David A. Wolfe
Foreword by
Anne Golden
21st Century Cities in Canada:
The Geography of Innovation
The 2009 CIBC Scholar-in-residence Lecture
by David A. Wolfe
Foreword by Anne Golden
The Conference Board of Canada • Ottawa, Ontario • 2009
©2009 The Conference Board of Canada*
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ISBN-13: 978-0-88763-946-3
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Library and Archives Canada Cataloguing in Publication
Wolfe, David
21st century cities in Canada : the geography of innovation : 2009
CIBC scholar-in-residence lecture / David A. Wolfe.
ISBN 978-0-88763-946-3
1. Cities and towns. 2. Sociology, Urban. 3. Urban
economics. I. Conference Board of Canada II. Title.
III. Title: Twenty-first century cities in Canada.
HT155.W65 2009
307.1’16
C2009-906162-7
Printed and bound in Canada by Gilmore Printing Services Inc.
Cover design, page design, and layout by Scott Grimes, The Conference Board of Canada.
Cover illustration and design by Robyn Bragg, The Conference Board of Canada.
CIBC logo is a trademark of Canadian Imperial Bank of Commerce.
This book is dedicated to David Pecaut, Chair of the Toronto City
Summit Alliance, who embodies the true spirit and qualities of a civic
entrepreneur and serves as an inspiration to all who care as passionately
as he does about the future of Canada’s cities.
Author’s Acknowledgements
A number of people have contributed immeasurably to this book. The
book would not exist without Anne Golden’s generous invitation to
serve as the CIBC Scholar-in-Residence at The Conference Board of
Canada, and I am indebted to Anne and to Michael Bloom for their
helpful comments and suggestions. Over the past decade, I have been
privileged to work with a talented group of colleagues in the Innovation
Systems Research Network. The ideas and research presented in
this book reflect the results of our collective research. Research support for the network has been provided by the Social Sciences and
Humanities Research Council, Infrastructure Canada, the National
Research Council, the Ontario Ministry of Research and Innovation,
the Toronto Region Research Alliance, and the University of Toronto.
Some of the key ideas presented in the book took shape in the course of
my collaboration with Meric Gertler, Allison Bramwell, and Jen Nelles.
Their support is deeply appreciated. The charts and tables were generated by Greg Spencer, and the maps were prepared by Zack Taylor.
Trevor Barnes, Neil Bradford, Allison Bramwell, Meric Gertler, Jill
Grant, Adam Holbrook, Tom Hutton, Jen Nelles, Enid Slack, and Zack
Taylor took time to read and comment on all or parts of the manuscript,
which helped to sharpen the focus considerably. Responsibility for any
remaining errors or omissions is mine alone.
I am grateful to Lisa, Michael, and Rachel for their love and support
throughout the project.
v
Acknowledgements
The Conference Board of Canada is deeply grateful to CIBC for its
farsighted investment in the Scholar-in-Residence Program, which
made this volume possible and is supporting a decade of cutting-edge
research into topics of vital importance to Canada’s future.
We thank our media partner, The Toronto Star, for publicizing the
May 2009 lecture that resulted in this volume and for giving Canadians
an advance look at the arguments presented here.
At the Conference Board, Anne Golden and Michael Bloom organized
the 2008–09 Scholar-in-Residence Program, and Laura Paquet edited
this volume.
And, of course, we thank David A. Wolfe, as well as David Pecaut,
Carl Zehr, Judith Wolfson, and John Honderich, for their extraordinary
contributions to Canadian public debate.
vii
About The Conference Board of Canada
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in Canada.
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Funded exclusively through the fees we charge for services to the
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to provide services for all levels of government.
Independent from, but affiliated with, The Conference Board, Inc. of
New York, which serves nearly 2,000 companies in 60 nations and
has offices in Brussels and Hong Kong.
ix
THE AUTHOR
David A. Wolfe, Professor, Political Science, University of Toronto,
and Co-Director, Program on Globalization and Regional Innovation
Systems, Munk Centre for International Studies.
David A. Wolfe is a professor of political science at the University of
Toronto Mississauga and a co-director of the Program on Globalization
and Regional Innovation Systems (PROGRIS) at the Munk Centre
for International Studies. PROGRIS is the national secretariat for
the Innovation Systems Research Network (ISRN). Dr. Wolfe serves
as National Coordinator of the ISRN and is currently Principal
Investigator on the ISRN project entitled “Social Dynamics of Economic
Performance: Innovation and Creativity in City-Regions.”
He holds a B.A. and an M.A. in Political Science from Carleton
University and a Ph.D. from the University of Toronto. From October
1990 to August 1993, he served as Executive Coordinator for Economic
and Labour Policy in the Cabinet Office of the Government of Ontario.
Upon his return to the University of Toronto, he served as a research
associate in the Canadian Institute for Advanced Research’s Program
on Law and the Determinants of Social Ordering, a post he held from
1993 until 1997. He is editor or co-editor of seven books and numerous
scholarly articles and public policy reports. In 2003, he co-authored the
report Community Participation and Multilevel Governance in Economic
Development Policy for the Government of Ontario’s Panel on the Role
of Government.
xi
THE COMMENTATORS
Anne Golden, President and CEO, The Conference Board of Canada
Anne Golden has been President and Chief Executive Officer of The
Conference Board of Canada since October 2001. Previous to that,
Dr. Golden served as President of The United Way of Greater Toronto
for 14 years. She has gained national recognition for her role in the
public policy arena through chairing two influential task forces: one in
1996 for the provincial government on the future of the Toronto area,
and another in 1998 for the City of Toronto and the federal government on homelessness. Dr. Golden is also a member of the Board of
Directors of the Toronto Region Research Alliance.
In 2003, Dr. Golden’s commitment to social justice was recognized in
her appointment by the Governor General as a Member of the Order
of Canada. Author of numerous publications on public policy issues,
Dr. Golden has received several honorary doctorates. Her many civic
awards include the Urban Leadership Award for City Engagement from
the Canadian Urban Institute, and the Women’s Executive Network’s
Canada’s Most Powerful Women: Top 100 Award.
xii
Judith Wolfson, Vice-President, University Relations, University of Toronto
Judith Wolfson is a former President and Chief Executive Officer of
Interac Association/Acxsys Corporation, the national electronic financial services network serving Canada’s financial institutions and related
industries. She spent 10 years with the Government of Ontario in several senior positions, serving under three premiers: David Peterson, Bob
Rae, and Mike Harris. As Assistant Deputy Minister in the Ministry of
Industry, Trade and Technology, she was involved in Canada’s free trade
negotiations. She also served as Deputy Minister, Intergovernmental
Affairs; Deputy Minister, Economic Development, Trade and Tourism;
and Deputy Minister, Consumer and Commercial Relations. In 2003,
Ms. Wolfson received the Queen’s Jubilee Medal for leadership and
service to the community in recognition of her contributions to a wide
range of major community organizations.
xiii
Carl Zehr, Mayor, City of Kitchener
Carl Zehr is Mayor of the City of Kitchener. He was first elected to
the position in November 1997 and was re-elected in 2000, 2003, and
2006. Mr. Zehr also served as a councillor for the City of Kitchener
from 1985 to 1994, and as a councillor for the Regional Municipality
of Waterloo for four terms (1988–94 and 1997–present).
During his previous and current terms of elected office, he has served
on a lengthy and varied list of municipal and regional council committees, and has actively supported and served many community organizations. His roles include, or have included, treasurer of the SEED Loan
Fund, chair of the Independent Living Centre, past president of the
Rotary Club of Kitchener, and member of the Mennonite Foundation
of Canada Finance Committee. He has also served the Toronto Region
Research Alliance and the Kitchener-Waterloo Skating Club.
Mr. Zehr was a partner in the CGA firm of Mercer, Hildebrand & Zehr
from 1981 to 2002. Previously, Mr. Zehr held corporate and staff positions with Hybrid Turkeys Limited and associated companies, the
University of Waterloo, and Kitchener-Waterloo Hospital.
xiv
David K. Pecaut, Senior Partner and Director, The Boston Consulting
Group; and Chair, Toronto City Alliance Summit
David K. Pecaut is the voluntary Chair of the Toronto City Summit
Alliance (TCSA), a diverse coalition of civic leaders whose mission is to accelerate social and economic development in the Toronto
region. Through the TCSA, he has helped to mobilize the Toronto
Region Immigrant Employment Council, the Toronto Region Research
Alliance, the Strong Neighbourhoods Task Force, the Task Force on
Modernizing Income Security for Working-Age Adults, Luminato (the
Toronto Festival of Arts and Creativity), and Greening Greater Toronto.
Mr. Pecaut has taken his passion for the community and Canada to the
national level. His accomplishments include founding and co-chairing
the Canadian E-Business Opportunities Roundtable; co-founding Career
Edge, the national youth internship program; serving on the Prime
Minister’s External Advisory Committee on Cities and Communities;
co-chairing the Leaders’ Roundtable on Commercialization, a blueribbon panel set up by The Conference Board of Canada; and serving
on the boards of Canada Basketball, the United Way of Greater Toronto,
and Pathways to Education.
xv
Table of Contents
Foreword
by Dr. Anne Golden
1
CHAPTER 1—Introduction 9
Social Dynamics of Innovation and Creativity
15
Civic Engagement and Strategic Governance
19
Outline of the Monograph
21
CHAPTER 2—Innovation and Creativity in City-Regions
25
Introduction
27
Industrial Evolution and the Life Cycle of City-Regions
30
Diversity and the Emergence of an International Hierarchy
of Cities 40
Urban Agglomeration and the Concentration of Talent
and Creativity
44
From the “Creative Class” to the “Creative Economy”:
Cities as “Schumpeterian Hubs”
46
Specialization Versus Diversity: Some Final Observations
50
CHAPTER 3—Innovation, Talent, and Creativity in Canadian Cities
53
Introduction
55
Cities in the Canadian Urban System
57
Competition Between Toronto and Montréal for Dominance
of the Urban System
61
xvii
Innovation and Growth in Canadian Cities: Specialization,
Diversity, and Relative Size
64
The Role of Large Cities in the Innovation Economy
73
Innovation Patterns in Canada’s Medium-Sized and
Small Cities
80
The Role of Talent and Creativity in Canadian Cities
86
Creative Industries and Creative Occupations in
Canadian Cities
90
Immigration, Creativity, and Inclusion in Canadian Cities
102
Final Thoughts
105
CHAPTER 4—From Government to Governance
107
The Role of Civic Capital in Urban Economic Development
107
Introduction
109
Changing Patterns of Governance
114
Urban Governance in a Multi-Level Setting
117
Governance and Social Learning
121
Civic Capital and Urban Governance
123
Strategic Planning in the Urban Economy
130
From Government to Governance: Final Observations
134
CHAPTER 5—Urban Governance and Strategic Planning in
Canadian Cities
135
Introduction
137
Urban Governance and Civic Engagement in Canada’s
Largest Cities
138
xviii
Civic Engagement and Multi-Level Governance in the
Greater Vancouver Region
140
The Toronto Region: Strong Cities, Weak Region
146
Civic Engagement, Multi-Level Governance, and Strategic
Planning in the Montréal Region
153
Regional Governance in Ottawa
157
Prospects and Challenges for Urban Governance in
Mid-Sized Cities
163
Civic Engagement and Strategic Management in Waterloo
and London 163
Civic Engagement and Creative Planning in Halifax,
Nova Scotia
171
Civic Engagement and Strategic Planning in Canadian Cities:
Key Findings
174
CHAPTER 6—Challenges and Choices for Canadian Cities
177
Introduction
179
Industrial Structure and Economic Growth in City-Regions
180
Urban Economic Transformation Through Civic Engagement
185
Conclusion
190
From the Lecture: Anne Golden’s SIRP Lecture Comments
(presented on behalf of Judith Wolfson)
191
From the Lecture: Carl Zehr’s SIRP Lecture Comments
197
From the Lecture: David Pecaut’s SIRP Lecture Comments
203
From the Lecture: Panel Discussion and Q & A
213
xix
Foreword
by Dr. Anne Golden
C.M., President and Chief Executive Officer
The Conference Board of Canada
I
am privileged to introduce the work of Professor David Wolfe, The
Conference Board of Canada’s 2009 CIBC Scholar-in-Residence.
Since the early 1990s, economists have predicted that the world
is moving to a global economy—one that is based on the exchange of
information. Economists have also advised that industries built around
the production and distribution of knowledge will become key drivers
of our economy. But they warn that Canada is not competitive in these
emerging areas the way it has been in the natural resources sector. This
year’s devastating recession has driven these points home.
At The Conference Board of Canada, we are particularly concerned
that the vital contribution our cities make to national prosperity has not
been fully acknowledged. Nor has the role they are destined to play in
the new global knowledge economy been fully understood. Professor
Wolfe’s research helps to clarify this role.
There are still many questions to resolve about which elements are
most important in determining the economic performance of a city region.
Should reliance be placed on urban specialization—as Harvard professor Michael Porter claims? Do knowledge spillovers among clusters of
geographically concentrated groups of firms in similar or related industries make the most important contribution to growth? Or should we
trust in diversity—as the late urban expert Jane Jacobs believed? Does
the exchange of knowledge and complementary ideas across a variety of
firms generate the greatest return for those firms that are able to recognize
and capitalize on the newly forming knowledge bases?
Professor Wolfe argues that we have reached a stage where we
are ready to transcend this debate. He has found empirical evidence
to support assertions that both specialized and diversified industrial
structures stimulate economic growth. Dr. Wolfe is leading a fiveyear national study of urban industrial clusters, involving an extensive
research network of people across the country. In 21st Century Cities
in Canada: The Geography of Innovation, Professor Wolfe summarizes the key insights and findings from that study. He found that while
concentration and diversity can still be crucial, additional factors must
also be taken into account when considering the economic performance of cities. For each city, we need to consider its relative size, active
Foreword
3
economic sectors, fit in the evolving global hierarchy of urban centres,
state of the evolution of its industrial structure toward higher-end businesses, and services associated with the new knowledge economy.
Size does matter, Professor Wolfe found. Canada’s largest cities are
adapting to the new global economy while smaller cities struggle with
new challenges. However, it is encouraging to be able to report that
Professor Wolfe’s findings also offer hope to smaller cities. When they
grow into medium-sized cities, they too can become centres of innovation. Similar and related industries, and chains of suppliers, develop
within these medium-sized cities and form clusters of common interest.
And when this pattern is reinforced by support from government at all
levels and from progressive educational institutions, the city can move
forward as a centre of innovation and creativity.
Professor Wolfe’s monograph complements and builds upon earlier
work undertaken by the Conference Board. For several years now, the
Conference Board has explored the links among cities, productivity
growth, and innovation. In our 2006 report Canada’s Hub Cities: A
Driving Force of the National Economy, we used what economists call
“convergence theory” to examine GDP—measuring per capita growth
in nine of Canada’s largest cities in relation to their hinterlands. We
found that these nine hub cities serve as the economic drivers of their
respective provinces, or in the case of Halifax, for the entire Atlantic
region. In fact, we show that when hub cities grow and prosper, the
surrounding communities grow at an even faster pace than the hub
cities themselves. We incorporated these findings into Volume III of
our Canada Project Report, Mission Possible, which highlighted the
importance of Canada’s cities to our nation’s future prosperity. We
emphasized that cities today are the crucibles of innovation and production centres of knowledge-intensive goods and services. And we placed
cities at the centre of the innovation dynamic, where brain-power
is concentrated and where the sharing of ideas is most intense due
to proximity.
