Path dependency or investing in place: Understanding the changing conditions for rural resource regions

Abstract

Over the past few decades, senior governments in many OECD countries have rolled back regulatory strategies to incentivize jurisdictional environments for resource development. As senior governments promote resource development, however, they are also reducing financial support for communities experiencing the social and physical infrastructure pressures. This has prompted municipalities to pursue regional strategies to retain a portion of resource wealth. Drawing upon staples theory and evolutionary economic geography, we explore how municipal stakeholders in the Peace River region of British Columbia, Canada leveraged an underdeveloped provincial policy regime to recapture resource revenues through the Fair Share Agreement (FSA). Once the FSA was adopted, local governments needed to follow strict spending and investment guidelines. Based on their property tax regimes and limited jurisdiction, they focused on infrastructure repairs and expansion of basic services, but also with some investments in recreation centres and schools. Tensions emerge, however, about how these revenue regimes can either entrench path dependency or create opportunities for investing in place. Under this regime, no emergency or legacy fund investments are allowed. As local government stakeholders acquired resource revenues, they had no jurisdiction to support new development pathways, resulting in no significant changes from path dependency.