COMPETITION AND COOPERATION IN ECONOMIC
DEVELOPMENT: EXAMINING THE PERCEPTIONS
OF PRACTITIONERS IN ONTARIO, CANADA
GODWIN ARKU
The University of Western Ontario
This article reports on a study that explored economic development practitioners’ perceptions of competition and cooperation in economic development. The study was conducted against the
backdrop of (1) an increasing advocacy by scholars and policymakers for cooperative policy practices
in economic development instead of competition and (2) the restrictive institutional environment within
which practitioners operate in Ontario. The analysis in the paper is based on in-depth interviews with
eighteen economic development directors from a wide range of communities in the province of Ontario,
Canada. Findings indicate that practitioners had a strong positive view of regional approaches in the
present global economy. These findings contrast sharply with prior studies suggesting that practitioners
are unwilling to cooperate in regional economic development. The study offers several possible reasons
for a change in thinking. Practitioners also supported restricting financial incentives to businesses in
Ontario, arguing that restrictions provide a more even environment for economic development activities in the province. Interestingly, practitioners’ support appears to contradict doubts about the global
competitiveness of Ontario communities in such a restrictive environment. In light of practitioners’
positive cooperative attitudes, study findings suggest areas for policy interventions to enhance practical
cooperative policy making.
ABSTRACT:
Economic development officials are charged with initiating programs that enhance the material and
social well-being of their communities. To accomplish this task, officials strive to attract and retain
economic enterprises to promote the economic and fiscal health of their communities and to improve
the tax base, which local governments rely on heavily to provide municipal services. Private capital
is limited. Capital is also increasingly mobile, due to rapid technological changes, competition
from unexpected places, and market fragmentation. Although cities have traditionally competed
with each other for economic development, this competition has intensified in recent years due to
global changes (Morin & Hanley, 2004). Scholars and commentators have debated the consequences
of competition among communities, arguing that competition is inefficient and creates inequities
(Goetz & Kayser, 1993; Grady, 1987; Wolfson & Frisken, 2000). Thus, some scholars have called
for cooperative efforts to solve problems (Agranoff & McGuire, 2003; Blakely & Leigh, 2010;
Gordon, 2009; Jansen, 1994; McGuire, 2000; Wolfson & Frisken, 2000; Wolfe & Creutzberger,
2003). Recent evidence suggests that some communities are beginning to understand the benefits of
cooperation and are becoming more willing to participate in regional economic development efforts
(see Gordon, 2007, 2009; Arku, 2013).
Most research on municipal competition and cooperation was conducted in the United States and
a handful of European countries. Relatively less is known about countries such as Canada, where
Direct correspondence to: Godwin Arku, The University of Western Ontario, Department of Geography, London, ON, Canada
N6A 5C2. E-mail: [email protected]
JOURNAL OF URBAN AFFAIRS, Volume 36, Number 1, pages 99–118.
C 2012 Urban Affairs Association
Copyright All rights of reproduction in any form reserved.
ISSN: 0735-2166.
DOI: 10.1111/j.1467-9906.2012.00647.x
100 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
municipalities generally operate in a different institutional climate. In Canada, municipalities are the
creatures of provincial governments and are, therefore, restricted in ways to promote their economies
(see Gertler, 1990; Graham, Phillips, & Maslove, 1998; Kitchen, 1985; Reese & Rosenfeld, 2004;
Reese, 2006; Tassonyi, 2005; Wolfson & Frisken, 2000). The strict restrictions are meant not only
to avert costly financial bailouts or financial collapse of municipalities but also to prevent abuses
and inequities from unregulated use of municipalities’ financial incentives (Gertler, 1990; Graham,
Phillips, & Maslove, 1998). More critically, policymakers assume that strict financial restrictions
will enhance cooperation among municipalities and avoid intense competition.
What is not known is how practitioners perceive competition and cooperation for local economic
development in such a constrained environment or within the changing global environment, in which
regional economic development is regarded as the way to attract investments and promote growth.
Moreover, in Ontario, since the late 1990s, financial responsibilities have been gradually downgraded
from upper levels of governments to municipalities (Sancton, 2000). This has caused some scholars
to predict an increase in competition among municipalities because these urban communities want
to attract more private enterprises to enhance their tax base (Wolfson & Frisken, 2000). No study
has empirically examined the extent of competition as opposed to cooperation since the municipal
environment began changing in Ontario.
This study responds to this gap by examining the perceptions of economic development officials
in Ontario regarding competition and cooperation. The perceptions of those persons tasked to initiate
and implement economic development programs are critical. This paper, therefore, contributes to an
understanding of the topic in a specific region where the institutional context is, in some respects,
designed to promote cooperation.
COMPETITION VERSUS COOPERATION: AN OVERVIEW OF THE ARGUMENTS
Over the years, academics, policy makers, and commentators have given considerable attention to
the topic of competition versus cooperation in economic development (see Bowman, 1988; Bradshaw,
2000; Goetz & Kayser, 1993; Gordon, 2007, 2009; Grady, 1987; Wells, 1990; Wolfe & Creutzberger,
2003; Wolfson & Frisken, 2000). To provide a context for the present research, the information
here provides a brief overview of the main arguments found in the existing literature on economic
development.
Studies have debated the utility or futility of competition and cooperation in economic development
efforts (Jansen, 1994; Korsching, Borich, & Stewart, 1992; Wells, 1990). This issue has garnered
more interest because of the economic uncertainty and the economic order that has characterized
the emerging global economy in recent years. As part of this new economic order, cities are forced
to compete internationally for investments to counter industrial declines and rising unemployment
rates. Competition for investment is not a new phenomenon. Cities have traditionally competed
among themselves for economic development, and practitioners have typically regarded economic
development as a competitive task (Gordon, 2007, p. 60). To improve the economic and fiscal health
of their communities, states and localities compete to recruit or retain firms and spend hundreds of
millions of public dollars annually on a variety of tax incentives and spending programs (Buss, 2001;
Forman, 1997; Grady, 1987; Hanson, 1993; Schweke, Rist, & Dabson, 1994).
Among other benefits, competition is thought to generate innovation in an urban economy, to
ensure local control, and to enhance local and state governmental efficiency. However, competition
among communities has attracted intense scrutiny and criticism. Some scholars believe competition
creates inefficiency and inequities (Goetz & Kayser, 1993), and others argue that it distracts policy
makers from promoting a regional economy (Wolfson & Frisken, 2000). The latter argument is
considered particularly valid within a changing global economy. Some scholars believe that the
current global economy requires communities to operate as a group. Thus, instead of competition,
local governments have been urged to cooperate in economic development policies and projects (e.g.,
Blakely & Leigh, 2010; Gordon, 2009; Jansen, 1994; Korsching, Borich, & Stewart, 1992; Lackey,
Freshwater, & Rupasingha, 2002; Leibovitz, 2003; Wells, 1990; Wolfson & Frisken, 2000).
