pathfinding and investment decisions for high-impact regional projects (PrairiesCan, 2025a, 2026b). The broader Prairie Partnership Initiative also provides a single-window mechanism for smaller-scale and more localized projects (PrairiesCan, 2026b).
While international institutional structures differ from those in Canada, they can demonstrate how locally grounded knowledge can connect to national investment and implementation. France’s Territoires d’industrie program, for example, combines locally developed industrial action plans with dedicated project managers who co-ordinate local actors, help advance industrial projects, and connect those projects with engineering support and national financing instruments (ANCT, n.d.; Ministère de l’Économie, des Finances et de la Souveraineté industrielle, énergétique et numérique, 2023).
Where an opportunity spans Regional Development Agency jurisdictions, the relevant agencies should co-ordinate their response. The REGI evaluation identified stronger linkages among Regional Development Agencies and improved cross-jurisdictional collaboration as areas for improvement (ACOA, 2023).
The federal government should provide Regional Development Agencies with sufficient analytical, staffing and co-ordination capacity to take on this expanded role, rather than add it to existing program delivery responsibilities without additional resources.
The federal government should also assess the co-ordination function directly, including timeliness of federal pathfinding, the proportion of qualifying opportunities receiving a co-ordinated federal response, progress in addressing identified complementary investment needs and regional partners’ experience navigating federal supports.
Locally rooted institutions should also play a role in identifying and advancing community-level economic development priorities. The IRPP has previously recommended expanding the mandate and resources of Community Futures Organizations to strengthen community planning and the alignment of economic and skills development (Jackson, Samson, & Chejfec, 2025; Samson et al., 2025). These organizations and other local partners can help identify and develop priorities at the community level, while Regional Development Agencies can connect opportunities across communities and regions and provide a route into federal programs and decisions (Bradford, 2017; Jackson, Samson, & Chejfec, 2025).
A stronger rural voice in federal economic decision-making could also complement a place-based approach to industrial policy (box 2).
Federal, provincial and territorial governments should allocate a greater share of industrial-policy and economic-development funding to building capacity in communities before opportunities become investment-ready, rather than waiting until major investments or projects arrive (Krawchenko, Earley, & Shaw, 2026). They should support innovation and entrepreneurship that reflect the distinct assets, knowledge and economic opportunities of rural, northern and Indigenous communities (OECD, 2024).
Capacity funding should include multi-year support for economic development staff and strategic planning, funds for feasibility and early project development work, and technical support to prepare proposals and manage implementation. Capacity funding should also support local community institutions dedicated to skill development, innovation and entrepreneurship. Where individual communities cannot sustain these functions on their own, programs should allow them to pool funding and share expertise across a region (OECD, 2024).
Federal and provincial innovation programs should provide multi-year support for locally led innovation hubs and other intermediaries where they serve a broader regional role. They should also help rural and northern firms and entrepreneurs develop, adopt and scale new ideas by connecting them with post-secondary institutions, research networks, financing and markets. Ontario’s experience with successive iterations of its regional innovation programs, including the Ontario Network of Entrepreneurs, shows the role regional intermediaries can play in connecting actors within and across entrepreneurial ecosystems. It also highlights the need for sustained co-ordination across the innovation support system, as well as the challenge of maintaining policy continuity as governments revise existing program structures (Bramwell et al., 2019).
Saskatchewan’s Southeast Techhub (SETH) is an example of a locally led model that could inform similar efforts elsewhere (More, 2025). The community created the hub by leveraging provincial funding allocated to places facing coal plant closures to transform the economy through technology and innovation (More, 2025).
SETH reflects several elements the OECD (2024) identifies as important to rural innovation, including building networks and linkages, connecting rural entrepreneurs with wider innovation supports and expanding local capacity for innovation. It achieves these elements by not just focusing on economic or technology development. It promotes technology literacy and helps build public trust in innovation (More, 2025). It also has partnerships with the local college and the University of Regina. In 2026, Innovation Saskatchewan committed $149,000 over three years to the hub’s Rural Innovation Startup Ecosystem program to expand startup support and strengthen regional innovation (Innovation Saskatchewan, 2026).