Since 2007, the Conference Board has benchmarked the attractiveness of Canada’s 27 census metropolitan areas (CMAs) to answer
the question, “Do our cities have what it takes to attract increasingly
4
21st Century Cities in Canada
mobile skilled workers?” And in our City Magnets report, we showed
that the places with the highest rankings are also the places with high
in-migration.
In Professor Wolfe’s monograph, a central theme is the link between
a city’s ability to innovate—making effective use of local universities and social networks—and its approach to governance. Shifting to
knowledge-based economies from traditional industrial platforms is
difficult enough, but the current economic recession and restructuring
is accelerating the transformation. This is especially true in the manufacturing industries that have been a mainstay of cities in the Ontario–
Quebec industrial corridor.
Professor Wolfe is adamant that most cities do have the potential
to mobilize resources in pursuit of new, local-development strategies.
However, he stresses, their success depends on two factors. The first is
whether the city can adopt “strategic cooperation”—a flexible, innovative approach to local economic development that provides better alignment and coordination of available programs and policy instruments
across all three levels of government. The second factor is whether the
city can obtain a broader range of civic associations and actors—under
what the Conference Board and others are calling the “big tent”—and
involve them directly as active participants in the design and implementation of this strategic cooperation process. When the author says that
“governance matters,” he means that the administrative and political
structures governing the urban region must both be open to, and accept,
a new level of civic engagement.
For many readers, the most compelling chapter in Professor Wolfe’s
monograph involves the case studies that document how these new
models of urban governance and civic engagement are taking hold
in Canada’s cities. The stories of efforts in Vancouver, Montréal,
Toronto—as well as a number of mid-sized cities, such as London,
Hamilton, Halifax, and Waterloo—are fascinating, even inspiring. In
each case, the approaches are quite different.
The account of the progress of the Toronto City Summit Alliance
(TCSA), with which I was personally involved, underscores a view
that I have long held. Much depends on the leadership of civic
Foreword
5
entrepreneurs. Professor Wolfe’s dedication of this monograph to
Canada’s most extraordinary civic entrepreneur, David Pecaut, the
acknowledged dynamo of the TCSA, is therefore most appropriate.
The depth and scope of the evidence that Professor Wolfe has
analyzed and summarized for us in this year’s publication confirms the
thesis that cities have become the primary sites for innovation. His findings reinforce what some of us have argued for some time—that our
cities are different, they play different roles in what geographers call
the “urban system,” and that recognition of this significant variation
is essential.
Professor Wolfe spent considerable time in Waterloo. That’s because
he found a highly developed tradition of strategic cooperation and inclusion of non-governmental organizations and individuals in this midsized Ontario city. He believes Waterloo has been particularly astute in
identifying existing federal and provincial resources and programs that
the city could tap into, draw down to the community level, and use to
its advantage.
Other cities need more than merely aspiration to replicate the
Waterloo experience. Professor Wolfe shows that each individual city
has to follow a trajectory that grows out of its own history and circumstances. But other cities can certainly adopt the entrepreneurial spirit of
Waterloo. In a sense, Waterloo becomes the poster child for the kind of
“big tent” mixture of government and governance that Professor Wolfe
believes we must develop to create successful 21st century cites.
Professor Wolfe’s monograph reminds me of the lecture of our first
Scholar-in-Residence, Janice Gross Stein. Professor Stein set out her
vision of “networked federalism” to deal with the multiplying flows
of information that are an inherent part of globalization. She called for
non-siloed, horizontal decision making that brings all orders of government, as well as non-governmental organizations and individuals, into
“shared policy space.”
David Wolfe agrees that in a world of increasing policy complexity,
jurisdictional overlap, and constrained government resources, we need to
make room for all the key players. We need to find new ways of working
together to devise strategies that will secure Canada’s future prosperity.
6
21st Century Cities in Canada
He concludes by warning us not to be lulled into a false sense of security by global demand for our commodities. But in the end, the author’s
message is empowering and optimistic. Canada’s innovation agenda is
an urban agenda, both by necessity and by default. We can meet the
challenges of the 21st century and beyond—if we can find ways to be
truly inclusive and collaborative, and to align policies and programs of
all levels of government in support of the right strategies. Not an easy
task in Canada’s federal system . . . but not beyond our reach.
Foreword
7
1
Introduction
T
he economic shock of the past year has dramatized the
changing nature of Canada’s economy and the challenges that
lie ahead. The industries and resources that have powered
Canada’s growth for the past six decades are in flux, and the contours
of the next economy are still taking shape. The requests for government assistance from a growing number of economic sectors underscore the pressure these sectors face, but they also highlight the need
for strategic thinking about the future role of government support for
economic development.
The impossibility of satisfying all of these demands simulta­
neously suggests that governments need to align their policies more
effectively across competing jurisdictions and that they have to ensure
current and future investments in economic development have the maximum impact on the economic transition underway. Such an approach
requires that policy development and implementation be sensitive to
regional variations and that they consider the perspectives of the array
of local actors who are concerned about the economic prospects of the
communities where they live and work. A coordinated approach to
economic development at the regional and local levels requires an integrated perspective on policy planning at the governance level, cutting
across existing programs and levels of government, to achieve a greater
degree of policy alignment.
The impact of the current recession and the economic consequences
that flow from it are increasing the pressure on government to deploy
its resources more strategically to achieve maximum impact and facilitate the structural transformation needed. The task of responding to
these challenges in order to promote a more innovative and competitive economy that is also cognizant of the growing trend toward social
polarization demands a coordinated response across all three levels of
government in this country. However, our track record in this area is not
particularly impressive. One response is to adopt a scattershot approach
and liberally spread public resources across the country. An alternative
response is to align policy strategically to ensure that it is tailored to,
and suitable for, the specific capabilities and needs of individual cityregions across the country. Governments need to do the latter.
Chapter 1
11
Another consequence of the transition underway is that the importance of cities, where a significant proportion of economic activity in
Canada occurs, is bound to grow.1 As the processes of globalization
gathered steam from the mid-1970s onwards, manufacturing activity
has moved offshore driven by the search for lower cost production
sites, making the connection between cities and their economic base
of activity appear more tenuous. The containerization revolution of the
1970s was a critical innovation that facilitated this development, while
the diffusion of new information and communications technologies
in the following decade accelerated the trend with respect to service
activities. By the turn of the millennium, confident predictions were
being made about the elimination of space as an economic factor, or
the “death of distance.”2
Despite this trend, there is growing evidence to suggest that many
aspects of the contemporary global economy are making cities more
important as sites of economic activity and innovation. Paradoxically,
as certain aspects of the economy become more globalized in their
scale of operation, the local scale of activity assumes an even greater
significance. In Richard Florida’s apt phrase, “the world is spiky,”3 not
flat, and becoming more so all the time.
With each layer that is added—population density,
economic activity, and innovation—the map becomes
increasingly concentrated. . . . The world gets spikier
and spikier the farther you climb up the ladder of economic development, from producing basic goods to
undertaking significant new innovations.4
1
Natalie Brender, Marni Cappe, and Anne Golden, Mission Possible: Successful Canadian Cities,
The Canada Project final report (Ottawa: The Conference Board of Canada, 2007).
2
Frances Cairncross, The Death of Distance: How the Communications Revolution Is Changing
Our Lives (Boston: Harvard Business School Press, 2001).
3
Richard Florida, “The World Is Spiky,” The Atlantic Monthly (October 2005), p. 48.
4
Ibid., Who’s Your City? How the Creative Economy Is Making Where You Live the Most Important
Decision of Your Life (Toronto: Random House Canada, 2008), p. 30.
12
21st Century Cities in Canada
But as Florida recognizes, the converse side of these global spikes
are the valleys, where population, economic activity, and innovation are
far less densely concentrated. The spiky nature of economic activity
means that some regions, which already have a greater concentration
of economic activity, will do well, while others may fall behind. The
spikes are increasing in Canada’s urban economy as the rate of growth
of the largest cities rapidly outpaces that of the medium-sized and
smaller ones. However, our strong commitment to regional equalization and social equity means that policy solutions cannot be fashioned
to ensure prosperity in the spiky regions alone, but must take account of
the valleys as well. The challenge is to ensure that the policy supports
in place can be customized sufficiently to accommodate the different
needs and realities of the diverse regions of the country. In other words,
we must acknowledge that, in Canada, one size does not fit all.
Most Canadians live in city-regions. In its simplest terms, a cityregion is a continuous network of urban communities, whose “boundaries move outward—or halt—only as city economic energy dictates.”5
More precisely, it can be defined as “the presence of a core city linked
by functional ties to a hinterland. The nature of those ties . . . generally
includes a combination of economic, housing market, travel-to-work,
marketing, or retail catchment factors.”6 According to the 2006 Census,
nearly 25 million people—or four-fifths of Canada’s population—live
in urban areas and two-thirds reside in the 27 census metropolitan areas
(the large statistical areas that correspond most closely to the concept of
a city-region).7 Most population growth in Canada between 2001 and
2006 took place in city-regions. According to the Conference Board,
Canada’s 10 major city-regions accounted for 51 per cent of gross
domestic product (GDP) and 51 per cent of employment in 2005. Over
5
Jane Jacobs, Cities and the Wealth of Nations: Principles of Economic Life (New York: Random
House, 1984), p. 45.
6
Andrés Rodríguez-Pose, “The Rise of the ‘City-Region’ Concept and Its Development Policy
Implications,” European Planning Studies 16, 8 (September 2008), p. 1027.
7
Statistics Canada defines a census metropolitan area as an urban core with a population of at
least 100,000 and adjacent urban or rural areas that have a high level of economic and social
integration with the core.
Chapter 1
13
the previous decade, 65 per cent of the net new jobs created in the country
were located in the major city-regions and the level of output grew by
3.6 per cent annually in those cities, compared with only 2.9 per cent in
the rest of the country.8 Clearly, Canada is a highly urban society and
becoming more so with each passing decade. Its city-regions are not just
the dominant sites of economic activity; they are also the leading edges
of innovation that will generate the new ideas, new products, and new
industries that will drive the economy in the future.
However, city-regions are more than just locations where people
live and work. Cities are also social and political spaces that shape our
social, cultural, and political institutions. Any analysis of the factors
contributing to the current development of Canadian cities must include
this broader set of influences, in addition to the economic ones. We
need a better understanding of how the interplay between the economic
dimensions of urban centres and their social and political character
affects their overall pattern of development. The political decisions that
are taken about local strategies—to promote economic growth, expand
the talent base of the local economy, and reduce social inequality—
have important consequences for their economic performance.
Despite their underlying significance, recognizing the role of cityregions is not a particular strength of Canadian politics. Nor are cityregions well represented in the architecture of the federal system,
where the local “voice” is often absent from the table. As Janice Stein
perceptively argued in her 2006 CIBC Scholar-in-Residence lecture:
It is in cities that the intermingling of federal and provincial jurisdictions stands out most clearly, and it is
here that they are tested most sharply. It is impossible
to imagine that these overlapping jurisdictions could
be disentangled from our city-regions, which are at the
core of our future economic success.9
8
Brender, Cappe, and Golden, p. 5.
9
Janice Gross Stein, “Canada by Mondrian: Networked Federalism in an Era of Globalization.”
In Roger Gibbons, Antonia Maioni, and Janice Gross Stein, Canada by Picasso: The Faces of
Federalism (Ottawa: The Conference Board of Canada, 2006), p. 35.
14
21st Century Cities in Canada
At the same time, municipal boundaries rarely correspond to the
real economic geography of Canada’s city-regions. This jurisdictional
fragmentation compounds the pre-existing problem of the subordinate status of Canadian cities in the federal system. The result, as the
Conference Board argued in Mission Possible, is that, “[t]he difficulty
of coordinating local and regional—and even provincial and federal—
activities and policies is one of the most critical challenges facing all
our major cities.”10
The accelerating trend toward globalization and the emergence of a
more knowledge-based and creative economy pose a set of challenges
and opportunities for city-regions. Formulation of a suitable response
must begin with a better understanding of the current factors driving
innovation and growth in city-regions. This monograph addresses this
question by exploring three specific dimensions of the way in which
innovation and creativity contribute to the economic dynamism of cityregions: the nature of the innovation process in city-regions; the growing importance of talent attraction and retention to urban economic
development; and more inclusive processes for civic engagement and
policy development at the urban level. The following sections lay out
some of the relevant dimensions that will be explored.
Social Dynamics of Innovation and Creativity
Innovation is increasingly recognized as a social process; it depends
on interaction and social learning among economic agents. A substantial proportion of that innovation occurs via interaction between technology users and technology producers, or with supporting institutions.
The city-region is a critical scale for innovation and creativity because
spatial proximity between economic actors and the institutions that
support their activities enables the easy circulation of knowledge. As
Brian Kahin has eloquently argued:
10 Brender, Cappe, and Golden, p. 68.
Chapter 1
15
Conventional thinking is that location matters less
now, but this thinking again confuses information with
knowledge. In a flat world where information flows
easily and freely, virtual tools and virtual organizations are accessible to everyone. Advantage lies in the
ability to generate and manage knowledge in all its
recalcitrant complexity. The richness of [collocation]
provides a competitive edge against the world by offering the nuance and rich interaction that physical presence makes possible. Where smart, ambitious, creative
people get to know and trust each other, innovation is
“in the air.”11
The relationships that transform ubiquitous pieces of information
into commercially valuable forms of knowledge are underpinned by
the presence of local infrastructure for knowledge generation in cityregions: specialized educational and research institutions, unique support services for industry, and institutions that build and strengthen
networks among firms and other actors to expedite the circulation of
knowledge. At the same time, city-regions act as crucial hubs for tapping into global knowledge flows and disseminating that knowledge
and learning to their regional hinterlands.
Some city-regions benefit from specialization in activities in the
same and related industries, which generates positive effects related
to the concentration of suppliers, a dense labour market, and the spillover of ideas among related firms.12 Some observers also point to the
benefits of a diverse mix of economic activities. The urban economics
literature, following Jane Jacobs, suggests that ideas that are commonplace in one sector of the economy may be novel in another. Thus, the
opportunity for knowledge spillovers across economic sectors enhances
11 Brian Kahin, “Beyond the Box: Innovation Policy in an Innovation-Driven Economy,” Science
Progress [online]. (July 2009). www.scienceprogress.org/2009/07/beyond-the-box, p. 11.
12 Michael E. Porter, “Clusters and the New Economics of Competition,” Harvard Business
Review 77, 6 (November–December 1998), pp. 77–90.
16
21st Century Cities in Canada
the potential for innovation and the generation of new economic ideas
among local firms.13 However, a number of questions remain. There
is little agreement on the relative advantages of specialization versus
diversity, nor have discussions of these factors been linked to an understanding of the roles different cities play in a country’s urban system.
While the advantages of the largest city-regions as centres of innovative activity appear to be well established, there is less consensus on
the prospects for mid-sized and smaller urban regions in the evolving
urban system. While the continuing importance of global linkages to
local economic activity is recognized, there is still little understanding
of how these distant connections complement the local dynamics of
knowledge circulation in city-regions.14
The analysis presented in this monograph explores the relationship
between specialization and diversity in city-regions; the difference
size makes to the nature of economic activity in different cities across
the country, as well as to their economic performance; and, finally, the
way the global embeddedness of the Canadian economy and its cityregions affects the knowledge flows that contribute to innovation and
economic growth.