I Competition and Cooperation in Economic Development I 101
Some authors believe that cooperation, among other advantages, provides a better mechanism
for local governments to access the external economy, increase decision-making capacity, enhance
resource capacity, achieve greater external economies of scale, improve market strengths, ensure
cost effectiveness, and gain greater political influence through strength in numbers. Given these
advantages, benefits of cooperation extend beyond an individual economy to multiple communities.
Thus, proponents have urged communities to remove barriers to cooperative efforts and to forge
partnerships for mutual benefits. Such community partnerships may be particularly critical for
smaller communities because these localities lack resources and are not sufficiently attractive to
operate effectively in the emerging global economy. In short, cooperation among communities for
economic development is an important mechanism for improving the economic and social wellbeing of communities. Recent empirical studies on cooperation have shown that these arguments are
resonating well with some community practitioners and that practitioners are willing to engage in
cooperative regional economic development efforts (Gordon 2007, 2009; Nelles, 2005).
Although the benefits of cooperation are generally understood, various obstacles impede cooperative efforts among communities, including mismatches between goals and fiscal capabilities, lack
of public demand for local cooperation, mistrust and suspicion of neighboring communities, and
the inability of cooperative efforts to generate quick and visible results (Cigler, 1994; Dewar, 1998;
Leibovitz, 2003). Other frequently mentioned impediments include the culture of individualism, individual competitiveness, different expectations among participating communities, a desire to retain
a sense of community, unequal needs, unequal resources, unequal power among communities, and
local politics (for discussion of these factors, see, e.g., Baker, 1992; Bradshaw, 2000; Cox & Wood,
1994; Garkovich, 1992; Gordon, 2007, 2009; Lackey, Freshwater, & Rupasingha, 2002; Leibovitz,
2003; Wolfson & Frisken, 2000). Solutions to overcome these impediments and, therefore, ensure
cooperative efforts vary. Some scholars believe voluntary cooperative efforts will be more sustainable and are more likely to yield results (Baker, 1992); others emphasize the need for active policy
(Axelrod, 1984; Cigler, 1998).
Although existing research on competition and cooperation for local economic development is
comprehensive, most research comes from the United States and a few European countries. Less is
known about such countries as Canada, where the institutional climate within which municipalities
operate is generally different. Thus, the purpose of the present study was to address this gap by
understanding the perceptions of officials who operate in such a context. The key question addressed
is “What are practitioners’ perceptions about competition vis-à-vis cooperation in economic development?” Secondary questions are “How are practitioners’ perceptions played out in their economic
development efforts?” and “What influence, if any, does the institutional context have on competition
and cooperation?”
INSTITUTIONAL CONTEXT FOR LOCAL ECONOMIC DEVELOPMENT IN ONTARIO
Municipalities in Canada are the creatures of provincial governments and are, therefore, subject to
a broad range of legislative restraints that define their powers and limit their actions (see Gertler, 1990;
O’Brien, 1976; Tindal & Tindal, 1979; Reese, 1992; Sancton, 2000). Legislative controls have been in
place for years and address, among other actions, all important financial decisions relating to taxing,
charging, borrowing, and spending. Municipalities cannot engage in these decisions without explicit
approval from the provincial government (Bird & Slack, 1993; Graham, Phillips, & Maslove, 1998).
The only real exception is municipalities’ ability to set property tax rates. Through these financial
restrictions, the provincial government exclusively determines the level of tax revenues available to
the municipalities (Tassonyi, 2005).
The field of economic development is similarly constrained (see Gertler, 1990; Kitchen, 1985;
Reese, 1992, 2006; Wolfson & Frisken, 2000). The Municipal Act prohibits the municipalities from
giving bonuses to private firms, a restriction that dates from 1888 (see Kitchen, 1985; Taylor, 1986).
Subsequent Municipal Act amendments have established further controls on borrowing activity, capital expenditures, budget procedures, and the conveyance of economic benefits to private businesses
(Gertler, 1990; Reese, 1992; Tassonyi, 2005; Taylor, 1986).
102 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
Years of provincial control over municipal finances have produced the current situation, in which
all financial assistance, including bonuses or tax abatement, to industrial or commercial enterprises
is regulated. For instance, the Municipal Act 2001 specifically states that “A municipality is not
permitted, despite any Act, to assist any manufacturing business or other industrial or commercial
enterprise, either directly or indirectly, through the granting of bonuses” (Ontario Municipal Act,
2001). Specifically, municipalities are prohibited from (a) giving or lending any property of the
municipality, including money; (b) guaranteeing borrowing; (c) leasing or selling any property of
the municipality below the fair market value; and (d) giving a total or partial exemption from
any levy, charge, or fee (106(2) of the Act). Municipalities may only offer incentives for such
activities as heritage development, brownfield redevelopment, and other projects specified within a
community development plan (Tassonyi, 2005). Municipalities may also waive development charges
for businesses in certain areas of their jurisdiction (e.g., downtown) and provide serviced land at a
competitive market price.
The restrictions have profoundly affected the way municipalities pursue economic development.
Gertler (1990, p. 43) argued that
such restrictive provincial statutes have important implications for the manner in which local
governments fashion and pursue their own economic development strategies, since they are constrained from engaging fully in the kind of competitive interjurisdictional bidding for economic
activity that American municipalities have developed.
In light of the restrictions, municipalities in Ontario have been compelled to find creative ways to
enhance the economic growth and competitiveness of their jurisdictions (Gertler, 1990; Wolfson &
Frisken, 2000). Policy reviews indicate that municipalities emphasize infrastructure investment to
stimulate development, special events, site development, marketing policies (see Reese & Sands,
2007), and lower tax rates on industrial and commercial properties than rates in nearby jurisdictions,
among other strategies (Gertler, 1990). Municipalities have also begun to emphasize quality-of-life
strategies to retain local businesses, to attract new investments, and to attract the labor force needed
to compete in the global economic environment. Specific initiatives revolve around improving the
environment, promoting culturally diverse communities, and investing in local amenities, among
other strategies.
Overall, the restrictive environment raises an important question related to competition and cooperation for local economic development: Does the restrictive environment enhance or hinder
inter-jurisdictional competition and cooperation?
DATA COLLECTION AND METHODOLOGY
The data presented in the following sections are from Ontario, Canada’s most populous province.
Ontario is home to 13 million of Canada’s 34 million inhabitants (Statistics Canada, 2011). Traditionally, it is the manufacturing heartland of Canada and contributes between 45% and 50% of
the country’s manufacturing GDP. Along with other places, Ontario has been forced to cope with
the challenges of significant economic restructuring and, in recent years, the global economic crisis. These challenges have affected the economic fortunes of most cities in Ontario (Hutton, 2010;
Vinodrai, 2010; Bourne, Britton, & Leslie, 2011) and, therefore, their approaches to local economic
development.