Governments should strengthen existing local economic development institutions like Community Futures Organizations and support Indigenous governments and communities in building the capacity to identify, develop and pursue their own economic opportunities.
The federal government should strengthen the mandate and resources of Community Futures Organizations to support strategic planning and capacity-building, connect local businesses with relevant networks and financing, and better align economic and skills development (Jackson, Samson, & Chejfec, 2025; Samson et al., 2025).
The partnership between Business Development Bank of Canada (BDC) and Community Futures/SADC+CAE/CBDC to support rural entrepreneurship is a positive step. In 2025, they launched a $100-million initiative combining BDC financing and advisory services with Community Futures’ local reach (BDC, 2025). Similar partnerships could be explored with other federal financial institutions, such as Export Development Canada and Farm Credit Canada, where their mandates align.
Federal, provincial and territorial governments should support the financial, technical and governance capacity of Indigenous governments and communities to assess economic opportunities, negotiate participation and ownership arrangements, and generate long-term own-source revenues.
Existing Indigenous-led economic development models show different approaches to Indigenous economic participation and ownership:
Federal and provincial/territorial governments should also support sharing lessons learned and models of success to promote greater wealth generation in Indigenous communities. This could be done through Indigenous-led peer learning and access to independent financial, legal and technical advice for communities considering similar opportunities (OECD, 2020b, 2025c).
For example, the federal Indigenous Loan Guarantee Program pairs access to capital with funding for investment analysis and due diligence (NRCan, 2025c). Similar capacity support should accompany other efforts to expand Indigenous ownership and participation in major industrial opportunities (OECD, 2025c).
Communities that host or are affected by major projects should receive funding for capacity-building to help develop local benefit frameworks, including community benefit agreements, Indigenous equity participation, and local procurement and employment plans (Krawchenko, Earley, & Shaw, 2026; OECD, 2025c). This support should be available early in project planning so that communities have the capacity to identify priorities, assess options and negotiate benefit arrangements before key project and funding decisions are finalized.
The MPO’s dedicated funding for Indigenous capacity to engage early and consistently on major projects provides one example of this approach (MPO, 2026f). Similar attention to capacity should accompany the development of local and regional benefit frameworks.
This approach should align with federal commitments under the 2026-2030 Sustainable Jobs Action Plan, particularly the use of community benefit agreements and commitments to skills development and Indigenous-led solutions (NRCan, 2026e). Local supplier development efforts could also complement the plan’s Buy Canadian policies (NRCan, 2026e).
Canada’s national industrial priorities take shape in diverse communities and regions — from urban neighbourhoods and industrial clusters to smaller towns, rural and northern communities, and Indigenous territories. These places each have a unique set of assets, barriers and priorities, and their economic relationships often extend beyond administrative boundaries.
Local conditions shape whether industrial strategies and major projects achieve national objectives, who benefits from the projects and who bears the associated pressures. Developing critical minerals projects, for example, depends in part on suitable energy and transport infrastructure, workers with the appropriate skills, and firms’ capacity to supply mining equipment, materials and specialized services. Major investments can also increase demand for housing, transportation and public services in host communities, creating pressures when complementary investments lag.
Place-neutral policy is not necessarily neutral in effect: programs with uniform rules can disproportionately benefit regions that already have stronger industrial ecosystems, infrastructure and capacity to access funding.
Gaps between national industrial priorities and local economic development persist at the strategy, implementation and capacity levels: federal industrial strategies give uneven and limited attention to regional and local conditions; federal institutions and programs do not consistently connect major investment decisions with regional and local economic development; and federal support for community capacity is limited.
In practice, Regional Development Agencies and subnational governments often carry much of the responsibility for responding to regional differences, while major federal strategies and programs do not consistently incorporate place-based considerations from the outset. These federal strategies and programs also do not systematically include Regional Development Agencies in decision-making or establish clear mechanisms for regional and local actors to inform key decisions.