While scientific research and engineering capabilities have long
been seen as the keys to innovation and economic growth, there is also
recognition that additional skills associated with the cultural and creative occupations are important for economic success. This insight suggests that cities with local concentrations of highly skilled and creative
workers have a potential advantage in attracting and retaining globally
mobile investment, as well as in generating indigenous growth in the
local economy. It is the social characteristics of particular places that
make them attractive to talented workers who are of primary importance in sustaining local economic growth and prosperity. Such talent is
attracted to cities that can provide a wide range of employment opportunity, a critical mass of cultural activity and social diversity, and a
13 Jane Jacobs, The Economy of Cities (New York: Random House, 1969).
14 James Simmie and P. Wood, “Innovation and Competitive Cities in the Global Economy: Introduction to the Special Issue,” European Planning Studies 10, 2 (March 2002), pp. 149–151.
Chapter 1
17
welcoming attitude for newcomers. There is also increasing evidence
to indicate that the scientific and engineering occupations, traditionally seen as essential for the growth of an innovative economy, are
also attracted to cities with strong concentrations of creative industries
and occupations.
A related attribute of city-regions that makes them centres of dynamism and growth is their role as centres for the production of a range of
cultural products, including products as diverse as books and magazines,
television shows, films and videos, live and recorded music, new media,
advertising, design, live theatre, and museums. The common attributes of
these products are their high degree of creative content and the distinctive pattern of innovation required to make them. Innovation in the creative and cultural industries is driven by the generation of content or the
creation of products, embodying a high degree of design, which are then
brought to market through a particular medium—be it books, television,
film, music, art, or digital media. Developing, attracting, and retaining
the talent capable of creating this content is critical to the vitality of these
industries. A common feature of most of these industries is the projectbased nature of their production process, which relies on the presence of
a large, diverse talent pool that can be assembled quickly and easily into
project teams to create individual productions. As Allen Scott and others
have argued, cities have long been the pre-eminent sites for the creation
of such cultural products.15
The migration of skilled labour has been an important factor in
shaping the character and geography of Canadian cities. However, it
has had a highly differentiated impact on specific places, according to
city size and relative location. Immigration has contributed to the dynamism of the largest metropolitan areas, especially Toronto, Vancouver,
Montréal, Calgary, and Ottawa, by providing a key source of human
capital and talent. Immigration flows have enriched the cultural economies of these city-regions by endowing them with distinctive forms
of cultural capital. However, the benefits of immigration have not
15 Allen J. Scott, The Cultural Economy of Cities: Essays on the Geography of Image-Producing
Industries (London, and Thousand Oaks, Calif.: SAGE Publications, 2000).
18
21st Century Cities in Canada
been equitably distributed across all city-regions in the country. Midsized and smaller cities, especially those more distant from large urban
regions, have limited prospects of benefiting from these flows of immigration. Many are trying to cope with the loss of their own talent to
other parts of the country, as well as their inability to attract and retain
educated migrants from other countries.
While there is growing acceptance that the pursuit of a talent-based
strategy is essential for tapping into the full knowledge resources of
the labour force and the creative potential of cities, some question the
degree of social inclusion in this approach. A key challenge for urban
policy is to create the broader conditions to foster access to the education, skills, and labour market opportunities that all groups in society
need to realize their full creative potential. Several questions follow
from this idea. For instance, how effectively are concerns regarding
social inclusion being incorporated into the talent-based development
strategies adopted by Canadian cities? An equally pressing concern is
how this approach applies to mid-sized and smaller cities. While many
larger urban regions exhibit a strong quality of place that can attract
and retain talented labour, will smaller urban regions with less distinctive characters be relegated to the status of also-rans?
Civic Engagement and Strategic Governance
The need to forge better linkages among relevant institutions and
associated actors is a critical factor in urban economic development
policy. The Conference Board describes the shift from a top-down, government-knows-best approach to a more inclusive, multi-sectoral style
of local governance as “the big tent.”16 Yet, recognizing the importance
of collaboration and coordination to effective policy development is only
part of the challenge; one must also understand the conditions that contribute to their emergence and development. Among those conditions is
16 Brender, Cappe, and Golden, p. 76.
Chapter 1
19
the emergence of strong, dynamic civic leaders with the ability to forge
broad and inclusive local development coalitions. A development coalition is a place-based coalition of a diverse cross-section of social and
economic groups committed to the economic development of a specific
city-region.17 Effective policy coordination also requires a conception of
policy learning that focuses on the capacity of community-based organizations and local governments to devise strategies to promote urban
economic growth in a knowledge-based and innovation-intensive era.18
The recognition that policy outcomes depend on the interaction
among a wide range of social and economic actors—including subnational governments, business, and not-for-profit organizations—has
led to a growing focus on the role of governance as opposed to government. Central to the concept is the development of styles of governing
in which the boundaries between public and private actors, and even
across different levels of government, are blurred. Despite the inherent
challenge in moving to a more participatory and inclusive “big-tent”
approach to urban governance, there is evidence that such initiatives
are underway in a growing number of cities and city-regions across the
country. A number of them are engaging in strategic planning processes
to identify and mobilize their knowledge assets and chart a new direction for their local economy. The monograph draws on case studies
from across the country to investigate the specific conditions that facilitate or inhibit the emergence of effective collaborative leadership and
the broadly based civic engagement that integrates community stakeholders into a more strategic approach to urban economic development.
This approach can succeed only if the prevailing structures of urban
governance provide the necessary support to allow strategic planning
exercises to be effective.
17 Michael Keating, “Governing Cities and Regions: Territorial Restructuring in a Global Age.” In
Allen J. Scott, ed., Global City-Regions: Trends, Theory, Policy (Oxford and New York: Oxford
University Press, 2001), p. 379.
18 Neil Bradford, Cities and Communities That Work: Innovative Practices, Enabling Policies
(Ottawa: Canadian Policy Research Networks, 2003), p. 11.
20
21st Century Cities in Canada
Despite the number of initiatives underway across the country, there
is concern about whether cities can mobilize sufficient policy and fiscal
resources to alter their economic futures. However, even though such
civic resources are necessary if a city-region is to develop an alternative
urban development strategy, they are not enough. The reality remains
that the preponderance of fiscal resources fall within the purview of
the two senior levels of government, not Canada’s urban governments.
The key challenge remains to effectively coordinate public expenditures across all three levels of government in support of these goals and
objectives. That will require a more effective degree of policy alignment
across Canada’s multiple levels of governance. The mobilization of a
broad range of community-based actors can help align the expenditure
of public resources in the city-region in support of the strategic vision
that has been developed. This bottom-up, demand-pull perspective on
urban economic development can be thought of as the equivalent of a
“market signal” that tells senior levels of government where and how to
establish priorities and allocate funds.
Outline of the Monograph
The economic future of Canada’s city-regions will be profoundly
affected by their performance on each of the dimensions discussed
above: the social nature of the innovation process in city-regions and
how it varies across cities of different sizes; the social foundations
of talent attraction and retention, and the extent to which these tasks
are carried out in a socially inclusive manner; and the degree of civic
engagement and the extent to which the relevant social and economic
actors gather under a “big tent” to formulate strategies for managing
their economic future.
The monograph investigates each of these themes in greater depth
by drawing on a broad selection of case studies on the role of innovation and creativity in the economic performance of 16 cities and cityregions across the country, undertaken by members of the Innovation
Chapter 1
21
Systems Research Network over the past five years.19 The goal is to
develop a better understanding of the factors that influence the pattern
of urban economic development, particularly with respect to the role of
innovation across a range of large, medium-sized, and small Canadian
cities, and the role of talent and creativity, both cultural and scientific,
in fostering urban economic growth. The monograph explores the
implications of the shift from government to governance for the way
policy is formulated and implemented.
The second chapter surveys the findings and insights of recent
research from North America, Europe, and Asia on the role of innovation and creativity in city-regions. It argues that the underlying social
dynamics of city-regions exert a strong influence on their innovative
performance and economic outcomes. While national institutions play
an important role in setting and delimiting the context for urban economic development, the social and economic qualities of city-regions,
the relative degree of specialization and diversity in their industrial
structure, and the ways in which they are linked to the global economy
are critical to their overall economic performance. There is growing
evidence that the activities associated with the cultural and creative
industries, as well as industries that rely on design, are growing in significance in the emerging cognitive-cultural economy. However, this
pattern is playing out differently across cities of different sizes, with
critical implications for their economic future.
The third chapter examines the relative standing of large, mediumsized, and small cities in the Canadian urban system. It draws on a
range of case studies of different-sized cities to analyze how their relative degree of specialization or diversity affects their prospects for
economic growth. Particularly important is the changing role of the
creative and cultural industries in city-regions of different sizes, and
the way in which talent attraction and retention are influencing the
19 More details on the project can be found online at www.utoronto.ca/isrn/city-region_initiative/
index.html. Detailed conference presentations and conference papers on the results of the
individual case studies can also be found online at www.utoronto.ca/isrn/publications/NatMeeting/
index.html.
22
21st Century Cities in Canada
economic performance of these cities. The chapter also draws on data
for all of Canada’s census metropolitan areas and census agglomerations to examine changes in their economic performance along some of
the key dimensions of innovation and creativity.
The fourth chapter explores the broader literature and research on
changing patterns of governance in urban regions. It examines the role
of civic leadership in building local civic capital and forging cohesive
development coalitions that can pursue strategic approaches to urban
economic development.
The fifth chapter draws on the Canadian case study literature to
analyze the recent experience of cities of differing sizes in increasing
civic engagement and adopting a more strategic approach to fostering
innovation and urban economic development. It also examines the
case studies for evidence that the three levels of government are beginning to work across their respective jurisdictions to align their policies
more effectively.
The monograph concludes with a summary of the key themes that
emerge from the analysis and their implications for the changing role
of urban regions in Canada’s economic future. It explores the degree
to which the intersection of past trajectories of development and the
strategic choices made by city-regions affects their capacity to respond
to periods of rapid economic change. As noted above, a more strategic
approach to urban economic development requires not just a new category of policy, but also a new style of policy development. Not all
cities will be equally successful in making this transition; the adoption
of such an approach is influenced by the legacy of their past pattern of
economic development, as well as their social and political capacity to
forge new ways of working with the senior levels of government and
aligning their initiatives with federal and provincial policies.
Chapter 1
23
2
Innovation and Creativity
in City-Regions
Introduction
A
s the world economy becomes more globalized, cities and
regions need to create distinct advantages for their local economies. The introduction of new ideas in knowledge-intensive
production and service activities is the basis for economic performance and growth in the industrial countries. The interactive nature of
the innovation process means that city-regions are the critical space in
which social learning takes place. The dense concentration of economic
actors in cities offers multiple opportunities for contact, interaction,
and the exchange of ideas among highly skilled people. That makes
cities more, not less, important as sites for innovation and creativity in
knowledge-intensive goods and services. The foundation for economic
success in a globalized world involves not just the capacity for innovation and creativity, but also the broader qualities of urban places that
support that innovation and creativity. The decisions made by individual
cities that strengthen or undermine these qualities are likely to have a
major impact on their future well-being.
Despite the growing recognition of the importance of city-regions as
the loci of knowledge creation and innovation, a number of questions
remain. First, there is considerable debate about how the economic structure and particular characteristics of urban economies affect innovation
and knowledge circulation within cities. Some analysts maintain that
the most important dynamics are those generated by the advantages that
accrue to firms located in dense clusters of similar and related firms—in
other words, dynamics generated by a greater degree of specialization
within city-regions. Conversely, others emphasize the potential for
innovation that arises when new forms of knowledge circulate among a
wide range of sectors within a city—in other words, from the dynamics
associated with greater diversity in the economic structure of a cityregion. In this latter view, ideas that are commonplace or widely
accepted within one particular sector of the economy may have novel
value in another. The possibility of this cross-fertilization arising from
an economic structure with greater variety enhances the potential for
the generation of new ideas and innovation within the local economy.
Chapter 2
27
The question of whether industrial specialization or diversity has the
greater potential for innovation and growth within city-regions has
critical implications for their ability to adapt in a knowledge-based and
globalizing economy.
A second question concerns the relative advantages or disadvantages
associated with city size or urban agglomeration. There is widespread
agreement that the largest city-regions enjoy certain advantages as centres
of innovation and creativity, but they are also subject to greater costs that
result from rising land prices and the congestion associated with larger
size. The advantages derived from large, diversified economies, strong
research institutions, and a deeper talent pool may be offset by negative
consequences of urban agglomeration that weaken the social fabric of
these city-regions. There is an observed correlation between the overall
size of a city and the economic well-being of its inhabitants. In other
words, people in larger cities tend to enjoy higher average incomes,
but only up to a certain point. Statistical analysis undertaken by the
Organisation for Economic Co-operation and Development (OECD)
indicates that the relationship between urban size and income levels
changes once the population of a city-region grows beyond 6 million
people. At this point, the negative effects associated with greater congestion, higher commuting costs, increased logistics costs, higher rents,
environmental degradation, and rising social inequality outweigh the
positive effects associated with urban concentration.1 Bigger does not
necessarily mean better in all cases, and “the growth capacity of metroregions should not be over-estimated as metro-regions are not always
synonymous with success.”2 The underlying criterion for success in the
emerging knowledge-based economy is whether city-regions, regardless
of their size, are able to build the local institutions to generate the kind
of activities that nurture innovation in a knowledge-intensive economy.
Which economic activities are sufficiently valuable to offset the effects
of these “diseconomies” of scale in large city-regions? While there
1
Organisation for Economic Co-operation and Development (OECD), Territorial Reviews: Competitive Cities in the Global Economy (Paris: OECD, 2006), p. 51.
2
Ibid., p.15.
28
21st Century Cities in Canada
is only one city-region in Canada approaching this scale, the Greater
Toronto Area, few would deny that some of the negative effects
associated with this increased size have already begun to make an
unwelcome appearance.
At the same time, there is less agreement on the prospects for midsized and small cities. Small and medium-sized cities often operate
from a more specialized industrial base concentrated in a few economic
sectors. That offers some advantages, but the future of these cities is
closely tied to the specific industries in which they are specialized. The
industrial structure of such cities increases the risk that they will be
locked into declining sectors or obsolete technologies that may be supplanted by newer ones. One consequence is that the economic fate of
these cities may depend less on their degree of specialization than on the
specific sectors in which they are specialized. At the same time, the speed
or flexibility with which their economies can shift from declining sectors
to emerging ones may have a disproportionate effect on their economic
future. The ability of city-regions to adapt to and absorb rapid changes in
technology, and the competitiveness of their industrial mix, are critical
to their economic future.
Finally, the social changes associated with these economic trends will
also have an important effect on the future state of our cities. Quality of
place is an important factor underlying the social dynamics and economic
performance of city-regions. Urban areas that foster positive attitudes
toward tolerance and social diversity are more likely to succeed in
attracting and retaining highly skilled and creative workers.3 Yet there is
also evidence that while some people in large urban centres benefit from
highly skilled jobs in knowledge-intensive industries, a significant number
remain trapped in low-wage, contingent jobs, leading to increased social
polarization. There is good reason to believe that the growing bifurcation
3
Richard Florida, Charlotta Mellander, and Kevin Stolarick, “Inside the Black Box of Regional
Development—Human Capital, the Creative Class and Tolerance,” Journal of Economic Geography 8, 5 (2008), pp. 615–649.
Chapter 2
29
of employment opportunities in urban centres is less than coincidental,
as the low-wage workers are concentrated in the range of services occupations necessary to support a large-scale urban system.
