Where do we grow from here?
Ontario’s economic productivity is lagging compared to its U.S. counterparts, but the Institute for Competitiveness and Prosperity is looking for ways to bring it up to speed.
The institute is a not-for-profit organization concerned with Ontario’s economic progress, funded by the provincial government. Its latest working paper was presented at the Rotman School of Management on Wednesday by Dean Tiff Macklem and the Institute’s Executive Director, Jamison Steeve.
The paper looks at geographical regions where certain sectors are thriving thanks to an interconnected web of companies, suppliers and the academic and government institutions that support them. The Institute calls these regions “clusters” – think Silicone Valley in California, a hotbed of tech innovation.
Making these clusters stronger and more efficient, the Institute says, will in turn pour money back into Ontario’s economy.
“This virtuous cycle helps the region become more competitive, and a more competitive region is more prosperous,” Macklem writes in the working paper.
The paper zeroes in on five of the province’s industry-specific clusters to figure out what they’re doing well and how to make them even better.
Toronto, for example, is noted as a world-leading financial centre and publishing hub as well as a leader in communications services alongside Kitchener and Waterloo.
“Toronto is home to more than 4,000 companies in the financial services cluster which employ more than 145,000 workers”, says Steeve.
It’s an ever-changing sector, according to Lauren Wyman, a U of T School of Public Policy & Governance alumna who currently works at Manulife.
“While there’s a confidence there’s also definite acknowledgement that there’s so much to keep up on and pay attention to,” says Wyman, who attended the presentation.
So what makes Toronto a worthy base for these clusters? Steeve says the city is where Ontario’s future business leaders launch their careers. “They’re attracted here from an education perspective and then end up staying largely because of quality of life,” he says.
The working paper credits post-secondary schools for being a large contributor to the success of a cluster. “Academic institutions – Universities – provide innovation, they provide consultants – and probably most importantly, we’re in the business of providing talent. Talent is a key element of successful clusters,” says Macklem.
U of T Rotman Commerce student Aaron Shafton is a summer intern at Ontario’s Ministry of Economic Development and Growth – he helped put together the Institute’s clusters report. He says there’s a feeling of optimism regarding Ontario’s economic potential. “There is this overwhelming sense of ‘yeah, things are looking really good,’” he says.
But attempting to achieve anything close to Silicon Valley’s success comes with its own set of challenges. One of the biggest roadblocks is investment, Steeve says. Venture capitalists have been taking a more conservative approach – choosing to fund safer bets over startups.
“We in Canada often sacrifice dynamism for our decency,” says Steeve. “But maybe right now we can pull back on decency for a little bit and allow for a bit more dynamism.”
As far as talent goes, the report says that government restrictions on foreign direct investment are stopping companies in Ontario from bringing in the best and brightest from other countries. It’s also proving hard to attract and keep home-grown talent who are ditching cities like Toronto in favour of California, lured by tech giants and the hot climate.
Macklem says artificial intelligence innovators at University of Toronto are a prime example of this. The school is a leader in developing the technology that’ll play a huge part in the roll out of autonomous vehicles. But Facebook and Google are snapping up its PhD students and bringing them to the U.S.
“We’re actually really good at something but if we don’t act aggressively we won’t reap the benefits,” he says.
Read the full report here: http://www.competeprosper.ca/work/working_papers/working_paper_26