This study was based on qualitative analysis, which was appropriate for three reasons. First, and
most importantly, a qualitative approach helps a researcher explore a phenomenon with little prior
background knowledge (Denzin & Lincoln, 2003). This is the case with competition and cooperation
in Ontario, about which little is known. Second, this approach permits a researcher to use probing
strategies to collect in-depth information that other methods, such as a survey, might not provide
(see also Gordon, 2009). In this study, the research objectives required a deep understanding of the
issues. Third, a qualitative approach is useful when a researcher does not need to consider the degree
to which responses are representative of the population at large and does not need to seek “statistical
I Competition and Cooperation in Economic Development I 103
TABLE 1
Demographic Characteristics of Localities Involved in the In-Depth Interviews
Name of Cities
Population Size
2006 Unemployment Rate
(Statistics Canada)
Updated Employment Rates
(where available)
Small Size Localities
Belleville
Collingwood
Elliot Lake
Orillia
Sarnia
Wasaga Beach
49,454
19,241
11,549
30,586
72,366
17,537
6.5%
6.6%
13.2%
5.7%
7.4%
7.3%
Mid-Sized Localities
Cambridge
Guelph
Kitchener
Markham
Richmond Hill
Sudbury
Vaughan
Waterloo
120,370
121,688
219,153
301,709
129,609
92,048
192,068
98,780
5.9%
5.3%
5.7%
6.7%
5.4%
7.8%
4.7%
5.5%
n/a
4.7% (August 2011)
7.3 (December 2010)
n/a
n/a
6.3% (September 2011)
n/a
n/a
519,949
713,443
883,391
2,615,060
6.5%
6.5%
5.9%
7.6%
6.7% (September 2011)
8.5% (April 2011)
6.6% (2011)
7.8% (2011)
Large-Sized Localities
Hamilton
Mississauga
Ottawa
Toronto
7.4% (2011)
n/a
15.1% (March 2011)
7.35% (August 2011)
11.5 (March 2012)
n/a
Note: The most recent unemployment rates were compiled from various sources, including the communities’ websites. n/a = not
available.
integrity.” In qualitative research, samples are not intended to be representative of the population
under study because the goal is not generalization (Baxter & Eyles, 1997). Rather, respondents are
selected to represent maximum variation across a range of factors (Quinn-Patton, 1990). This study
used qualitative information to understand competition and cooperation within the context of (1)
a competitive and changing global environment and its associated municipal challenges and (2) a
strict institutional control environment, where local governments are controlled by the provincial
government in all important fiscal respects.
Qualitative information was gathered from the most senior person within economic development
departments in localities in Ontario (Table 1). Senior practitioners, namely directors, managers, and
so forth, were selected for the in-depth interviews because of their experience, level of responsibility,
position, and, perhaps more importantly, knowledge of the subject matter and familiarity with
economic development issues (Table 2). One practitioner per locality was targeted, and eighteen
in-depth interviews were completed. The collection of the current data began in 2009 and is part of
a larger study on economic development in a changing global economic environment. All localities
with “cities” status (n = 49) were contacted for the interviews, as were ten (10) towns. The inclusion
of selected towns was to obtain a different perspective on the topic under investigation. Of the
59 contacts made, only eighteen (n = 18) accepted the invitation and participated in the in-depth
interviews. However, it is worthwhile to point out that the final list of localities that participated in
the study is diverse geographically, economically, and demographically. The list included the four
major cities and some of the important mid-sized cities in the province (Table 1). Five out of the 18
practitioners (28%) were drawn from the Greater Toronto Area (GTA), the economic hub of Ontario.
The GTA communities are the City of Toronto, Mississauga, Markham, Vaughan, and Richmond
Hill (see Table 1). Additionally, of the 18 localities, six are small-sized communities (<75,000
population), nine are mid-sized communities (between 75,000 and 350,000 population), and four are
considered large-sized communities (>350,000 population). These categories are based on Sands
104 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
TABLE 2
Summary Characteristics of the Practitioners
Interviewee
Code
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Position Title
Manager
Director
Manager
Director
Director
Director
Director
General Manager
Executive Director
Business Development Officer
Eco. Development Officer
Manager
Director
Manager
Manager
Eco. Development Officer
Manager
Director
Gender
M
M
M
M
F
M
F
M
M
M
F
M
F
M
F
M
M
Years of Experience with
Economic Development
Around 17 years
Little over 15 years
20 years
15 years
More than 20 years
About 8 years
21 years
11 years
17 years
12 years
About 11 years
13 years
12 years
13 years
14 years
About 15 years
2 years
21 years
Note: The arrangement of participants is in no particular order.
and Reese’s (2008) classification scheme. Overall, the final list of communities that participated in
the interviews is a very good representation of the range of localities that exist in the province of
Ontario.
Also, despite the fact that only 18 practitioners participated in the interviews, the point of saturation
was reached with this number, with no new information being obtained (see Charmaz, 2004).
As shown in Table 2, the practitioners who participated in the interviews had wide-ranging
experience in the field of economic development, extending from about 2 to over 21 years; the
average working experience for the 18 practitioners was around 14 years. In terms of the recruitment
process, all directors received an introductory letter through email or a telephone call to determine
their willingness to participate. Although the interviewees were not intended to be representative of
the study sample, the final list of participating directors reflected varying lengths of service, divergent
histories, and widely diverse geography and locality sizes.
Data were collected through face-to-face, in-depth interviews. Interviews were conducted in
participants’ offices and lasted between 45 minutes and an hour. The practitioners responded
to a series of semi-structured, open-ended questions from an interview checklist. This format
ensured that the interviews did not stray from the research topics, and it allowed interviewers
to probe for specific details and to add or remove questions as necessary (Denzin & Lincoln,
2003).
The interviews focused on the key research objectives stated earlier and included some of the
following questions below, with the order of the questions varied according to participants’ responses
(Quinn-Patton, 1990).
(1) What do you understand by competition and cooperation? Do you compete?
(2) Where do communities see themselves in relation to other communities?
(3) Do communities view as competitors those communities that are close geographically and have
a similar population size, or are there other factors that influence these perceptions?
(4) Is there room for cooperation in a competitive environment and associated challenges?
(5) What are the perceived benefits of cooperation?
(6) What are the perceived obstacles to regional economic development efforts?
I Competition and Cooperation in Economic Development I 105
(7) What are the traditions and customs surrounding competition and cooperation that influence
these perceptions?
(8) What role, if any, has the strict institutional environment played on competition and cooperation?
(9) What impact has increasing financial responsibility on municipalities had on competition?
(10) Are there examples in other policy or program areas of cooperative efforts between communities
that can be built upon?
Each interview was tape-recorded and transcribed verbatim. NVIVO software was then used to
identify themes and patterns in the data. Themes and constructs related to the primary research
objectives guided the analysis. Key response categories were created prior to line-by-line coding,
which is generally considered the most appropriate coding process (Strauss & Cobin, 1990). This
interactive and inductive process allowed the data to direct the development of themes. Transcripts
were coded according to the emerging themes and then reviewed by key categories several times to
ensure that concepts pertaining to the same phenomena were placed in the same category. The same
coding scheme was used for all interviews, which is the most effective way to compare responses.
Finally, a number of strategies, such as using a comprehensive topic list, were employed to ensure
that data analysis was consistent (Krefting, 1991; Patton, 1987).