This chapter draws on recent empirical research and conceptual
analysis to explore these issues. It sets out a framework for understanding
the implications of city size, the relative degree of specialization and
diversity in cities, the contribution of a talented and creative workforce,
and the dangers of increasing social polarization for the economic
performance of city-regions. The framework developed in this chapter
is used in Chapter 3 to analyze how these trends are currently playing
out across a range of Canadian cities.
Industrial Evolution and the Life Cycle of City-Regions
One of the defining features of contemporary economies is the central
role of knowledge and learning in creating economic value and determining competitive success. The literature on this point is abundant and
compelling: Innovation is a socially organized process that depends on
interactive, social learning among individuals and firms.4 The critical
issue is how the socially embedded nature of the innovation process
affects economic growth and development in an urban setting. A number
of theories have been advanced to explain the relative pace of industrial
growth and decline in city-regions. Traditional explanations of the factors
that affect the economic performance of city-regions have been framed
in terms of the origins and growth of urban centres; the relationship
between the concentration of firms in an urban economy and the growth
of local labour markets; the relative degree of specialization or diversity
that characterizes the economic structure of individual cities; and
the relative importance of lifestyle amenities and the quality of place
4
30
Bengt-Åke Lundvall, “Introduction.” In Bengt-Åke Lundvall, ed., National Systems of Innovation:
Towards a Theory of Innovation and Interactive Learning (London: Pinter Publishers, 1992),
pp. 1–19.
21st Century Cities in Canada
in increasing the attractiveness of particular cities.5 Recent research
suggests that these issues need to be considered within the context
of a broader set of changes that influence the economic performance
of city-regions. The additional factors include the relative size of the
individual city, the city’s point of insertion into an evolving global
hierarchy of urban centres, and the evolution of the city’s industrial
structure toward the growth of higher-level business services associated
with a more knowledge-intensive economy. The following discussion
surveys the influence that this range of factors exerts over the economic
performance of city-regions.
There is a close relationship between the locational choices of firms
and those of individuals, particularly people with the higher level of
educational qualifications and occupational skills that are in increasing
demand. Conventional theories of urban economic growth emphasize
the historical decisions made by firms regarding where to locate. These
decisions were often influenced by physical factors, such as the practical
necessity of locating near conventional modes of transportation such as
rivers, coastal harbours, or railway lines, or the advantage of operating
near rich endowments of natural resources. As transportation systems
improved in the post-war period, especially with the introduction of
intercity highway networks in the 1950s and 1960s and the deregulation
of airline travel in the 1970s, the relative weight of these historical factors
in determining urban location was reduced. Some researchers point
to the greater impact that the mobility of highly skilled and educated
workers attracted to locations with high levels of climatic or lifestyle
amenities has on urban growth.6 At the heart of this debate is a question
about how the locational choices of individuals intersect with and
reinforce those made by firms to contribute to the growth and dynamism
of modern cities: Do people choose to locate where they find the greatest
5
David A. Wolfe and Allison Bramwell, “Innovation, Creativity and Governance: Social Dynamics
of Economic Performance in City-Regions.” Innovation: Management, Policy & Practice, 10,
2–3, (October–December 2008), p. 172.
6
Edward L. Glaeser and Joshua D. Gottlieb, “Urban Resurgence and the Consumer City,” Urban
Studies 43, 8 (July 2006), pp. 1275–1299.
Chapter 2
31
number of job opportunities, or do businesses locate in city-regions with
the largest potential labour market? The debate has serious implications
for the type of policy levers that governments at all levels may deploy
most effectively to stimulate urban economic growth.
A related issue concerns the advantages that firms derive from collocating in cities with firms in similar or different industries, and which
type of structure contributes most to industrial innovation and economic
growth. One perspective emphasizes the benefits for urban economic
growth of specialization in similar or closely related industries, while
the alternative focuses on the advantages that flow from a diverse and
variegated urban environment. The first approach argues that the advantages created by a dense network of suppliers, a deep pool of skilled
labour, and the knowledge spillovers that occur among geographically
concentrated groups of firms in related industries make the most significant contribution to growth. These advantages are associated with a
greater degree of specialization in an urban economy. The advantages
are derived from factors that lie outside the boundaries of the individual
firm, but are embedded in the industrial sector found in a particular city.
This perspective draws on a tradition dating back to the late 19th century, which suggests that once a region or city establishes itself in a particular set of production activities, its chances for continued growth tend
to be high. Paul Krugman, building on a tradition that dates from the
work of Alfred Marshall in the early 20th century, suggests that three
types of benefits are created for firms located in the same city-region
that specialize in similar technologies or production techniques. The
first is the deep pool of specialized labour created by the concentration
of firms within similar industries, which makes it easier to hire people
with the specialized skills the firms require and attracts more workers to
the city-region because of the resulting employment opportunities. The
second benefit is the fact that a local concentration of firms in the same
industry can support a larger number of specialized providers of intermediate inputs or services, thus enabling firms to concentrate on their
areas of competence through the specialized division of labour in the
local economy. Finally, knowledge is transferred more easily among
firms located close to each other in a city-region than it is over longer
32
21st Century Cities in Canada
distances. The transfer of knowledge between firms in the same industrial
sector in the same city-region occurs through the mobility of specialized
labour among them, through the tendency of serial entrepreneurs to
establish a succession of firms in the same city, and through the “learningby-observing” effects of densely concentrated industries.7 Overall, firms
benefit from the process of industrial clustering, which increases sectoral
specialization in particular regions over time.8
The contrasting perspective, frequently associated with the work of
Jane Jacobs, suggests that new and innovative ideas often come from
different industrial sectors. Therefore, city-regions that are endowed
with a diverse range of different industries, rather than those that are
specialized in a smaller number of industrial sectors, have the conditions
that are most conducive to innovation and growth. Innovative ideas are
derived by applying knowledge that may be considered standard in one
sector to help solve problems or develop new products in another sector
of the local economy. From this perspective, larger city-regions, with a
broader cross-section of diverse industries, have a greater potential for
generating innovative new ideas and, as a result, enjoy faster rates of
growth and higher levels of innovation than do smaller ones. Jacobs also
suggested that competition among alternative sets of ideas embodied
in a diverse set of economic actors is more conducive to generating new
knowledge than the local monopoly over ideas that exists in a more
specialized urban economy.9
These competing views on the sources of urban economic growth
have stimulated a considerable amount of academic research that has
generated support for both sides of the argument, providing additional
fuel for the ongoing debate.10 The results of some initial studies
found greater support for Jane Jacobs’ hypothesis. An early study by
7
Paul Krugman, Geography and Trade (Cambridge, Massachusetts: MIT Press, 1991).
8
Gregory Spencer et al., “Do Clusters Make a Difference? Defining and Assessing Their Economic
Performance,” Regional Studies (forthcoming 2010).
9
Jane Jacobs, The Economy of Cities (New York: Random House, 1969).
10 Catherine Beaudry and Andrea Schiffauerova, “Who’s Right, Marshall or Jacobs? The Localization
Versus Urbanization Debate,” Research Policy 38, 2 (2009), pp. 318–337.
Chapter 2
33
Ed Glaeser and his collaborators measured employment growth in a
cross-section of manufacturing industries using data from 170 American
cities between 1956 and 1987. The researchers found that, at the industry
level for individual cities, “specialization hurts, competition helps, and
city diversity helps employment growth.”11 Feldman and Audretsch subsequently examined innovation patterns in knowledge-based industries
in the U.S. and found that the presence of complementary industries that
draw upon a common base of scientific knowledge provided a stimulus
for innovation. Furthermore, cities that have a greater degree of competition for new ideas are more supportive of innovative activity than
cities with a greater degree of concentration, which is consistent with
Jacobs’ suggestion. The degree of innovative activity tended to be
lower in cities that were primarily specialized in a particular industry,
whereas a stronger presence of complementary industries that drew
on a common base of scientific knowledge generated a higher level of
innovative activity.12
Conversely, a study by Vernon Henderson demonstrated that singleplant firms in a city benefited from their collocation with a greater
number of firms in their own industry, but there was limited evidence
to suggest that these firms benefited from the presence of other firms
in a diverse range of local industries other than their own. The study
thus found little evidence that firms benefit from the type of industrial
diversity suggested by Jane Jacobs. Henderson concluded that industrial
specialization in particular cities helps the firms involved realize greater
economies of scale, and benefit from lower rents and congestion costs.
However, the study also revealed an important finding related to urban
size: the economies of many smaller metropolitan areas tended to exhibit
a greater degree of specialization in more standardized manufacturing
activities—such as the production of textiles, food processing, autos,
11 Edward L. Glaeser, Hedi D. Kallal, Jose A. Scheinkman, and Andrei Shleifer, “Growth in Cities,”
Journal of Political Economy 100, 6 (December 1992), p. 1150.
12 Maryann P. Feldman and David B. Audretsch, “Innovation in Cities: Science-Based Diversity,
Specialization and Localized Competition,” European Economic Review 43, 2 (February 1999),
pp. 409–429.
34
21st Century Cities in Canada
steel and wood products—where the economic benefits associated with
specialization can be realized. Conversely, the economies of larger cities
tended to be more specialized in knowledge-intensive services, such as
finance, real estate, insurance, and newer industries, such as electronic
components and instruments.13
The extensive research in the field provides some evidence to support both perspectives: that the presence of specialized and diversified
urban economies contributes to the overall performance of city-regions,
but the two factors may act in different ways in different-sized
cities. A recent survey of the literature suggests a possible explanation
for the apparently contradictory results. The outcomes reported by
different studies may be the result of the specific industries selected
for examination. Those industries with a base in more traditional,
standardized methods of production tend to demonstrate the benefits
resulting from a greater degree of specialization than do sectors based in
high technology. The results are also affected by the range of indicators
selected as evidence of economic performance. Different indicators,
such as the level of employment growth, the degree of productivity
increase, and the amount of innovation, can have a different effect on
the results of the study. Most significant, however, is the suggestion
that part of the confusion may arise from the omission of time as a factor
in determining whether the economic benefits associated with specialization or diversity exert a more important influence on the economic
performance of firms in city-regions. In effect, “. . . the role of externalities
varies according to the maturity of the industry. Jacobs externalities
predominate in the early stages of the industry life cycle, whereas
Marshall externalities enter at a later point, and in the end, specialization
will, in fact, hinder economic growth.”14
This conclusion is consistent with other recent contributions, which
suggest that the introduction of an industry life cycle perspective, as well
as a better appreciation of the relationship between city size and diversity
13 J. Vernon Henderson, “Marshall’s Scale Economies,” Journal of Urban Economics 53, 1
(January 2003), pp. 1–28.
14 Beaudry and Schiffauerova, p. 334.
Chapter 2
35
or specialization, may provide a better understanding of the relative
contribution made by industrial specialization and diversification to
urban economic growth. The economic benefits associated with a more
diversified local economy play different roles in the innovation process
at various stages in the maturity of the industry, while differences in
population also affect cities’ ability to create and diffuse new knowledge.
In an attempt to reconcile the contradictory findings described above,
Gilles Duranton and Diego Puga have suggested that firms often
develop new products in the diversified, creative environment found in
larger urban centres, but as the technology and industry mature, there
is a strong incentive for them to relocate to more specialized cities
in the mass production phase of the industry’s life cycle in order to
exploit urban cost advantages. Larger city-regions tend to be more
diversified and knowledge-intensive than medium-sized and small
cities. Where large cities tend to have multiple specializations, mediumsized cities have significantly fewer.15 Related findings reveal that levels
of innovative activity are also strongly linked to city size, with R&D,
patenting, and major product innovations much more concentrated
in large urban areas.16
This insight is reinforced by an argument that links industrial activity,
economic fortunes, and city size. Large cities with a diversified industrial base are more insulated from the impacts of economic change,
while smaller ones with a narrower industrial base are more subject to a
life cycle of growth and decline.17 While a greater degree of specialization does stimulate the growth of some medium-sized cities, the outlook
for those cities is linked to the economic prospects of the specific sectors
in which they are specialized. Once the sectors lose their competitive
edge, the cities may lack the knowledge assets or the quality of place
15 Gilles Duranton and Diego Puga, “Diversity and Specialization in Cities: Why, Where and When
Does It Matter?,” Urban Studies 37, 3 (2000), pp. 533–555.
16 David B. Audretsch, “The Innovative Advantage of U.S. Cities,” European Planning Studies 10, 2 (March 2002), p. 170.
17 Elise S. Brezis and Paul Krugman, “Technology and the Life Cycle of Cities,” Journal of Economic
Growth 2, 4 (December 1997), pp. 369–383.
36
21st Century Cities in Canada
to compete or diversify their local economy into newer and expanding
industries. They are often confronted with the challenge of regenerating
their local basis for economic development without the institutional
capacity that can furnish a fresh supply of ideas and new sources of
growth. This suggests that ultimately the source of innovation and
economic growth for a city-region does not rest simply on the degree
of specialization or diversification in its industrial structure, but more
importantly on the resilience of the city-region in mobilizing its economic assets in the pursuit of a new basis for growth.
This insight suggests that variations in the ability of cities to create and
diffuse new knowledge appear to be important for the cities’ long-term
growth prospects, as well as their ability to adjust to changing economic
conditions and recover from a decline in the economic fortunes of the
industrial sectors in which they were specialized. Cities with a greater
specialization in the kinds of knowledge-intensive service activities
associated with the growing information economy tend to have stronger
economies than places without any specialization. That is not particularly surprising, given that the globally focused information sector is the
fastest growing part of the U.S. economy and is concentrated in its largest
metropolitan areas.18 The growing significance of the information
sector to the economic performance of individual cities is reinforced
by work on the geography of the Internet economy. The spatial
clustering of the Internet-related production of goods and services
is not distributed on the basis of population patterns, but according
to the geographic concentration of the information economy.19 Large
concentrations of the advanced producer services documented by
Matthew Drennan—finance, media, entertainment, health, technology,
and related industries—constitute the control centres of the information
18 Matthew P. Drennan, The Information Economy and American Cities (Baltimore: The Johns
Hopkins University Press, 2002), p. 6.
19 Matthew A. Zook, The Geography of the Internet Industry: Venture Capital, Dot-Coms, and Local
Knowledge (Malden, Mass.: Blackwell Publishing, 2005).
Chapter 2
37
economy. The growing impact of telecommunications and computer
networks reinforce these concentrations of high value-added producer
services in a few large metropolitan centres.20
The growing centrality of knowledge-intensive activity to urban
competitiveness suggests that the growth potential of cities increasingly depends on their ability to utilize their local knowledge assets to
develop greater specialization in growing knowledge-intensive areas of
economic activity. That introduces a distinctly Schumpeterian dimension into the analysis of urban economics that underlines the impact of
the capacity to innovate. New economy sectors are sustained by the continuous pace of innovation and learning needed to keep abreast of the
rapidly moving knowledge frontier in their industries. However, this
need for continuous innovation extends well beyond the manufacturing
sector of the economy. Analyses of the modern economy that are constrained by conventional 20th century definitions of industrial sectors
are being overtaken by the growing integration of manufacturing and
service activities: firms must be able to integrate their manufacturing
capabilities with more knowledge-intensive activities to maintain their
competitive edge.21 In an innovative economy where the knowledge
frontier is moving rapidly, dynamic cities are those able to draw on their
local knowledge assets and research infrastructure to reinvent themselves by moving from one field of specialization to another. In this
transition, existing industries may provide the essential building blocks
for the emergence of a new innovative industry, because the skills
and talents that have accumulated over time in the city may furnish
critical inputs needed by the emerging industry, as has been the case with
20 Manuel Castells, The Internet Galaxy: Reflections on the Internet, Business, and Society (Oxford
and New York: Oxford University Press, 2001), pp. 222–231.
