A growing alignment of economic interests between Aboriginal people and the Canadian business community is sparking the beginning of an economic transformation for Aboriginal communities, a new report from TD Economics says.

TD chief economist Don Drummond and director of economic analysis Derek Burleton note that several trends are contributing to greater economic success in Aboriginal communities.

First, Aboriginal communities are seeking out more opportunities in the market economy, according to the report. It estimates that there are as many as 27,000 Aboriginal-owned businesses operating across the country, spanning a wide array of businesses from airlines to mining supply to business services.

The financial services industry has been a particular area of growth in recent years. More than 50 Aboriginal Capital Corporations and financial institutions have emerged across the country as Aboriginal business owners seek to fill gaps in the market, such as credit. Aboriginal reserves commonly experience shortages of available credit since real and personal property on a reserve cannot be used as collateral for a loan under the Indian Act, the report notes.

The emergence of Aboriginal businesses has also been strong in the resources and renewable energy sectors.

“An important catalyst for the emergence of Aboriginal enterprises is their growing belief they can move into the mainstream economy without sacrificing their core values,” said Burleton. “Chief among them is the protection of land and the environment.”

A second factor driving economic success among Aboriginals is an increase in partnerships between Aboriginal and non-Aboriginal businesses, according to the report.

It finds a growing number of Canadian companies are recognizing that employing Aboriginals and partnering with Aboriginal communities is a smart business strategy. This is partially because companies across all sectors are worried about longer-term labour shortages and are making more effort to connect with under-represented populations such as Aboriginal people, the report says.

The boost in hiring was evident in the 2006 Census data, which showed improvements in employment and income figures among Aboriginal people.

The third trend contributing to the economic transformation is greater attention from the government. The federal and provincial governments are increasingly linking Aboriginal education and social issues with Canada’s future prosperity challenges, the report notes.

It finds that education remains a significant issue for Aboriginal people, with high school completion rates far below the national average.

The TD economists applaud recent efforts by the Canadian government to address these issues. For instance, the $1.4 billion for at Aboriginal skills training and infrastructure, announced in the 2009 federal budget, was “a step in the right direction,” according to the report. In addition, the federal government is currently working on a new Policy Framework for Aboriginal economic development, which could include important changes to the Indian Act.

Canadian governments and Aboriginal communities have also worked at making education more relevant for Aboriginal people to boost education levels. But the report notes that other key areas have not received enough focus, including adult education.

A meaningful economic transformation of Aboriginal communities would be beneficial for all Canadians, according to the economists.

“All Canadians have a vested interest in the economic prospects of Aboriginals, given that they represent the youngest and fastest growing segment of our population and will therefore make up an increasingly larger portion of our workforce,” said Burleton. He added that greater economic success of these communities would drive up government revenues, reduce social services costs and increase productivity.

“Our economy’s future is inextricably linked to their future.”

IE