To address these gaps, the IRPP recommends a comprehensive three-level framework:
Canada has the building blocks to advance this approach. Governments can draw inspiration from existing Canadian initiatives with strong place-based elements like Quebec’s Green Hydrogen and Bioenergy Strategy, the Regional Economic Growth through Innovation (REGI) program delivered by Regional Development Agencies, and BDC’s partnership with the Community Futures network to support rural entrepreneurship. International approaches, including those in the United Kingdom, European Union and France, also offer lessons on connecting national industrial priorities with regional and local development.
In a pivotal moment of geopolitical and economic change, Canada is embarking on an ambitious nation-building agenda. A smarter industrial strategy — one that takes a place-based approach — can strengthen both national economic performance and outcomes for the communities and regions where investments take shape.
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Sectoral patterns also reveal differences in the extent to which place is incorporated into industrial strategies. Our discussion below focuses on sectors with at least three strategies.
In agri-food and forestry, hydrogen, and advanced manufacturing, transportation and defence, strategies tend to score higher on place-based orientation. These sectors often depend on geographically specific clusters, supply chains and production systems (see figure A1). By contrast, fossil fuel, innovation and digital sector strategies tend to score lower on place-based orientation, with more sector-wide approaches that are less differentiated by local conditions (Krawchenko & Arcand, 2026).
Appendix B provides an inventory of selected federal industrial policy strategies, programs, funds, investment vehicles and delivery mechanisms examined in this brief. It summarizes their scope, purpose, timing, lead federal organization and funding. Appendices C and D build on this inventory to examine the role of Regional Development Agencies and how place is incorporated into federal industrial policy instruments.
This appendix examines spatial conditions in two groups of federal industrial policy instruments. Box D1 defines spatial conditions. Table D1 presents the 10 largest targeted federal instruments in the OECD’s 2023 Quantifying Industrial Strategies (QuIS) database. Table D2 supplements this snapshot with selected federal industrial policy instruments introduced after 2023 or otherwise not captured in the QuIS top 10 ranking.
This Policy Brief was published as part of the IRPP’s Community Transformations Project. The manuscript was copy-edited by Prasanthi Vasanthakumar, proofreading was by Zofia Laubitz, French publication management was by Étienne Tremblay, production was by Chantal Létourneau and art direction was by Anne Tremblay.
Shaimaa Yassin is senior research director at the Institute for Research on Public Policy.
Rachel Samson is vice-president of research at the Institute for Research on Public Policy.
Dena Abtahi is a research associate at the Institute for Research on Public Policy.
Abigail Jackson is a former senior research associate at the Institute for Research on Public Policy.
The Community Transformations Project was funded in part by The McConnell Foundation and Vancity. Research independence is one of the IRPP’s core values, and the IRPP maintains editorial control over all publications.
To cite this document: Yassin, S., Samson, R., Abtahi, D., & Jackson, A. (2026). A place for place: The role of place-based industrial policy in a more ambitious Canada. Institute for Research on Public Policy. https://doi.org/10.26070/hkww-2231
The authors would like to thank the many experts who reviewed this Policy Brief for their valuable insights and feedback, particularly Tamara Krawchenko, David Wolfe and Bruno Arcand. The authors also thank Marilyn Crewe, Carla Arsenault, Rick Van Staveren, Nigel Wodrich and Gordon More for sharing their local knowledge and perspectives on the communities featured in this Policy Brief. The authors also thank IRPP research director Ricardo Chejfec for his insights and contributions to discussions that informed this Policy Brief.
AI coding assistance tools were used to support the development of scripts for the data analysis used in figures 2, 3 and A1 and to assist with the visual styling of figures in this Policy Brief. All generated code and outputs were verified and tested by the authors, who take full responsibility for the output.
This Policy Brief has undergone rigorous internal and external peer review for academic soundness and policy relevance. The opinions expressed in this Policy Brief are those of the authors and do not necessarily reflect the views of the individuals consulted or the IRPP Board of Directors.
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Illustration: Auni Milne, Sumack Loft.