21 James Simmie and Peter Wood, “Innovation and Competitive Cities in the Global Economy,
European Planning Studies 10, 2 (March 2002), pp. 149–151.
38
21st Century Cities in Canada
the digital media industry.22 The successful development of these new
industries and clusters, many of which involve information-intensive
activities, is a path-dependent process, which builds on the distinctive
knowledge and industrial bases of individual cities. As a result, the ability
of individual city-regions to marshal their local knowledge assets and
develop local concentrations of expertise in emerging technology areas
may be a good indicator of their prospects for resurgence and growth. As
two experts put it, “[T]he important question may not be specialization
versus diversity but whether a city has specialized in the right thing at
the right time.”23
The capacity of individual cities to effect this transition to newer
and more information-intensive forms of industrial activity does not
just depend on the functioning of autonomous market-based processes;
it is also affected by the cities’ institutional and political structures. The
emergence of new technologies and industrial sectors is often associated
with a corresponding set of changes in the industrial geography of particular cities and regions. It is not surprising that the new information
technologies or biotechnologies tend to be associated with names such as
Silicon Valley, San Diego, Austin (Texas), or Research Triangle Park—
places that scarcely registered on the industrial map of the U.S. prior
to 1970. However, the ready association of these industries with upstart
metropolitan areas often resulted from the ability of local business,
and civic and political leaders to take advantage of the opportunities
created by the emergence of new technologies.
At the same time, this transition poses significant economic challenges
for the older, established metropolitan areas in the U.S., Europe, and
Canada that dominated the previous industrial era. These cities were once
the pinnacles of economic growth and prosperity to which other
urban regions aspired: “[T]he Silicon Valleys of the Second Industrial
22 Shauna G. Brail and Meric S. Gertler, “The Digital Regional Economy: Emergence and Evolution
of Toronto’s Multimedia Cluster.” In Hans-Joachim Braczyk, Gerhard Fuchs, and HansGeorg Wolf, eds., Multimedia and Regional Economic Restructuring (London and New York:
Routledge, 1999).
23 Michael Storper and Michael Manville, “Behaviour, Preferences and Cities: Urban Theory and
Urban Resurgence,” Urban Studies 43, 8 (July 2006), p. 1250.
Chapter 2
39
Revolution had names like Akron, Detroit, Pittsburgh, and Rochester.”24
While some older industrial cities in the U.S. have experienced recent
economic growth and resurgence due to their ability to shift to knowledgeintensive activities, others have not. Cities and regions that remain
locked into traditional specializations in mature manufacturing and are
unable to capitalize on their existing knowledge assets or mobilize their
local endowments of human capital face greater challenges in effecting
this transition. However, as noted at the outset, this capacity is very
much determined by the structure and the operation of their local civic
and political institutions—a subject that will be examined in greater
depth in Chapter 4.
Diversity and the Emergence of an International
Hierarchy of Cities
The relation between the size of a city-region and its economic prospects is not determined solely by its relative standing within the national
economy, but also depends on its place within an emerging hierarchy
of global or world cities. In the early 1970s, Canadian economist
Stephen Hymer suggested that the growing predominance of multinational corporations in the global economy was likely to have a
corresponding effect on the stratification of cities around the world,
creating a new global division of labour between geographic areas
corresponding to the vertical one within the firm. It would result in a
concentration of those occupations with responsibility for corporate
decision making within a few of the world’s major cities—such as New
York, London, Paris, Frankfurt, and Tokyo—supported, in turn, by a larger number of regional hubs. He maintained that the structure of income
24 Sean Safford, Searching for Silicon Valley in the Rustbelt: The Evolution of Knowledge Networks in Akron and Rochester, working paper (Cambridge, Mass.: MIT Industrial Performance
Centre, 2004), p. 16.
40
21st Century Cities in Canada
and consumption in those major cities would match the distribution
of status and authority, with the citizens of these global capitals enjoying
the best jobs and the highest rates of remuneration.25
In the decades since then, this provocative insight has been expanded
upon in the growing literature on the stature and importance of “world
cities” or “global cities.” In a seminal paper, John Friedman formulated
a hypothesis about the emerging character of world cities as the basing
points for global capital in the spatial organization of production activities
and markets. He suggested that the resulting linkages made it possible to
order world cities into a spatial hierarchy.26 According to Saskia Sassen,
the fundamental dynamic at work “is that the more globalized the economy becomes, the higher the agglomeration of central functions in a
relatively few sites . . . the global cities.”27 The position of these cities
in the global hierarchy is determined not only by the role they play
in coordinating the processes of production and distribution of goods
around the world, but also by their role in providing the increasingly specialized services that large, complex firms require to manage a spatially
distributed network of offices, factories, and distribution centres.
Increasingly, these global cities have also become the key sites for
innovation in the financial services industry and the development of new
financial instruments, which have been two of the most notable features
of the global economy since the 1980s. Rather than being distributed at
random around the world, as some enthusiastic supporters of the digital
revolution maintained,28 these high-end financial and information
25 Stephen Hymer, “The Multinational Corporation and the Law of Uneven Development.” In Jagdish
N. Bhagwati, ed., Economics and World Order From the 1970s to the 1990s (London: CollierMacmillan, 1972).
26 John Friedman, “The World City Hypothesis,” Development and Change 17, 1 (January 1986),
pp. 69–83.
27 Saskia Sassen, The Global City: New York, London, Tokyo (Princeton, N.J.: Princeton University
Press, 2001), p. 5.
28 Frances Cairncross, The Death of Distance: How the Communications Revolution Is Changing
Our Lives (Boston: Harvard Business School Press, 2001).
Chapter 2
41
services have in fact become ever more concentrated in the central
business districts of a few leading cities that are specialized in the production of producer and financial services.
Below this narrow tier of truly global cities is a wider range of urban
centres with a concentration of diverse knowledge-intensive production
and service activities that act as the economic hubs of their respective
national economies and serve as the principal nodes linking those economies into the global economy.29 James Simmie argues that knowledgeintensive innovation is concentrated in a minority of the largest urban
regions for several reasons. While innovative urban regions draw on
their own knowledge assets, the ability to capture both local and global
knowledge flows—“local capacity and international connections”—is
increasingly necessary to reduce the uncertainty inherent in the innovation
process. The ability of innovative firms to capture market share outside
their own region is linked to their capacity to generate new products and
services that draw on external sources of knowledge to a greater extent
than less innovative companies do. The most successful cities are those
that “are able to combine both rich local knowledge spillovers and international best practice in the design and specifications of innovation.”30
International gateway cities—such as Paris, London, Tokyo, New
York, and Los Angeles—located at the peak of the urban hierarchy
achieve a higher level of economic performance because of their access
to large pools of highly specialized and technical workers and the wide
range of innovative firms located in the cities. They play a central role as
knowledge hubs—both for their countries and for the wider world—due
to their ability to attract exceptional talent, and to capitalize on global
and local sources of knowledge, much of which flows through their
local companies.
29 James Simmie, “Innovation and Urban Regions as National and International Nodes for the
Transfer and Sharing of Knowledge,” Regional Studies 37, 6 & 7 (August 2003), pp. 607–620.
30 Ibid., “Knowledge Spillovers and Reasons for the Concentration of Innovative SMEs,” Urban
Studies 39, 5 & 6 (May 2002), pp. 885–886.
42
21st Century Cities in Canada
However, these leading cities are not the only sources of innovation.
Regional hubs, such as Montréal, Toronto, Boston, and Milan, are also
highly competitive and play an important role in the global hierarchy.
So do national and regional hub cities that share certain critical features.
They contain high proportions of elite business and political leaders with
the authority to make local investment decisions, which gives these urban
areas a greater degree of autonomy. With their large populations, these
cities also enjoy the benefits of economic agglomeration due to the concentration of a wide range of knowledgeable collaborators from different
disciplines who can contribute to the innovation process.31
Specialized knowledge transfers occur to a disproportionate extent
among the minority of cities at the top of the emerging international
hierarchy. Knowledge transfers between places such as Silicon Valley,
Route 128 in Massachusetts, Berlin, Stockholm, Greater Southeast
London, Baden-Württemberg, and Île de France occur “because they
are often repositories of leading-edge knowledge in the activities in
which they are specialized.”32 Medium-sized cities that are specialized
in a narrower range of industrial activities can serve as hubs for their
regional economies, but they have more limited access to global knowledge flows and trade. The most dynamic medium-sized cities, which
make the most effective use of local institutional research supports
(universities) and social networks, are able to specialize successfully in
knowledge-intensive industrial activities.33
31 Simmie, “Knowledge Spillovers and Reasons for the Concentration of Innovative SMEs.”
32 Ibid., “Innovation and Urban Regions as National and International Nodes for the Transfer and
Sharing of Knowledge,” p. 617.
33 Safford.
Chapter 2
43
Urban Agglomeration and the Concentration of
Talent and Creativity
Another view of the underlying determinants of urban dynamism and
economic growth focuses on the crucial role of talent and creativity. The
critical link between innovation, personalized knowledge exchanges,
and economic growth makes the most important locational asset a dense
labour market of highly educated and creative workers—what Cooke
calls “regional talent pools of global significance”—with the potential to
attract and embed globally mobile investment, and generate innovative
growth.34 This view suggests that the local attributes that attract talented
workers are of paramount importance in determining local economic
prosperity. Such talent is attracted to and retained by cities, but not just
any cities; those that offer rich employment opportunities, a high quality
of life, a critical mass of cultural and entertainment activity, and social
diversity are said to exert the strongest pull.35
A different line of argument maintains that the causal link between
concentrations of creative and talented workers and regional economic
growth may in fact be reversed. The preference of firms for locating in
regions with large, diversified economies may be the primary factor in
attracting and retaining large concentrations of creative workers, thus
stimulating urban growth and innovation. “Though person-embodied talent remains a critical input into innovation, it needs to be considered in
the context of the other factors discussed above, such as city size, industry
specialization, local institutional infrastructure, and knowledge flows.”36
Recent theories about the connection between the skill levels of
creative workers and the economic performance of cities, such as
Richard Florida’s idea of the “creative class,” identify the presence of
knowledge-intensive industries in the city by measuring occupational
categories rather than the industrial composition of the local economy.
34 Philip Cooke, “Regional Innovation, Entrepreneurship and Talent Systems,” International Journal
of Entrepreneurship and Innovation Management 7, 2/3/4/5 (2007), pp. 117–139.
35 Glaeser and Gottlieb.
36 Wolfe and Bramwell, p. 177.
44
21st Century Cities in Canada
The creative class—people whose jobs add economic value through
their creativity—includes knowledge workers, symbolic analysts, and
professional and technical workers. The key driver of innovation in the
creative economy is not restricted to scientific and engineering occupations, but includes a wide range of idea-generating and knowledgeintensive occupations. However, the definition of the “creative class”
suggests that certain occupations are more important for innovation and
regional development than others.
Florida defines the creative core of this new class as including those
whose work involves “producing new forms or designs that are readily
transferable and widely useful—such as designing a product that can
be widely made, sold and used; coming up with a theorem or strategy
that can be applied in many cases; or composing music that can be
performed again and again.”37 Recent research has also found positive
correlations between economic dynamism and agglomerations of artists,
other non-science occupations, and entrepreneurs. There are relatively
high correlations between artistic and entertainment occupations and
regional labour productivity.38 These findings suggest that urban labour
markets that contain a high concentration of artistic and creative occupations have an effect on urban economic growth similar to the effects
that Jane Jacobs ascribed to the presence of a diversified industrial base.
The positive contribution of human capital to urban growth rests on the
concentration of a diverse labour pool rich in the creative occupations
described above.
In addition, the more concentrated the talent, the more innovative the
output. One of the key advantages of cities in a globalized economy is
that they reduce the cost of knowledge transfer, and act as centres of idea
creation and diffusion where talent clusters. There is also a strong correlation between population density in general, and the density of creative
37 Richard Florida, The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life (New York: Basic Books, 2002), p. 69.
38 Timothy R. Wojan, Dayton M. Lambert, and David A. McGranahan, “Emoting With Their Feet:
Bohemian Attraction to Creative Milieu,” Journal of Economic Geography 7, 6 (2007), pp. 711–736.
Also Ann Markusen and Greg Schrock, “The Artistic Dividend: Urban Artistic Specialisation and
Economic Development Implications,” Urban Studies 43, 10 (September 2006), pp. 1661–1686.
Chapter 2
45
workers in particular, and metropolitan patenting activity, suggesting
that the population density of cities is a critical factor for knowledge
spillovers and innovation.39 Consistent with the findings that the largest
cities attract the strongest flows of knowledge, the effect of creative
density on innovation in the U.S. is found to be the greatest in cities
with a population of over 1 million. The relationship appears significant
only at that level, suggesting that the innovative advantages accruing to
large cities arise from the high concentration of technologically intensive
manufacturing sectors, as well as a disproportionate share of the highly
educated population.40 A related finding is that human capital levels
are becoming more unequally distributed across urban centres, giving
cities with greater concentrations of human capital a distinct advantage.
Glaeser and Gottlieb suggest that the resurgence of cities such as
London, New York, Boston, and Chicago in recent decades is partly
attributable to the increase in the importance of knowledge to economic
activity, so that “the biggest, densest cities appear to have a comparative
advantage in facilitating the flow of knowledge,” partly due to rising
consumer preferences for the sophisticated urban amenities, such as
entertainment, found in these cities.41
From the “Creative Class” to the “Creative Economy”:
Cities as “Schumpeterian Hubs”
Critiques of those studies that find a positive correlation between
urban concentrations of talent and human capital in urban centres and
the prospects for economic growth suggest that the high concentrations
of human capital may be the result of other positive externalities found in
these cities. The basis of the criticism is that the skills-led explanations
of economic growth espoused by Glaeser, Florida, and others may confuse
the nature of the relationship between the locational decisions of
39 Gerald A. Carlino, Satyajit Chatterjee, and Robert M. Hunt, “Urban Density and the Rate of Invention,” Journal of Urban Economics 61, 3 (May 2007), pp. 389–417.
40 Brian Knudsen, Richard Florida, Kevin Stolarick, and Gary Gates, “Density and Creativity in U.S.
Regions,” Annals of the Association of American Geographers 98, 2 (June 2008), p. 472.