RESULTS
The findings are organized around the key objectives and the common themes that arose in the
interviews. Quotes throughout the results section illustrate key issues raised by the practitioners. In no
particular order, the interviewees were referred to throughout the results section by a code assigned
to them; the numbers range from 1 to 18 (Table 2). As well, based on Sands and Reese’s (2008)
classification scheme, participating communities are referenced as large, medium, and small to help
distinguish some of the responses. Finally, this paper uses the following abbreviations to identify
participants and participating communities: PLC = Practitioner from Large-sized Community; PMC
= Practitioner from Mid-sized Community; and PSC = Practitioner from Small-sized Community.
Competition: “Friendly” and Not “Fierce”
Participants generally noted that although some “sort” of competition exists, it is not the direct and
aggressive competition previously reported in some U.S. areas (e.g., Guskind, 1990; Goetz & Kayser,
1993; Hanson, 1993; Forman, 1997). In this study, the major theme from the in-depth interviews
was that competition in the province is generally “friendly” and subtle, as voiced by nearly all
participants, irrespective of the size of community. To describe competition among municipalities,
participants used such phrases as “friendly competition,” “normal competition,” “so-so competition,”
and “minimal competition.” Many participants noted that “friendly” attitudes had been an intrinsic
part of their practices for many years but have become more prevalent in the uncertain global climate.
A practitioner from a mid-sized community noted that “we don’t take the position of we’re
competing against our neighbors. Competition is not helpful. We like to work with other cities on
mutual projects and policies . . . ” (7, PMC). Other practitioners echoed this theme, with one noting,
“We really don’t look at competition in the region very strongly. We prefer to feature benefits and
promote our community as a value proposition, as opposed to you shouldn’t locate in the city of
Burlington or Brampton or Toronto” (2, PLC). Indeed, some directors indicated that they celebrate
each other’s successes, especially following a major accomplishment. As recalled by a practitioner
from a small community,
When Toyota announced in June 2005 to build a new $1.1 billion automobile assembly plant in
the City of Woodstock I called my colleague immediately after the announcement to congratulate
him. I gathered most of my other colleagues did the same thing. This is the kind of spirit we have,
at least in this region . . . Our position is that we’re in together and we must work together and
celebrate each other’s successes (14, PSC).
106 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
Some practitioners noted that geographical boundaries are not major determining factors in their
decision making, as illustrated by a respondent from a small community:
The only people who look at our boundaries are perhaps the local politicians. We practitioners
don’t. We look at economic development from a regional perspective (15, PSC).
Overall, practitioners’ approach to economic development seemed to be characterized by mutual
respect. They generally did not compete at the peril of their neighbors or, as one practitioner plainly
stated, “We don’t stab each other” (11, PMC). Such sentiments were typical and repeatedly expressed
by practitioners from all three sizes of communities.
Even though the practitioners admitted that “some sort” of competition exists, they attributed it
to the nature of economic development, which is perceived as results-driven. However, the broad
sentiment was that competition is generally subtle. Some of the practitioners believed that the
“petty” competition that exists among communities in the province is “inherent,” “unavoidable,”
and “hidden.” Many practitioners stressed that this is normal in the economic development process,
or, as one stated, “bound to happen.” Another argued that “you cannot have a complete lack of
competition so far as you have individual cities . . . That would only happen if you have a country
without communities . . . that’s simply not realistic” (12, PMC).
Practitioners feel a sense of competition when prospective investors are looking for places of
investment and have contacted two or more communities. Even in those moments, the practitioners
reiterated, they do not criticize each other; rather, they emphasize the advantages of their local
economy to prospective investors. A practitioner from a community located within the GTA explained
this, stating,
Yes in some sense we compete . . . we try to make our community the best environment for business.
But we don’t go to City of Toronto or Ottawa and say to companies over there, you shouldn’t be
here you should come to our community or tell prospective businesses that don’t go to such and
such a community. We don’t do that because we believe that a strong Toronto is really beneficial
for all of us.
Another practitioner from a small-sized community expressed similar sentiments, noting,
We don’t ever in any of our dealings try to put down another community, ever, no matter what. We
may compare utility rates or tax rates but it’s never with an eye toward you know, giving another
community a black eye, absolutely not, that’s not what we do. We just present ourselves, what we
have to offer, the services we can provide, we always push the aftercare, like you know once you
make the decision to come here, that’s the beginning of the relationship with us, it’s not the end. So
you know once you move here, depending on what you need you know, to get your shoes repaired
or find a dry cleaner, you know we’re here to get you whatever you need. (13, PSC)
Practitioners outside the GTA indicated that they promoted their communities through conventional
marketing strategies, such as promotional materials. They often relied on such mechanisms as
newspaper advertisements, especially in widely circulated print media outlets (e.g., the National
Post, Toronto Star, Globe & Mail) and electronic media (e.g., YouTube) to extol the virtues of their
economies. Those virtues often include lower industrial and commercial taxes and inexpensive and
“shovel ready” land. Although such marketing strategies are likely to put communities in direct
competition with each other, the practitioners argued that their marketing efforts were not driven
by desire to undermine their counterparts; instead, they claimed their primary motivation was to be
proactive in an uncertain and volatile global environment.
Competition Is “Global” and Not “Local”
A common theme among practitioners was that competition was a “global,” not “local,” issue.
The practitioners were generally reluctant to describe their immediate geographical neighbors as
I Competition and Cooperation in Economic Development I 107
competitors, perhaps reinforcing their argument that competition in economic development efforts
was a subtle issue within the province. The global theme was especially prevalent among practitioners
from the large and mid-sized communities. In part, this reflected the resources and diversity of those
economies. More importantly, this also reflected their desire to assume global-image status and to be
competitive internationally. For instance, a major aim of the City of Toronto, as stated in their 2008
strategic document, was to position the community “as a leading global city of the 21st century”
(City of Toronto, 2008, p. 5). Another example of this global view is the 2011–2015 economic
development strategic document for the City of Kitchener, a mid-sized city, which states that the city
aims to position “its innovative businesses to compete on the global scale” (City of Kitchener, 2011,
p. 4).
The global viewpoint was clearly reflected in practitioners’ perceptions about whom they regarded
as their competitors. Throughout the interviews, the practitioners from large and mid-sized communities referred to their competitors as being outside Canada, not their immediate neighbors. For
instance, a practitioner in a mid-sized community stated that “our competitors are not really neighbors like Toronto, Kingston or Waterloo . . . it’s more with our southern counterparts [U.S. cities],
Shanghai, Singapore, and so forth” (6, PMC). A practitioner from a large community reinforced this
idea when asked which localities were his greatest competitors, stating,
Our competition is over other locations in the world, there’s no doubt about it because of the
internet and a lot of other things businesses can operate almost anywhere and anytime depending
on what they are doing. We definitely feel our competitors are our global counterparts . . . as such
we always try to position ourselves strongly to take advantage of any and every opportunity. (1,
PLC)
Nonetheless, four of the six practitioners from small communities identified their geographical
neighbors as their competitors. This perspective may be explained by the fact that the scope and
programs of smaller communities are more locally and regionally focused than globally focused.