41 Glaeser and Gottlieb, p. 1275.
46
21st Century Cities in Canada
individual workers—creative or otherwise—and those of firms. These
critiques argue that the primary determinant of economic growth in cities
is not the locational preferences of highly skilled and creative workers,
but of the concentration of firms that generate a dense labour market in
the first place. Pointing to the fact that economic resurgence has occurred
not just in Sunbelt cities, but also in “old, cold, dense city-regions”
such as Boston, Chicago, and New York, Storper and Manville argue
that recent population growth in cities—both older, northern ones and
new, southern ones—is linked to shifts in regional economic geography
and industrial activity. Workers are drawn to urban centres where
employment opportunities are the greatest, not just to those with lifestyle
amenities such as shopping and entertainment, which are ubiquitous
and readily available in most cities of a certain size:
Jacobs, Florida, and Glaeser are all on to something
in claiming that skills and amenities go together, but
they may have got their causality reversed. It is the fact
that these skilled workers are congregated in certain
places that leads to the presence of amenities and, in
some cases, makes the places tolerant and bohemian
as well.42
The argument that workers are attracted by employment opportunities more than by consumer, lifestyle, and social amenities suggests that explanations of urban economic growth need to be more
nuanced. While many industrial activities still occur in identifiable
sectors staffed by industry-specific occupations, many of the knowledge-intensive activities associated with new and emerging sectors of
the economy are less easily categorized. Changing patterns of urban
development are similarly ambiguous. Allen Scott describes shifts in
the nature of economic activity in terms of an emerging “cognitivecultural economy” where leading-edge economic growth and innovation are driven by “technology-intensive manufacturing, diverse
42 Storper and Manville, p. 1254.
Chapter 2
47
services, ‘fashion-oriented neo-artisanal production,’ and cultural
products industries.”43 The shift to this new form of production is
facilitated by the steady adoption of digital technologies for creating more customized goods through a less routinized organization of
the production process. In this view, the location choices of the creative class and related concentrations of human capital result from the
broader economic transformation to a knowledge-based economy that
is underway. The larger forces at work are the outcome of historically
conditioned trajectories of urban economic growth, where the supply
of, and demand for, labour evolve in a mutually reinforcing fashion.
The decline and resurgence of urban centres occur through the mutual
attraction of capital and labour in an interdependent spiral, but labour
is not the primary factor; local economic growth is anchored primarily
by the preferences of firms.
The interaction between the location decisions of firms and those
of highly skilled workers is strongly influenced, though not completely
determined, by city size. The “cognitive-cultural economy” is most evident in large metropolitan areas or “flagship hubs,” such as New York,
London, Paris, Amsterdam, and Tokyo, where production activities
are densely concentrated in firms with global market reach. However,
smaller cities, such as Nashville and Austin in the U.S., or Halifax in
Canada, have also developed large concentrations of artistic talent and
cultural activity. New information technologies permit the simultaneous
dispersion and concentration of economic activity, allowing producers
in various urban centres to benefit from the local knowledge flows in
a specific location, as well as to access global knowledge flows and
markets. Virtuous cycles of growth result as the number of producers
increases and local growth accelerates, leading to a deepening of localized
returns and the intensification of economic benefits. The emphasis on
growth driven by the virtuous interaction of skilled labour and firm
preferences characterizes large metropolitan cities as environments
where value chains underlying production, and the associated networks
43 Allen J. Scott, “Capitalism and Urbanization in a New Key? The Cognitive-Cultural Dimension,”
Social Forces 85, 4 (June 2007), p. 1466.
48
21st Century Cities in Canada
of economic actors, can adapt rapidly because of their efficiency at
coordinating and managing the processes that are the basis of innovation
and growth. In this sense, cities are acting like giant “Schumpeterian
hubs” of innovative activity, or “switchboards which permit the constant
creation and reshaping of the chains linking producers, consumers,
and different kinds of indirect players of the economy.”44 Signs of this
developmental dynamic are evident in large metropolitan areas, both
in rapidly growing “cognitive-cultural sectors” and in the formation of
“intra-urban industrial districts devoted to specialized facets of cognitivecultural production,” such as high-tech and software in the San Francisco
Bay area, movies in Hollywood, business and financial services in New
York and London, and fashion in Paris and Milan.45 These emerging
areas of cognitive-cultural production tend to be located in, or close to,
the central business district and often take advantage of low-cost space
available in abandoned industrial warehouses or factories. The conversion
of existing physical spaces associated with the older industrial economy
to new uses for the emerging cognitive-cultural economy illustrates the
critical way in which the spatial landscape of the inner city is reconfigured in dynamic urban regions.46
Despite the appeal of a talent-based approach to urban economic
growth and development, the uneven distribution of creative occupations
and highly skilled labour and the resulting increase in social disparities
in some of the most successful city-regions suggests there are inherent
limits to this approach to urban growth strategies. The rise of creative
cities in North America and Europe is a product of their role as places
with the ability to generate a high level of technological innovations and
economically useful knowledge. However, as noted above, this pattern
of urban development has also coincided with a number of negative
44 The Rationale for a Resurgence in the Major Cities of Advanced Economies [opening plenary
address]. Presented by Pierre Veltz at Leverhulme International Symposium 2004 on the Resurgent City. London: London School of Economics, April 19–21, 2004.
45 Scott, p. 1470.
46 Thomas A. Hutton, The New Economy of the Inner City: Restructuring, Regeneration and Dislocation in the Twenty-First-Century Metropolis (London and New York: Routledge, 2008), p. 11.
Chapter 2
49
economic and social side effects. “The emerging new economy in major
cities has been associated with a deepening divide between a privileged
upper stratum of professional, managerial, scientific, technical and
other highly qualified workers on the one side, and a mass of low-wage
workers . . . on the other side.”47 In fact, cultural and creative occupations often provide some of the most poorly paid jobs in large cities.
If local and regional governments are to pursue a talent-based strategy
for economic development, they must address the issue of social
disparities to ensure that the resulting strategy draws upon a wide
cross-section of skills and occupations in the labour force. A serious
concern is whether it is possible to pursue a socially inclusive economic development strategy at the local level while many of the key
policy levers that influence levels of education, occupational skills,
and the capacity for innovation remain in the hands of the senior levels
of government. A critical challenge for city-regions in Canada is to ensure
that the policy levers with the greatest effect on our urban economies
are aligned across all three levels of government and that there is an
appropriate recognition of the interconnection between urban economic
development and social inclusion.
Specialization Versus Diversity: Some Final
Observations
This chapter has surveyed the conflicting evidence on the virtues of
economic specialization and diversity for urban economic growth; the
emergence of a global hierarchy of cities around the world with ever
more differentiated economic roles; the relative importance of greater
concentrations of highly skilled and creative workers as attractors for
firms and industries; and the relationship between creative occupations
47 Michael Storper and Allen J. Scott, “Rethinking Human Capital, Creativity and Urban Growth,”
Journal of Economic Geography 9, 2 (March 2009), p. 164.
50
21st Century Cities in Canada
and creative industries as drivers of urban economic growth. While
there is no consensus in the varied and contradictory theories and
empirical studies surveyed above, some interesting patterns do emerge.
First, cities of different sizes play different roles in the broader
urban system of both their own national economy and the broader
global economy, with respect to specialization and diversification.
Larger cities with a more diverse range of industries and more extensive
research infrastructure are frequently, though not exclusively, the locations where new ideas leading to new products and industries are
developed. As the technologies and their associated production processes
evolve, firms often relocate to medium-sized cities with traditional cost
advantages. The evidence confirms this pattern has been particularly true
in the case of the traditional manufacturing industries that dominated
the urban economy of North America and Europe through the post-war
period of growth. There is less clear evidence to conclude it will necessarily hold true for the newer industries that have emerged over the past
two decades and are still developing.
Second, the spread of a globalized economy has also led to the concentration of higher-order financial and business services in larger cities
around the world, but a clear division has emerged between those cities
that operate on a truly global scale and those that act as national and
regional hubs for their hinterland economies. At the same time, there is
growing strength in a wide range of industries related to the design of
fashion and cultural products, many of which involve digital content.
The tendency for these industries to collocate with the existing concentrations of financial and business services has led some observers to
describe this development in terms of the emergence of a new cognitivecultural economy. While creative and talented workers locate in greater
concentrations in cities with strength in financial and creative industries,
the exact nature of the causal link between the two remains debated.
Third, what is clear is the growing importance of knowledge-based
activities, design, and the cultural industries to future economic growth,
especially in North American cities. While the evidence suggests that
large cities have certain advantages in this respect, the successful
development of new dynamic regions in the U.S. and elsewhere, with
Chapter 2
51
respect to both the production of new technologies and cultural activities,
suggests that is not a foregone conclusion. However, this tendency does
pose serious challenges for small and medium-sized cities that have
developed historically as more specialized manufacturing centres.
As we shall see in the next chapter, the Canadian urban system
is characterized by a relatively small number of large cities (none of
which have attained truly global city status) and a much larger number
of medium-sized and small cities. The analysis presented in this chapter
suggests that they will face increasing challenges in coping with the
transition to the emerging knowledge-intensive and innovative economy.
52
21st Century Cities in Canada
3
Innovation, Talent, and
Creativity in Canadian Cities
Introduction
O
ver the course of the past century, Canada has become an
increasingly urban society. As part of this transition, cities have
become the primary site for innovation within the Canadian
economy. However, in a country as diverse as Canada, not every city is the
same, nor do they play similar roles in the Canadian urban system. One
of the key challenges we face is to overcome the particularly Canadian
inclination to treat all parts of the country the same and, instead, recognize the substantial variation in the roles played by different cities across
the diverse regions of the country.
In a series of case studies of large, medium-sized, and small cities
across Canada, researchers from the Innovation Systems Research
Network (ISRN) have examined the considerable variation in the industrial structures of their economies, the different paths they have followed in their evolution toward a more knowledge-based economy,
and the way in which the dynamics of the urban economy are shaped
by the structure of the region in which a city is located.1 This variation
has important implications for the innovative capabilities of Canadian
cities and their potential to evolve into more knowledge-intensive
centres of production—described as “Schumpeterian hubs” in the
emerging cognitive-cultural economy. Even more significantly, it has
profound implications for the way in which policy should be formulated if we are to adopt the more strategic approach to urban economic
development discussed in the next chapter.
Most industrialized economies face the challenge of adapting to
more knowledge-based forms of production over the coming years—a
challenge that has been intensified by the impact of the current global
recession. Canada faces a particular hurdle in this respect. On the
one hand, the industrial sector must innovate to remain competitive,
just as its counterparts in other OECD countries must. On the other
hand, traditional manufacturing accounts for a decreasing portion of
1
Full details of the ISRN’s research program, as well as papers and presentations from the annual
meetings of the research network, can be found online at www.utoronto.ca/isrn.
Chapter 3
55
Canadian economic output, and two recent reports suggest Canada is
falling behind in terms of its innovative capabilities. Our continuing
dependence on resource-based sectors of the economy, along with a
lack of private investment in research and development in some of the
core manufacturing sectors, are part of the reason why Canada’s performance has consistently lagged on most measures of innovation.2
The impact of the current recession on many of our traditional manufacturing industries, as well as the virtual disappearance of some of our
major technology leaders in the more knowledge-intensive sectors of
the economy, underline the urgency of this economic issue.
The challenge of simultaneously recovering from the recession and
competing in a more knowledge-based economy accentuates the need
to understand how the innovation process operates across our diverse
regional and urban economies. Attempts to develop appropriate policies to
support the innovation capabilities of firms and industries at the national
level in Canada have foundered frequently on this problem of diversity.
While broad statistical analyses can identify some of the common features
of the innovation process across a range of industries, a more detailed
examination of the dynamics of the innovation process within individual
city-regions is essential for this understanding.
As we saw in Chapter 2, the prospects for urban economic growth
are closely tied to the issue of the relative degree of specialization and
diversity in the industrial structure of Canadian cities, and how it contributes to or constrains their capacity for innovation. Underlying this
issue is the debate that has preoccupied urban scholars: whether it is
economically more effective to be specialized in a few things within
a regional or urban economy, or to be highly diversified. Jane Jacobs
maintained that a diversity of industrial sectors, especially in larger
cities, creates the opportunity for spillovers and cross-fertilization of
2
56
Council of Canadian Academies, Innovation and Business Strategy: Why Canada Falls Short,
Report of the Expert Panel on Business Innovation in Canada [online]. (Ottawa: Council of
Canadian Academies, 2009). www.scienceadvice.ca/innovation.html; Science Technology and
Innovation Council, State of the Nation 2008: Canada’s Science, Technology and Innovation
System [online]. (Ottawa: Science, Technology and Innovation Council, 2009). www.stic-csti.ca/
eic/site/stic-csti.nsf/eng/h_00011.html.
21st Century Cities in Canada
ideas, which in turn stimulates the generation of innovations that feed
the growth of new economic sectors, and contributes to the growth of
cities and higher standards of living.
The ISRN case studies have examined the nature of the innovation process across a range of Canadian cities. In particular, they have investigated
the pattern of knowledge flows that generate the new ideas that sustain
the process. The results suggest that in most established industrial sectors,
especially those found within small and medium-sized cities, knowledge
flows occur largely within the contours of the existing industrial sector or
cluster, or along the supply chain that provides key inputs to a particular
firm or industry. Key ideas can come from local research institutions, such
as post-secondary institutions, public and private research laboratories,
and research consortia. More often than not, hiring students from local
post-secondary institutions or drawing employees from a common labour
market is the most effective way to circulate ideas among a group of firms
within a city-region. At the same time, the globalization of the economy
means that relatively few industrial sectors or clusters are self-sufficient
in terms of their sources of ideas. However, the local circulation of knowledge that does occur tends to happen within a particular sector or cluster.
This pattern differs significantly from that found in larger cities,
especially the three largest Canadian ones, where a concentration of
creative and cultural industries co-exists alongside more knowledgebased and research-intensive ones, in a manner similar to that suggested by Jacobs. These cities provide some evidence of the emerging
cognitive-cultural economy, but serious questions remain about whether
the policy supports in place are adequate to ensure continued success
and vibrancy, as other cities around the globe undergo a similar economic transition.
Cities in the Canadian Urban System
Cities do not exist in isolation but as part of the regional economy
in which they are located, as well as in relation to other cities in the
national economy. The economic standing of an individual city and its
Chapter 3
57
long-term prospects are influenced by its relative position within the
urban system, which is defined by its spatial relationship with other
cities. The factors affecting the prospects for a particular city are not
confined to its local, or even regional, context but include a broad set
of factors within the context of the urban system as a whole. The urban
system is the organizational dynamic that underlies the economic and
human geography of the country. Different-sized cities play different
roles in Canada’s urban system. A clear understanding of those differences is necessary to formulate effective economic development
policies targeted at the level of cities. Each city in the urban system
“represents a unique combination of population size, demographic
structure, economic specialization and rate of growth that together
define the opportunities open to each resident.”3
Canada’s urban system is distinguished by its relatively large number
of small cities, and only a few large ones, and by the substantial differences between those larger cities. Large cities within the urban system
are clearly differentiated from the medium-sized and small ones by
their more diversified economic base. The 10 largest cities—Halifax,
Montréal, Ottawa–Gatineau, Toronto, Winnipeg, Regina, Saskatoon,
Calgary, Edmonton, and Vancouver—generate a disproportionate share
of the national wealth and dominate the regional hinterlands in their
respective parts of the country. In 2005, these cities accounted for 51 per
cent of gross domestic product (GDP) and 51 per cent of employment in
Canada. Between 1995 and 2005, 65 per cent of the 3.1 million net new
jobs created in Canada were located in these cities.4
Although the 10 cities vary considerably in size, each (with the
exception of Ottawa–Gatineau) is deemed to be a hub city that acts
as the primary economic driver of its respective provincial or regional
economy. The share of provincial output accounted for by these hub
cities has been increasing over time, and they currently account for
3
Larry S. Bourne and Jim Simmons, “New Fault Lines? Recent Trends in the Canadian Urban
System and Their Implications for Planning and Public Policy,” Canadian Journal of Urban
Research 12, 1 (June 2003), p. 24.
4
Brender, Cappe, and Golden, p. 5.
58
21st Century Cities in Canada
at least 45 per cent of their respective provincial economies. (When
there is more than one hub city in a province, the two cities combined
account for at least 45 per cent).5 The Conference Board of Canada
argues that these hub cities face major challenges—while they are
expected to drive economic growth, they lack the investment and political autono­my to fully develop this capacity.
Using a slightly different yardstick, a recent report, Large Cities
Under Stress, included two additional cities, which have populations
between 700,000 and a million, as large cities—Québec City and
Hamilton. The report argues that these cities are clearly differentiated
from smaller ones by several critical factors: “They are powerful magnets
for the young and highly educated, . . . they are the dominant gateways
for new immigrants, the command and information centres for the economy, and the focal points of global connections.”6 Despite the privileged
status of these cities within the Canadian urban system, none is substantial enough to have attained a significant position in the global urban
hierarchy, with only one city—Toronto—in the 10-member “beta” group
of world cities (no Canadian city is ranked in the topmost “alpha” group)
and the 12-member “well-rounded global cities” category.7
The increasing role of the largest cities in the Canadian urban system, and the challenges it poses for the country as a whole, is highlighted in a recent analysis of trends in the urban system over the past
four decades. Pierre Filion notes that the traditional distinction between
the core industrial cities and the more distant cities, referred to as the
“heartland-hinterland” distinction, is on the wane. Over this period,
it has been displaced by a growing differentiation between Canada’s
largest cities and its medium-sized and small ones. As this disparity
5
Mario Lefebvre and Natalie Brender, Canada’s Hub Cities: A Driving Force of the National Economy, The Canada Project (Ottawa: The Conference Board of Canada, 2006), p. 4.
6
Enid Slack, Larry Bourne, and Heath Priston, Large Cities Under Stress: Challenges and Opportunities, report prepared for the External Advisory Committee on Cities and Communities
(Toronto: Authors, March 3, 2006), p. 1.
7
Brender, Cappe, and Golden.
Chapter 3
59
continues to grow, he postulates, the urban system will become more
bifurcated, with a growing concentration of population and economic
opportunities in the largest cities at the expense of the rest:
The Canadian urban system of tomorrow will be
polarized, confronted at once with steep urban growth
and decline. . . . [t]he future will advantage Toronto,
Montréal, Vancouver, Ottawa–Gatineau, Calgary and
Edmonton. Urban areas within the orbit of these regions
will also enjoy rapid growth.8
These cities will also benefit from their attractiveness as centres for
the continuing flows of immigration that will be the primary source of
population growth in the future. Their increasing size and economic
influence will afford them greater weight in our political system as
well, to the disadvantage of small and medium-sized cities. The smaller
and medium-sized cities that are more dependent on relatively few
areas of industrial concentration may be more vulnerable to external
economic shocks, which can adversely affect their economic status.
This suggests that a major policy challenge for the urban system as a
whole will be to ensure a balanced distribution of economic growth and
economic opportunities across the country.
A defining feature of the urban system is the extent to which the
urban corridor stretching from Windsor to Québec City, and containing
Canada’s two largest urban areas, dominates the country as a whole. It
contains a significant share of the manufacturing economy, as well as
over 60 per cent of the total urban population.9 The relative concentration of manufacturing industries within this narrow corridor cuts two
ways—witness the impact of the current recession on the automotive
8
Pierre Filion, “Growth and Decline in the Canadian Urban System: The Impact of Emerging Economic, Policy and Demographic Trends,” GeoJournal [online]. (March 4, 2009). www.springer.com/
geography/human+geography/journal/10708.
9
Larry D. McCann and Jim Simmons, “The Core-Periphery Structure of Canada’s Urban System.”
In Trudi Bunting and Pierre Filion, eds., Canadian Cities in Transition: Local Through Global
Perspectives (Don Mills, Ont., and New York: Oxford University Press, 2006), pp. 76–96.
60
21st Century Cities in Canada
clusters concentrated in the key cities from Oshawa to Windsor in
Southern Ontario. The Metropolitan Outlook, recently released by The
Conference Board of Canada, shows that some of Canada’s small and
medium-sized cities with the heaviest concentration in manufacturing
and automotive production are being punished the most by the current
economic recession. Oshawa’s economy, which is heavily dependent on
auto production, is forecast to decline by 2.5 per cent in 2009. Kitchener–
Waterloo, with a more diversified economy, is forecast to decline by
2.6 per cent. St. Catharines–Niagara is expected to suffer a decline of
2.7 per cent due to a fall in both manufacturing output and tourist activity. London is facing a decline of 2.8 per cent, unprecedented in its recent
history. Given the expectation that Canada’s automotive industry will
be radically reshaped by the current restructuring, the pressure on these
manufacturing-dependent urban centres to shift their local economy to
more knowledge-intensive forms of production will be all the greater.10
Competition Between Toronto and Montréal for Dominance of the
Urban System
If we examine the relative position of individual cities within the
urban system more closely, we observe significant differences in their
trajectory of economic development, as well as their relationship to
their regional hinterland. The early development of Canada’s urban
system can be traced to the commercial conflict between two competing metropolitan centres—Montréal and Toronto—for control over the
trade of the St. Lawrence River waterway and its continental hinterland. Throughout this period, both cities competed for access to the
hinterland and sought to attract a larger share of new immigrants and
inward investment. Until the end of the Second World War, Montréal
was the dominant urban economy in Canada, reflecting its initial locational advantages as the chief eastern port at a key juncture of the
St. Lawrence–Great Lakes waterway, its growth as a railroad hub from
the mid-19th century onwards, its proximity to leading American urban
10 Alan Arcand et al., Metropolitan Outlook 2: Economic Insights Into 27 Canadian Metropolitan
Economies (Ottawa: The Conference Board of Canada, 2009).
Chapter 3
61
centres (especially Boston and New York), and its control over the
national capital markets. Prior to the 1960s, Montréal was the primary
transportation and communications centre of the country and home to
the largest companies in these sectors.
Toronto emerged to challenge Montréal’s dominant position within
the urban system after the Second World War, aided by the post-war
economic boom that saw Canada’s trading patterns shift from an east–
west to a north–south basis. In the early post-war period, Toronto’s
growth was stimulated by the transition from a wartime to peacetime
footing and the influx of foreign branch plants into Southern Ontario,
many of which located their Canadian head offices in the Toronto
region. Additional growth came from the emergence of aerospace,
auto, and telecommunications industries. This trend was reinforced by
the signing of the Canada–U.S. Auto Pact in 1965, which stimulated
the growth of the automobile assembly and parts industry in Southern
Ontario over the next three decades. Economic geographer Michael
Ray argues that the growing predominance of American subsidiaries
in Southern Ontario in the post-war period can be explained by the
“economic shadow” concept, which is based on the relative distance
between the U.S. city in which the corporate head office is situated and
the Canadian location of its subsidiary. Using data from the 1960s, he
demonstrated that Toronto provided the optimal market location for
American subsidiaries and that only 8 of 210 metropolitan areas in the
U.S., with head offices controlling Canadian subsidiaries, had more
subsidiaries in Montréal than in Toronto.11
Toronto’s lead over Montréal as the dominant city within the urban
system was secured in the 1970s, when the conflict over Quebec’s
place in the Canadian federation accelerated the exodus of many leading financial institutions from the province. According to Polèse and
Shearmur, the loss of financial and other higher-order business services
to Toronto accentuated the relative importance to the Montréal economy of industrial manufacturing, as well as more research-intensive
11 D. Michael Ray, “The Location of United States Manufacturing Subsidiaries in Canada,”
Economic Geography 47, 3 (July 1971), pp. 389–400.
62
21st Century Cities in Canada
sectors such as pharmaceuticals and aerospace that benefited from
high levels of research spending and supportive government policies.
Toronto, in contrast, has increasingly become the Canadian city-region
most specialized in financial and other sources of management information. It serves as the leading node integrating Canada into national
and international networks.12
While Montréal and Toronto are the two largest cities in Canada’s
urban system, they are not the only important ones. Other hub cities
within the urban system play key roles as providers of high-order or
specialized services within their region; as the locations of regional
or even national head offices for key companies; as centres for the
financial services, cultural-creative, or media industries; or as critical
nodes in the regional transportation network. Nowhere is that more
evident than in Vancouver, Canada’s third major city. Vancouver differs significantly from the other two—and, indeed, from most other
industrial cities in North America—due to its economic origins as the
regional metropole within the staples economy of British Columbia,
based on the extraction and processing of fishing, forestry, and mining
resources. Within this regional economy, Vancouver served as a centre
for the control and distribution of the staple goods produced by these
industries. The influx of major U.S. multinational corporations into
the B.C. economy further consolidated Vancouver’s role as the control centre for the provincial resource economy. From the mid-1970s
onwards, as the leading staples industries in B.C. experienced strong
declines, Vancouver’s economy became decoupled from its resource
hinterland and the city began evolving into a modern centre of the
cognitive-cultural economy that bears a stronger affinity to other West
Coast cities in North America than to the more traditional manufacturing centres in the Québec City–Windsor corridor.13
12 Mario Polèse and Richard Shearmur, “Culture, Language, and the Location of High-Order
Service Functions: The Case of Montréal and Toronto,” Economic Geography 80, 4 (October
2004), pp. 329–350.
13 Trevor Barnes and Tom Hutton, “Situating the New Economy: Contingencies of Regeneration
and Dislocation in Vancouver’s Inner City,” Urban Studies 46, 5&6 (May 2009), pp. 1252–1255.
Chapter 3
63
As the cases of Montréal and Toronto demonstrate, a city’s relative
position within the urban system can shift over time due to changes in
the underlying importance of its regional hinterland, the advent of new
industries based on technological change, or shifts in transportation
economics resulting from new modes of transportation.14 Despite its relatively smaller size and the loss of key financial activities to cities in Central
Canada, Halifax retains a key position within the urban system due to its
historic, and current, role as the leading commercial centre of Atlantic
Canada. Conversely, although Winnipeg served as the major gateway
into Western Canada from the late 19th until well into the 20th century,
its position was gradually usurped by Calgary and Vancouver over the
latter half of the century, due to the rise of the energy industry and the
revolution in air transportation that linked Vancouver more easily into
the national economy. Hamilton is roughly the same size as Winnipeg,
but it has never occupied the same place in the urban system due to its
location within the penumbra of the Greater Toronto Area and its competition from other manufacturing centres in Southern Ontario, such as
Kitchener–Waterloo.
Innovation and Growth in Canadian Cities:
Specialization, Diversity, and Relative Size
Analyses of the sources of urban growth and productivity in Canada
over the past decade lend support to the broad findings of the previous
chapter. Canadian cities are differentiated by their relative standing
within the urban system, as well as by the industrial structure on which
the local economy is based. Studies by Statistics Canada show that
industrial diversity varies significantly in different-sized cities across
the country, with larger cities enjoying a more diverse economic base.
Conversely, cities with the smallest populations tend to have more
specialized economies. However, the relationship between population
14 Slack, Bourne, and Priston, p. 14.
64
21st Century Cities in Canada
size and industrial diversity is not a simple linear one. As smaller
cities grow, their economies diversify rapidly, beginning to level off as
the population reaches a half million people. There are two reasons for
this trend: first, the growth of a city may be driven by the emergence
of new industries within the local economy, which partly accounts for
the city’s more diverse economic base; and, second, the local market
of an urban economy increases as the population grows, which creates
demand for the products of a more diverse range of local industries.
However, it should be noted that some cities, such as Kitchener–
Waterloo, are highly diversified despite their relatively small size.15
The relationship between the size of a city and the diversity of its local
economy can be clearly seen in Chart 1.
Canada’s larger cities are also more likely to be home to the more
creative and innovative industries. Recent research found that creative
industries, as well as those that depend on scientific research, are concentrated more heavily in larger cities across the country. There is a
high correlation between the presence of a diverse local economy and
a concentration of creative industries.16 The implication of this finding
is that the kind of knowledge needed for creative activities—knowledge based on a high degree of subjectivity, interpretation, and human
experience—is more likely to be generated in an urban environment
that is culturally rich and economically diverse. A large, diverse urban
economy is more suited to stimulating and supporting those industries
associated with the emerging cognitive-cultural economy. This finding
has important implications for the development of policy aimed at supporting the development of urban economies.
An alternative way of looking at the relative degree of specialization in Canadian cities is through the examination of industrial clusters.
Researchers from the ISRN have identified 255 individual clusters spread
15 Desmond Beckstead and Mark Brown, From Labrador City to Toronto: The Industrial Diversity of
Canadian Cities, 1992–2002, analytical paper, Cat. No. 11-624-MIE, No. 003 (Ottawa: Statistics
Canada, 2003).
16 Gregory Spencer, The Creative Advantage of Diverse City-Regions: Local Context and Social
Networks, Ph.D. thesis (Toronto: University of Toronto, 2009).
Chapter 3
65
Chart 1
Industrial Diversity
Industrial Diversity (Entropy Measure)
160
Kitchener
Vancouver
Hamilton
Edmonton
140
Toronto
Montréal
Calgary
120
100
Ottawa
80
60
40
20
0
0
1
2
3
4
5
6
Population 2006 (millions)
Source: ISRN Indicators Database.
across 19 different cluster types in 140 cities and city-regions defined
as urban areas by the Census of Canada.17 These clusters exhibit a distinct regional pattern reflecting the industrial geography of Canada.
(See Table 1.) As expected, the majority of manufacturing clusters are
located along the urban corridor stretching from Windsor to Québec
City. (See Exhibit 1.)
A significant proportion of the resource-based clusters are found
in Alberta (oil and gas), Quebec (forestry), and British Columbia (forestry). We see consistent patterns in the distribution of clusters across the
Canadian urban system. Toronto, Montréal, and Vancouver have the largest
17 The methodology used to identify these clusters and more detailed analysis of their economic
impact can be found in Greg Spencer, Tara Vinodrai, Meric S. Gertler, and David A. Wolfe, “Do
Clusters Make a Difference? Defining and Assessing Their Economic Performance,” Regional
Studies (forthcoming 2010).
66
21st Century Cities in Canada
Moncton
Montréal
Chapter 3
Ottawa–Gatineau
Kingston
St. John's
•
Halifax
•
•
•
•
•
Québec City
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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•
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•
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Table 1
Clusters, by Cities
•
5
•
6
2
0
3
0
10
•
4
•
1
(cont’d on next page)
67
•
•
Edmonton
Vancouver
Source: ISRN Indicators Database.
•
•
•
•
•
l
•
•
•
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•
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•
•
•
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21st Century Cities in Canada
Toronto
Ag
68
Table 1 (cont’d)
Clusters, by Cities
4
•
•
•
•
•
•
•
11
Exhibit 1
Cluster Map
Chapter 3
69
Source: ISRN Cluster Database, 2006.
number of clusters. Resource-based clusters are predominantly located in
smaller cities, whereas manufacturing clusters are present in city-regions
of every size. With the exception of higher education, which is relatively
evenly distributed, service-based clusters are situated overwhelmingly in
large urban centres. The results suggest that although clusters exist in a
variety of urban settings, those that are research or knowledge intensive
(such as biomedical; creative, cultural, and new media; finance; and information and communications technology [ICT] services) tend to develop in
large urban settings consistent with the findings on diversity.
The research examined how the presence of clusters in an urban
economy affected the economic performance of the region. An analysis
of 43 cities and city-regions in Canada revealed a strong positive relationship between the proportion of total employment in clusters and the
average employment income in the city. (See charts 2 and 3.)
Chart 2
The Relation Between Average Income and Clustering in Canadian Cities
Local average annual income (total; C$ 000s)
45
40
Ottawa–Hull
Windsor
Oshawa
R2 = 0.4468
35
Montréal
30
Chatham–Kent
25
Cape Breton
20
15
0
10
20
30
Local employment in clusters as a percentage
of total local employment, 2001 (per cent)
Source: ISRN Indicators Database.