Furthermore, these communities lack the resources and the size, as well as the social, cultural, and
economic diversity, to compete nationally and internationally. Practitioners from these communities
mentioned that the bulk of their efforts have been geared toward ensuring the growth of existing
businesses rather than pursuing businesses located elsewhere.
Cooperation: Regional Cooperation Is “the Way for the Future”
The practitioners widely acclaimed the value of cooperative efforts, unlike the theme of competition. Irrespective of the size of community, they claimed that cooperation was prevalent in their
economic development in respective geographical regions of the province. The directors used such
phrases as “fairly common,” “exceptionally good,” “better appreciation of it,” and “increasingly
being adopted” to describe the extent and importance of cooperation to their economic development
efforts. In the words of a practitioner,
Cooperation in Ontario, particularly in the Greater Toronto Area and the Regional municipality
of Waterloo is exceptionally good, maybe to the point of a certain level of inaction or lack of
competitiveness. (12, PMC)
According to practitioners, they often adopted a common front when dealing with prospective foreign investors: “There’s a greater level of sharing, collegiality, and common purpose with everybody
when we’re outside of your domestic market . . . we typically act as a unit” (12, PMC).
The practitioners stated that cooperative efforts have specific advantages, including enhancing
a larger regional economy, improving marketing strengths, pooling scarce resources, and ensuring
cost-effectiveness (Table 3). The general feeling was that cooperation was necessary to market communities as a ‘region’ or as a community within the context of a larger area. This is especially critical
108 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
TABLE 3
Summary of Practitioners’ View About Advantages/Challenges of Cooperative Efforts
Advantages
Ensures larger regional economy
Effective way to respond to global competition
Effective mechanism to deal with global recession
Saves time and effort
Permits sharing of knowledge and best practices
Increases resource capacity of communities
Ensures effective use of limited resources
Enhances cost-effectiveness
Reduces tension among communities
Permits the development of leadership skills
More appealing to upper levels of governments
Challenges
Managing expectations among participating communities in cooperative projects
Duplication of efforts (i.e., when a community belongs to more than one cooperative project)
Differences in economic development priorities among communities
Inability of cooperative efforts to generate quick tangible results
Bureaucracy
in the present competitive global market place. One practitioner described regional cooperation for
economic development as “the way for the future” (3, PLC). Other typical comments include “if we
pool our resources and feature the region as opposed to each of these individual cities, we find that
there’s benefit. So we think it’s valuable to work on a regional basis that way” (9, PMC). Two other
practitioners shared similar perspectives, as follows.
Cooperative efforts ensure mutual benefit. If a company locates in the City of Brampton or
Markham but they are from Japan there is a benefit to [our economy] as well . . . And if they locate
in [our community] there is a benefit to Brampton and Toronto and other places because people
will shop and live and help the regional economy. (2, PLC)
I enjoy a lot of collegiality and cooperation with all levels of government and with my colleges
across municipalities. I don’t think I’m the only one, I think that’s really the tenure of what we’re
all about, we’re in it together. If we can bring in a prospect and somebody lands it, we all win. (5,
PSC)
A consistent theme throughout the interviews was that prospective investors preferred a regional
economy, as illustrated in the following response:
Potential investors prefer regional development effort. We definitely get a lot more attention as a
region and what we notice the most is how potential investors feel about dealing with the region
as opposed to the individual municipalities. They like it a whole lot more. (15, PSC)
The practitioners indicated that regional economic development coordination makes tremendous
sense and broadly agreed that they had overcome the focus on individual efforts that previously
characterized their strategies. A practitioner from the GTA bluntly noted, “The days of the city
above Toronto were short-lived and over” (11, PMC). This practitioner was referring to a negative
campaign in the 1990s by the City of Vaughan, a municipality within the GTA, to attract new
businesses from other parts of the wider metropolitan region. Practitioners generally believed that
attitudes had changed about involvement and commitment toward regional economic development
coordination over the past decade, due, in part, to the changes within the global economy and efforts by
top government officials to push for common regional strategies. Although support for cooperative
efforts was nearly unanimous among participants from communities of all sizes, it was strongest
among practitioners from medium and small communities. Practitioners in those communities felt
I Competition and Cooperation in Economic Development I 109
they were insignificant on their own. However, as they partnered with neighboring municipalities to
form a “region,” their population base, physical area, and regional services increased, making them
a more attractive place for investments; that is, they saw tremendous advantage in working together
as a region.
The practitioners argued that joint marketing efforts within a region are very effective for attracting
investments. Joint efforts reduce the overall cost and increase the capacity of marketing and businessattraction activities. Practitioners from communities involved in regional partnerships indicated
that attraction activities could happen more frequently and on a much larger scale because each
municipality or region provided a fair share of the partnerships’ budget. For instance, instead of City
A having a $10,000 budget to travel to trade shows and to travel globally to market the city, City A
can draw on a budget of $50,000 with four partner cities to market the larger region. Not only can City
A partake in more business attraction activities due to cost savings but it also has a larger regional
brand to display the strengths of the entire region to prospective external investors. Typically, only
one representative from the partnering communities would attend a trade show, leaving more time
for the other communities to focus on economic development activities at home. Leads from such
events are shared with all other members of the partnership, though each participating community is
responsible for extolling the virtues of its economy to prospective businesses.
At the time of the interview, 15 of the 18 practitioners mentioned that their communities were
involved in one or more cooperative initiatives. Cooperative efforts often take two broad forms: sectoral and regional cooperation. Sectoral cooperation is typically an informal arrangement based on a
specific sector or project (e.g., information and communication technologies [ICT], biotechnology,
energy) that may or may not involve communities in close geographical proximity. One prominent
collaborative arrangement that was mentioned is the Ontario Technology Corridor (OTC)—a partnership among the regions of Toronto, Ottawa, Waterloo, London, and Niagara. The OTC aims to
promote the strength of the region to the external economy as a leading high-tech center.
Regional cooperation usually occurs among geographically close communities over a broad range
of economic development issues. One popular mechanism for cooperative efforts is a common
regional institution, such as an economic development organization. Typically, these organizations
are designed to facilitate dialogue among stakeholders and to help build a regional identity. More
importantly, they are tasked with marketing the region to the global economy, with the goal of
attracting new businesses, investments, and mobile talents. Regional organizations also serve as
business network facilitators. One of the most lauded examples in the province is the Canada
Technology Triangle (CTT), an organization established by the tri-cities of Waterloo, Kitchener,
and Cambridge, along with some neighboring townships. CTT and other regional organizations
mentioned in the interviews play key roles in cooperative efforts in the province. Another example
is the Greater Toronto Marketing Alliance (GTMA)—an organization that consists of the economic
development organizations in the regions of Peel, York, Durham, and the City of Toronto. Each of the
participating members contributes about $100,000 a year to market the entire region to the external
economy. Other practitioners identified specific cooperative initiatives involving oil sands projects
and export programs (e.g., pan-Northern export).
Obstacles to Cooperative Efforts
Although local governments have been consistently urged to adopt cooperative economic development policies and participate in cooperative economic development projects, studies have identified
considerable challenges to such efforts (see Cigler, 1994; Dewar, 1998; Bradshaw, 2000; Wolfson &
Frisken, 2000; Leibovitz, 2003; Nelles, 2005; Gordon, 2007, 2009). Nearly all participants indicated that they did not have such challenges as mistrust, suspicion, or resentment. Instead, some
practitioners mentioned that their challenges were managing expectations of participating communities, mitigating duplicated efforts, bureaucracy, and differences in economic development priorities
among communities (Table 3).
110 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
The challenge of managing expectations was mentioned primarily by practitioners from communities that had entered into formal agreements to establish common regional economic development
organizations. Each participating community typically wanted to see some dividend from their financial commitment to the organization, as reflected by a practitioner from a large city: “We often hear
at our board meetings complaints such as . . . ‘only 2 companies located in my community’, I’m not
happy about that” (2, PLC). Another large-city practitioner, whose community was part of a regional
marketing organization, commented that “some municipalities question the benefit they get from the
organization. It’s a bit of a challenge to show visible benefit to each community at all times” (4,
PLC).
Some practitioners also expressed concern about the duplication of efforts by regional development
organizations and individual cities. The directors with this concern indicated they overcame it by
mandating that regional organizations pursue functions distinct from those undertaken by individual
cities. For instance, in the Regional Municipality of Waterloo, CTT has a clear mandate to attract
investments from the international economy, and the individual departments within the community
government focus on retaining and expanding existing businesses and ensuring organic growth.
Effects of Institutional Climate
Municipalities in Ontario are subject to a broad range of legislative constraints that define their
powers and limit their freedom of actions, including within the field of economic development. The
extent and level of constraints have raised questions (Gertler, 1990; Tassonyi, 2005). Key issues
are whether municipalities are too restrained and whether the environment puts them in a less
competitive position. In response to these issues, the present study sought to explore economic
development practitioners’ perspectives on what role the strict institutional environment played in
their competitive or cooperative efforts and their perceptions of the framework within which their
functions were carried out.
Nearly all the practitioners interviewed believed that the restrictive environment affected their
approaches to economic development and the strategies they employed, noting that the environment
reduced the type of rivalry reported in U.S. communities. They made similar responses regarding
this: “it limits unnecessary competition,” “it lessens intense rivalry,” and “it reduces fierce competition.” Furthermore, within the restrictive environment, the practitioners were normally upfront with
prospective clients, as reflected in the following comment.
We don’t play any games at all, obviously by law we’re prohibited from bonusing, all kinds of tax
breaks and things, we make that clear up front and you know if they short list us off the list just
because of that so be it. (15, PSC)
In contrast to the consistent responses about the impact of the restrictive environment on competition, practitioners were ambivalent about its effects on cooperation among communities in the
province. One participant noted, “I’m not exactly sure if the system here in Ontario has made any
impact on our attitude toward cooperation. Maybe yes. Maybe not. I don’t know . . . Frankly that is
a very good question, and I don’t know the answer” (8, PMC). Most participants expressed similar
uncertainty. The uncertainty may be due to the fact that practitioners had not had experience with an
unrestricted environment, and, given the fact that economic development is inherently competitive,
they were not sure of how an unrestricted environment would have impacted their practices in the
province.
In spite of this uncertainty, nearly all practitioners expressed positive views about the institutional
framework as it relates to restrictions on financial incentives to businesses. One major difference
among the communities was that positive views about the restricted institutional environment were
more explicit and vocally expressed by mid- and small-sized communities than by the larger ones.
For instance, a practitioner from a small community asked the rhetorical question,
I Competition and Cooperation in Economic Development I 111
Can a small town like us compete with Toronto? Or how can the Town of Tillsonburg compete
with the City of Hamilton or Ottawa? (16, PSC)
Another practitioner from a mid-sized community observed that
Restriction ensures a level playing field for everybody. Of course, some would argue that we do
not have the same amount of resources at our disposal like our counterparts in the U.S. but I believe
there is positive to it. It prevents the kind of “bidding war” that is associated with an unregulated
system. Added to that it reduces inequities that unregulation may create. (7, PMC)
Practitioners from large communities supported the position of the mid- and small-sized communities, as expressed below.
[A restrictive environment] is good for communities with limited resources. Sure I would love
to have $100m at my disposal to enable us to go after the companies we like . . . as happened in
City of Nashville some years ago. But broadly speaking economic development is not only about
money. I believe a lot more has to do with devising the right policy framework. So personally I
believe the restrictive environment rather helps us to be creative with our policies. (4, PLC)
The above responses were typical, with the practitioners mostly positive about the economic
development environment in Ontario. They admitted that the restrictions gave them a competitive
disadvantage. However, unlike the study by Reese (1992), none of the practitioners mentioned that
they wished for the restrictions to be eliminated or relaxed. Indeed, practitioners from small and midsized communities explained that large communities have diverse economies and are more fiscally
stable. As a result, they can provide a wider range of incentives and services to attract investment
than can small communities. Thus, practitioners argued, the restrictive environment provided a more
even ground within which economic development was carried out in the province.
Many practitioners also questioned the effectiveness of financial incentives as a whole, and some
practitioners argued that an unrestrictive environment could lead to a waste of resources and weaken
a municipality’s capacity to provide essential services. As one practitioner noted, “If there are no
restrictions some communities will overextend themselves financially” (10, PMC). The restrictive
environment affected program and policy development. Some directors argued that the institutional
environment not only forced them to adopt a more focused approach but also compelled them to be
innovative in their programs and policies. As a participant from a mid-sized community explained,
“the system has forced us to be on the edge . . . frequently trying new ideas and adopting different
approaches to economic development” (18, PMC).
Along with the traditional infrastructure and land-based policies, the practitioners mentioned a
series of policies that were central to their economic development efforts. Investment in amenities and
cultural activities to attract the emerging young labor force was high on their agenda. For instance,
massive waterfront redevelopment with a waterfront trail in the City of Hamilton was seen as a
key strategy to transform the city’s economy and make it attractive. Other policy areas that were
cited included investments in skill training programs and innovation parks, and partnerships with
universities and provincial government to enhance commercialization and innovation. There is a sense
that a good number of communities were embracing policies that were likely to prepare them for
the emerging economy, especially the larger communities and some mid-sized communities. Many
practitioners from mid-sized and small communities also mentioned the creation of public incubator
facilities, which, they noted, had helped to spawn and nurture business start-ups and new ventures.
Overall, practitioners expressed satisfaction with the current institutional arrangement whereby
only the upper levels of government have the constitutional authority to offer recruitment incentives
to attract companies to designated areas in the province. However, some participants were quick to
point out the issue of lobbying associated with the system, or, as one participant stated, “underground
maneuvering” (3, PLC).
112 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
TABLE 4
Summary of Ways Communities Try to Be Competitive
Level of emphasis
Type of strategies or issues being emphasized
L
M
S
Creation of a good “business climate” (e.g., industrial service lands, lower development
charges—especially in downtown areas, lower property taxes, and so forth)
Investment in amenities and cultural activities to make themselves attractive to the
emerging young labor force (e.g., waterfronts, walking trails, cultural festivals)
Emphasis on diversity (e.g., ethnic, cultural groups, etc.)
Investment in incubator facilities
Incentives for brownfield redevelopment
Establishment of research and science parks—collaboration between industry and
universities
Investment in communication infrastructure—especially by communities which are
“geographically isolated”
Investment in people, labor force (fostering partnerships with universities)
Regional partnerships—to ensure economics of scale
Emphasis on success and diversity of businesses
Ensuring less bureaucracy (e.g., taking measures to reduce development approval
processes)
Extolling communities as “business friendly environment”
2
3
3
3
3
3
3
2
2
3
3
3
3
2
2
1
1
1
1
2
3
3
3
2
2
3
3
3
3
1
3
2
2
3
3
3
Ratings Legend: L = Large-sized towns, M = Medium-sized towns, S = Small-sized towns, 3 = Strongly emphasized, 2 =
Moderately emphasized, 1 = Not emphasized.
Community Business Climate: How Do They Distinguish Themselves?
Because all communities are forced to operate under the same rules, a key question is how they
make their business climates attractive in order to compete. In other words, what differentiates cities
regarding attractiveness to investment and their ability to expand the commercial-industrial tax base?
The practitioners indicated that they stay competitive by extolling the unique qualities of their communities, what one practitioner termed their “comparative advantages” (Table 4). The communities
also appear to compete with each other by pursuing quality-of-life strategies to attract the young,
highly talented, and creative individuals, especially the larger and mid-sized communities. Also, because of their external-oriented focused approach, strategies to enhance their general attractiveness
appeared to be more prominent among large and mid-sized communities than among the smaller
ones.
Two comparative advantages mentioned primarily by communities outside the GTA were lower
taxes on commercial and industrial properties and available, inexpensive serviced land:
We see ourselves as a low cost municipality for business compared to the GTA from land charge
rate to development charges, we are very competitive and have suitable locations for companies to
reach out to the market. It is not that far, wherever you are going from [our community]. Also, we
tend to have various industrial serviced lands at competitive prices and our development charges
that are lower compared to the GTA. (7, PMC)
Other practitioners extolled the diversity of their economy:
I think it is the success and diversity of our economy and our businesses. It is as a result of the sort
of companies that we have that others would want to locate in the area. (2, PLC)
Yet another practitioner praised the quality of the workforce:
I think what really makes us competitive as a city is our people, our labor force. It is the talent
side that makes us competitive. That is one of the reasons why we are now actively pursuing
I Competition and Cooperation in Economic Development I 113
partnerships with universities and educational institutions and connecting with the provincial
network for commercialization and innovation. (8, PMC)
The practitioners enumerated various virtues with varying degrees of emphasis, depending on
the size of the community, including a friendly business environment, strengths of specific sectors,
reputable educational institutions, support services for small businesses, training programs for businesses and the workforce, easy access to major cities, low cost of living, and innovative spirit. Because
communities are allowed to use incentives for existing properties, some had aggressively pursued
that option, most notably brownfield redevelopment. (For more detailed information on the overall
trends in economic development policies and programs in Ontario, see Reese & Sands, 2007.)
EFFECTS OF MUNICIPAL DOWNLOADING: NOT MUCH, BUT ECONOMIC
CONDITION IS A BIGGER CHALLENGE
Since the late 1990s, municipalities in Ontario have had to bear greater financial responsibilities due
to downloading of service delivery by upper levels of governments (Sancton, 2000). One assumption
is that increased financial responsibilities will spur municipalities to become more aggressive and
competitive in their economic development efforts—with greater determination to boost their tax
base.
Overall, the practitioners admitted that increased downloading of financial responsibilities had
put severe strains on municipal budgets, thereby affecting the delivery of various forms of services.
It was suggested that municipal governments are compelled to adopt neoliberal reforms and more
entrepreneurial approaches to deal with the budget constraints. In particular, additional sources of
revenue are increasingly being pursued, including privatization of municipal services, collection of
special levies, and frequent increases in rates, such as property taxes; large and mid-sized communities
particularly appeared to be pursuing these measures to boost their revenue bases.
In terms of economic development efforts, nearly all practitioners felt that constraints in municipal
budgets were affecting their activities. It is worthwhile to point out that although municipal financial
constraints were attributed to the downloading of services, some of the practitioners were quick to
attribute them to the volatile economic situation as well. Irrespective, they lamented that the lack of
sufficient money is adversely affecting their ability to undertake promotional activities (e.g., regular
trade missions, advertisement); provide adequate developable, serviced industrial land; and so forth.
Although these practices are still core parts of their economic development efforts, the practitioners
strongly believed that sufficient funding would have made a tremendous difference in the way they
carried out these activities. One practitioner stated, “I’d love to have sustainable funding to implement
all the projects we want . . . but money is simply not there. We’ve been very lean in our budget for
some time now” (17, PSC). Others made comments along the same lines, including the following:
. . . .with limited budgeting to go out and do promotional marketing, you know, if things were
successful it would be great if you had, say, a million dollars a year to go out and actually just
spend it on brand and target marketing for the community because I think we’ve got so many great
areas to talk about but it’s very difficult to be able to show a short term payback on that. Not when
the city is facing increasing financial constraint. (9, PMC)
Despite the municipalities’ greater responsibilities for services, the practitioners did not agree with
the assertion that the increase in responsibilities had intensified competition within the province.
Statements such as “I don’t think it has had any influence,” “no direct impact,” “I wouldn’t say we’re
any more competitive since the start of the downloading . . . ” typified their response when asked,
“What impact has increasing financial responsibility on municipalities had on competition?” In fact,
practitioners repeatedly emphasised that the uncertain global economy, frequent plant closures, and
competition from unexpected places pose far greater challenges to their economic development
efforts than downloading of services. As one practitioner explicitly stated,
114 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
Industries are relocating from my community every now and then. Guess what, they’re not relocating to my neighbors but outside the country. Low cost countries . . . countries with cheap labor and
weak environmental conditions. For me, frequent plant closures is my greatest challenge. Sure,
municipal downloading is an issue, but I think we can weather the financial storm if we’re able to
keep our businesses here. (3, PLC)
Others reiterated similar themes, often pointing to the worsening economic conditions in their
jurisdiction, including rising unemployment rates, as a bigger challenge (Table 1). Thus, invariably,
most of the practitioners discounted claims about likely increases in competition due to their greater
financial responsibilities. In general, the practitioners’ responses to this question reinforced their
earlier positions about competition being a “global,” and not a “local,” issue.
DISCUSSIONS AND CONCLUSION
This paper explored the perceptions of economic development practitioners in Ontario regarding competition and cooperation in economic development. Although the practitioners may have
demonstrated some ambiguity and unwillingness to cooperate in the past, interview findings suggest
that their perceptions have substantially changed. Consistent with previous findings (e.g., Goetz &
Kayser, 1993; Wolfe & Creutzberger, 2003), interviewees perceived intense and fierce competition
to be inefficient and costly. In contrast, the practitioners had a positive perception of cooperation
and argued that it produces various benefits, such as enhancing regional competitiveness, reducing
duplication of efforts, and ensuring efficiency. Practitioners overwhelmingly agreed that regional
thinking in the present global economy is critical and “the way for the future.”
These perceptions contrast sharply with the previously reported unwillingness by local communities to cooperate in regional economic development (e.g., see Wolfson & Frisken, 2000; Leibovitz,
2003). The practitioners indicated that, in practice, they spent a lot of effort coordinating programs
and activities, both formally and informally. The most notable cooperative actions were creating
common economic development organizations and engaging in joint marketing programs. Practitioners had a strong sense of mutual respect and tactfulness, as reflected by this comment: “We strive
to maintain the integrity of our roles as economic developers” (6, MSC).
This mutual admiration was indicated by the absence of intense and fierce rivalry for economic
development in the province. This contrasts with reported “bidding wars” and “under-hand dealings”
in other jurisdictions (see Grady, 1987; Forman, 1997). Even so, communities are not without
competitive attitudes in their actual practices. Indeed, the use of conventional marketing strategies,
such as promotional materials that extol the virtues of individual communities, may appear to
undermine claims made about the absence of a competitive spirit in the province. However, as the
practitioners pointed out, a complete lack of competition in economic development, especially in
such a geographically vast territory as Ontario, is improbable. Promotional campaigns are considered
normal practice. One practitioner described them as “bound to happen” but noted that competitive
practices were devoid of negative elements. Although “friendly competition” exists, practitioners
generally argued that the decision about where businesses locate lies with the investors. One area
where the communities appear to be competing involves the use of quality-of-life strategies to attract
young, highly talented, and creative individuals.
Based on the interviews, several factors appeared to account for the evolving attitude toward
regional thinking and noncompetitive behaviors among the practitioners. One important factor relates
to changes in the global economy, which practitioners argued played a key role in cooperative efforts.
In the global economy, economic development efforts concentrate more on attracting investments
from distant places than on engaging in intense neighborhood competition. Additionally, the uncertain
and competitive nature of the global economy suggests that individual communities lack the resources
and market characteristics to operate in isolation. The era when some communities could implement
all their economic activities internally has virtually passed. Communities of all sizes must operate in
the world marketplace, making regional efforts critical for economic development.
I Competition and Cooperation in Economic Development I 115
Another significant factor relates to the transformation from a manufacturing economy to the
present knowledge economy. Prior to the emergence of the new economy, communities largely
focused their efforts on recruiting industries, which made cooperation difficult (see Aronoff &
Vlasin, 1992). However, some economies have become specialized, with a focus on specific key
strengths, what is generally referred to as “niche marketing.” In other words, communities appeared
to target specific sectors in their economic development efforts rather than to take the approach to
“shoot anything that flies and claim anything that falls” (see Rubin, 1988). Within this framework,
most practitioners indicated that what competition exists depended largely on the sector of emphasis.
Finally, most practitioners interviewed indicated that much of their current focus centered on attempts
to retain, expand, and generate businesses within the local community rather than simply attracting
businesses from elsewhere. This shift in emphasis, too, may account for reduced competition among
the communities.
The key finding regarding the institutional environment is that the restrictive environment has
reduced the sort of rivalry reported in the United States. The practitioners were mostly supportive of
restrictions on financial incentives. They argued that the restrictions provide a more even ground for
economic development in the province. Interestingly, the practitioners’ support appears to contradict
concerns about whether Ontario communities can compete in such a restrictive environment and
whether they are too constrained (Gertler, 1990; Tassonyi, 2005). Practitioners agreed that the
restrictive environment compelled them to be creative in their economic development efforts. The
extent of the restrictions also suggests that communities have to rely on conventional strategies, such
as lowering taxes on commercial and industrial properties and providing serviced land at competitive
prices. However, some scholars claim conventional strategies are inefficient and deprive communities
of revenues needed to cover the costs of providing services (see Vojnovic, 2000). Indeed, the costs
associated with these strategies compared to direct financial assistance to business are open for
debate.
Overall, this study has contributed to a greater understanding of the perceptions of competition and
cooperation—issues that have attracted considerable attention in recent years. Not only has the study
updated existing research but also, and more importantly, it has provided perspectives on competition
and cooperation from a different institutional context. Using a series of in-depth interviews, the study
demonstrated that economic development practitioners had strong interests in regional cooperative
efforts.
The willingness to cooperate in regional economic development efforts implies that policy programs can enhance practical, regional cooperative strategies within the province. For instance, following the suggestion of Cigler (1998), communities that show attempts to enhance regionalization
in grant applications can be given special considerations. However, as Baker (1992) suggested, cooperation is more successful and enduring when voluntary. Thus, policy makers need to use public
incentives cautiously. Public policies could be particularly useful where efforts at regionalization are
already underway.
This study has taken the first step towards understanding the perceptions of economic development
practitioners regarding competition and cooperation within the Ontario context. Some issues that
emerged from the interviews should attract further studies and policy attention. For instance, although
practitioners supported the institutional framework whereby only the upper levels of governments may
provide financial incentives to attract companies, the system has inherent problems with lobbying.
Further research could investigate how those decisions are made, as well as investigate competition
and cooperation among communities during that decision-making process. Further research could
also detail all existing cooperative activities to determine trends and specific areas where such efforts
are most prevalent. Finally, additional research is needed to compare restricted communities with
those that operate with fewer restrictions. Findings from such a study could provide a baseline for
policy intervention. Finally, given the continuous restructuring of urban regions in the province since
the late 1990s, further research could investigate whether municipal consolidation has influenced the
level of competition or cooperation among various communities.
116 I JOURNAL OF URBAN AFFAIRS I Vol. 36/No. 1/2014
ACKNOWLEDGMENTS: This research was conducted with financial support from the Social Sciences and Humanities
Research Council of Canada (SSHRC). Special thanks to Victoria Gordon, who willingly made her research questions
available to me. The author would also like to thank peer reviewers and the editor of JUA (Dr. Laura Reese) for
their helpful suggestions. Finally, the author wishes to thank Catherine Oosterbaan who provided research assistance
throughout this study, and all interviewees who participated in the interviews. Your time and perspectives on the topic
are greatly appreciated.
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ABOUT THE AUTHOR
Godwin Arku is Assistant Professor at the Department of Geography, Western University, London,
Ontario. He teaches courses in urban development. His research focuses on global economic changes
and their impacts on municipal economic development efforts, relationships between housing and
economic development, and impacts of economic reforms on the urban built environment. His
regional area of expertise cuts across both the developed and developing world. He holds a BA in
Geography from the University of Ghana, Masters from the University of Toronto, and Doctorate
from McMaster University, Canada.