70
21st Century Cities in Canada
40
50
Chart 3
Cluster Concentration by City
Bubble size = population
3
Median annual full-time employment income, 2005 (C$ 000s)
Number = # of clusters
55
Ottawa–Gatineau
4
50
Hamilton
45
Kingston
4
1
4
40
Winnipeg
TroisRivières (0)
35
Calgary
7
London
6
12
Kitchener
Vancouver
3
3
11
Halifax
5 St. John’s
Saskatoon
0
Saint John Québec City
2 Moncton
2
Toronto
7
6
Edmonton
10
Montréal
30
-10
0
10
20
30
40
50
60
Percentage employment in clusters, 2006 (per cent)
Source: ISRN Indicators Database.
This finding reinforces the argument that relatively few of Canada’s
cities have achieved the size and scale to derive the full benefits that
flow from a diversified urban economy. Yet a broader cross-section of
cities is sufficiently specialized in a few key industrial clusters to reap
the benefits that clustering bestows on an urban economy.
Further confirmation of the economic benefits that flow from the
clustering of manufacturing activities is provided by a Statistics Canada
study that examined the effects of specialization on plant productivity
and urban economic growth. Using a variety of measures, it explored
Chapter 3
71
the degree to which collocating with firms in the same industry contributed to higher levels of productivity for firms in that industry. The study
found that the productivity of manufacturing plants was higher in cities
with a strong supply of the specialized upstream sectors that provided
critical inputs for the firms in the industry. Productivity was also higher
in plants located in cities that contained a deep pool of labour that the
firms in the industry could draw on. Finally, plant productivity benefited
strongly from the knowledge spillovers within a local cluster, to the
extent that locating within a 10-kilometre radius of establishments in the
same industry had a positive effect on overall performance.18
The way in which different-sized cities contribute to innovation and
growth across a range of industry sectors can also be seen in a related
set of studies using data from the Canadian Survey of Innovation in
Manufacturing. Researchers focused on the degree of uncertainty in
the firms’ competitive environment as a strong influence on where they
choose to locate. Firms faced with a higher degree of uncertainty in
terms of their competitive environment tend to locate in a larger city
where the presence of a diverse array of supporting industries can help
to counteract or offset that instability. Conversely, firms primarily interested in offsetting their need for highly specialized labour skills benefit from locating in an urban environment with a strong complement
of firms in similar and related industries. Establishments confronted
with a greater degree of uncertainty in their competitive environment,
as well as those that consider innovation an essential part of their competitive strategy, are more likely to locate in larger cities. In contrast,
establishments preoccupied with ensuring they have adequate access to
a strong base of necessary skills in the local labour market are likely
to locate in specialized urban environments, but not necessarily in the
largest cities.19
18 John R. Baldwin, Desmond Beckstead, Mark Brown, and David L. Rigby, Urban Economics
and Productivity, Economic Analysis Research Paper Series, Cat. No. 11-F0027-MIE, No. 045
(Ottawa: Statistics Canada, 2007), p. 28.
19 William Strange, Walid Hejazi, and Jianmin Tang, “The Uncertain City: Competitive Instability,
Skills, Innovation and the Strategy of Agglomeration,” Journal of Urban Economics 59, 3 (May
2006), pp. 331–351.
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21st Century Cities in Canada
These findings are consistent with Pierre Therrien’s conclusion that
the concentration of research and knowledge capabilities in larger urban
centres supports the conditions that contribute to radical innovations
(major technological breakthroughs or the introduction of radically
different products to the market), whereas smaller centres provide an
environment that supports incremental or process innovations, the kind
more likely to occur in already established industries.20 This evidence
from Statistics Canada’s Survey of Innovation confirms the view that
larger cities, which are home to a diverse economic base as well as
a strong research infrastructure, provide the best environment for
developing the new ideas that form the basis of new products and emerging industries. In contrast, small and medium-sized cities are more
likely to support the growth of firms and industries that draw on an
established knowledge base and depend on the supply of external inputs
likely to be provided in a cluster of similar and interrelated firms.
The Role of Large Cities in the Innovation Economy
While the general expectation is that the largest cities in Canada
should display similar evidence of more diversified economies, the
industrial structures of Vancouver, Toronto, and Montréal are actually
quite different, and they seem to be moving along different pathways
toward the development of a cognitive-cultural economy. Montréal
and Toronto remain similar in terms of the underlying structure of
their respective economies, with the exception of the higher-end financial and producer services. Data from the 2006 Census show that the
two largest cities are evenly balanced in terms of the proportion of
their local economies based in manufacturing, which accounts for
13.5 per cent of the labour force in both cities. Vancouver has a considerably smaller proportion of its labour force employed in manufacturing (8.5 per cent). Furthermore, the location quotient (a measure
of employment concentration) for manufacturing in Vancouver is
only 0.71, well below the quotient of 1.13 for Toronto and 1.14 for
20 Pierre Therrien, “City and Innovation: Different Size, Different Strategy,” European Planning
Studies 13, 6 (September 2005), p. 863.
Chapter 3
73
Montréal.21 Toronto has a significant lead over both Montréal and
Vancouver in higher-order services, with 7 per cent of the labour force
employed in the finance and insurance sector (and a location quotient
of 1.72), compared with 4.8 per cent of the labour force in Vancouver
and 4.6 per cent in Montréal. Calgary and Ottawa, the two other
cities with a population of over 1 million, are much more specialized
than the three leading ones, with 6.5 per cent of Calgary’s labour force
employed in mining and oil and gas extraction (a location quotient of
4.6) and 21.2 per cent of Ottawa’s labour force employed in public
administration (a location quotient of 3.7).
Vancouver’s urban economy began to transition out of its traditional
role as the regional metropole for the British Columbia resource economy in the 1970s. A major consequence of this decoupling was the
decline in the amount of resource processing within the city, as well
as a reduction in the number of corporate head offices. Vancouver’s
decline as a regional metropole was compounded by the migration to
Calgary of the local venture exchange, which had traditionally specialized in the financing of speculative mining companies. Conversely,
there was a dramatic increase during the 1980s in Vancouver’s role as a
destination for overseas investment and the migration of entrepreneurs
from Taiwan and Hong Kong, which accelerated the city’s integration
into the broader economy of the Pacific Rim. The redevelopment of
Vancouver’s central business district as an area strong in new digital
media and related cultural industries has been reinforced by a number
of emerging areas of strength in the broader metropolitan economy in
fuel cells, biomedical research, and wireless technologies. Despite the
different development trajectory it has followed, Vancouver’s economy reflects certain trends also observed in Toronto and Montréal. As
Barnes and Hutton have noted, “Within the Canadian urban system,
21 The location quotient is a measure used to determine the size of a particular industry in a given
city or region. It is calculated by comparing the local share (most often of employment) of a
particular industry against the national share of the same industry. The simplest way to interpret
it is that a location quotient of 2.0 means that the industry is twice as predominant locally as it
is nationally. Conversely, a location quotient of 0.5 means it is half as predominant locally as it
is nationally.
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21st Century Cities in Canada
there are significant commonalities in terms of inner-city development
both with Toronto and Montréal, with regard to the larger processes of
industrial innovation, creative firm formation and the social reconstruction of the inner city.”22
The Toronto urban economy has experienced four major eras of
growth over the course of the post-war period. The first, from the
end of the Second World War to the mid-1960s, was characterized by
the rapid influx of foreign subsidiaries into Southern Ontario and the
expansion of the aerospace, auto, and telecommunication sectors, as
well as by substantial government spending on educational, physical,
and social infrastructure. The second era, from the signing of the Auto
Pact in 1965 to the Free Trade Agreement with the U.S. in 1988, was
marked by an extension and deepening of those sectors that had taken
hold in the earlier period, augmented by the flight of financial and
business services from Montréal to Toronto. The third era witnessed
a dramatic restructuring of the branch plant economy in Southern
Ontario generally, and the Toronto region more specifically, following the introduction of both the Canada–U.S. and North American
free trade agreements. The impact of this restructuring compounded
the effects of the technological changes that occurred from the mid1980s onward, leading to a dramatic loss of traditional manufacturing and clerical jobs, and increasing income polarization in the city.
The most striking indicator of the extent of the change is the decline
in the percentage of employment in manufacturing in the Toronto
region, from 24 per cent in the 1981 Census to just 13.5 per cent in
the 2006 Census. While some sectors, such as autos, aerospace, and
telecommunications, continued to expand in the late 1990s and early
2000s, the third era of post-war growth also saw the rapid expansion
22 Barnes and Hutton. Also Living on the Edge: Globalization of Emerging Technology Clusters in
Vancouver [paper]. Presented by J. Adam Holbrook and Brian Wixted at 6th Asialics International
Conference on Linkages in Innovation Systems: Global and Local Perspectives. Hong Kong: July
6–7, 2009. Also John N.H. Britton, Diane-Gabrielle Tremblay, and Richard Smith, “Contrasts in
Clustering: The Example of Canadian New Media,” European Planning Studies 17, 2 (February
2009), pp. 211–234.
Chapter 3
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of the creative and cultural industries, including film, television, live
theatre, music, fashion, design, and publishing, along with the continued expansion of financial services.23
The period since the late 1990s has been labelled the Fourth Era in
Toronto’s post-war economic growth.24 Demarcated by the amalgamation of the municipal government into a unified structure in 1998 and
the growing integration of the urban core within the broader regional
economy, it marks the emergence of Toronto as a leading cognitivecultural economy. The GDP of the Toronto census metropolitan area
(CMA) was $262 billion in 2005, accounting for over 20 per cent of the
total Canadian economy. Between the 2001 and 2006 Census, Toronto’s
total population grew by more than 9 per cent; between 1996 and 2006,
employment increased by 27 per cent and average employment income
increased by almost 6 per cent. In regard to financial and higher-order
business services, Toronto has a significant lead over other Canadian
cities, with 28.2 per cent of its labour force in this sector, compared with
22.6 per cent in Montréal. Other dynamic sectors include information
and communications technology (including new media), biomedical
and biotechnology, fashion and design, aerospace and automotive, tourism, and the cultural-creative industries. Particularly noteworthy is the
dense concentration of both ICT and financial services in the regional
economy. Toronto clearly benefits from the presence of a highly diversified regional economy that is contributing to its development as a
“Schumpeterian hub” of innovation and creativity. While the current
recession will slow the overall pace of its growth, the decline of key
manufacturing industries is accelerating the transition to higher-order
business and financial services and the creative and design industries.
23 Boston Consulting Group, The Fourth Era: The Economic Challenges Facing the GTA, study
prepared for the GTA Task Force (Toronto: Queen’s Printer for Ontario, 1995). Also Meric S.
Gertler, A Region in Transition: The Changing Structure of Toronto’s Regional Economy, Portrait
of a Region Series (Toronto: Neptis Foundation, 2000).
24 Ibid.
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21st Century Cities in Canada
Montréal’s economy remains more heavily weighted toward the
manufacturing sector, relative to business and financial services, than
either Vancouver or Toronto’s economies. During the late 1980s and
early 1990s, Montréal underwent a major restructuring of its traditional manufacturing industries and those industries related to its role
as a rail transportation hub, which pushed the unemployment rate up to
6 percentage points above the Canadian average by the mid-1990s. The
economic restructuring of this period laid the basis for a subsequent
expansion after 1997, when the region emerged as a major centre for
knowledge-intensive industries, such as aerospace, biopharmaceuticals,
and ICT, which are among its primary exports.25
The economic development strategy adopted by the Communauté
métropolitaine de Montréal (CMM) emphasizes the strategic importance of the manufacturing and knowledge-intensive sectors and clusters in which the region has demonstrated a strong export capability,
as well as several associated with the creative-cultural industries. The
strategy focuses on four groups of clusters within the regional economy; three of these fall primarily within the manufacturing sector,
while the remaining group includes a range of activities more often
associated with the creative sector of the economy, including film,
culture, tourism, and services. Overall, the patterns of innovation and
knowledge flows supported by the strategy tend to follow existing
linkages and relations within existing sectors and clusters, rather than
promoting cross-sectoral and cross-cluster lines of convergence that
are frequently associated with the benefits of a large and diversified
urban economy. Despite the strengths of Montréal’s economy, a concern has been raised that the strong sectoral orientation of the strategy
is focused on reinforcing existing strengths and patterns of knowledge
25 Communauté métropolitaine de Montréal (CMM), Charting Our International Future: A Competitive Montréal Region, economic development plan (Montréal: CMM, 2005).
Chapter 3
77
flows, rather than promoting the cross-sectoral knowledge flows that
are generally recognized as one of the benefits of a large and diversified urban economy.26
Of the other large cities in Canada, Calgary and Ottawa are distinguished by their higher degree of specialization in a smaller number of
industrial sectors—Calgary in oil and gas and Ottawa in telecommunications and software, as well as public administration. Calgary is one
of the most distinctive cities in the country. Since the discovery of oil at
Leduc in 1947, followed by the construction of the Interprovincial and
Trans-Canada pipelines in the 1950s to bring the oil and gas to Central
Canada, Calgary has emerged as the centre of the oil and gas industry
and one of the most dynamic and fastest-growing city-regions in the
country. It is home to 87 per cent of Canada’s oil and gas producers.
Despite the fact there is no actual oil and gas production within the
boundaries of the city, mining and oil and gas extraction account for
6.5 per cent of the labour force of the Calgary CMA, with a location
quotient of 4.6, which is substantially greater than the location quotient
for any other industrial sector in the city. In the words of one interviewee in the ISRN case study, “. . . in Calgary, you can’t do anything
if it’s not linked to oil and gas.”27
Closely tied to oil and gas is a set of related industries whose
prospects depend on those of oil and gas, particularly the construction industry, and business, financial, and ICT services. Knowledge is
embodied in the people working in the sector, and innovation within
Calgary’s leading sectors is primarily based on local knowledge
sources. Knowledge flows occur through the movement of personnel within specific sectors, but they also occur through the networks
of firms assembled to meet the needs of individual clients, as well as
through the broader social networks within the city. In spite of the high
26 Innovation and Clustering in Montréal: Between a Product-Oriented and a Competence-Oriented
Approach [paper]. Presented by Diane-Gabrielle Tremblay and Juan-Luis Klein at 11th Annual
Conference of the Innovation Systems Research Network. Halifax, N.S.: April 29–May 1, 2009.
27 Firms and Their Problems: Systemic Innovation in Calgary [paper]. Presented by Cooper
H. Langford, Ben Li, and Cami Ryan at 11th Annual Conference of the Innovation Systems
Research Network. Halifax, N.S.: April 29–May 1, 2009.
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21st Century Cities in Canada
degree of specialization in Calgary, innovative ideas developed in one
sector of the local economy, such as imaging technology developed in
geophysical services, can be adopted and applied in other sectors, such
as medical devices.
Economic sectors that have grown up in close proximity to the
dominant oil and gas industry, and that have developed specialized
knowledge and technological capabilities in that role, can apply their
knowledge to other opportunities in new markets in different industries,
such as software, global information systems, and wireless communications. New knowledge platforms that have emerged out of the primary
resource-based economy are being applied in a cross-sectoral fashion to
new commercial products and economic opportunities in a manner that
suggests the possibility of moving beyond the confines of the specialization versus diversity model of innovation in urban city-regions.28
Despite their different economies and relative location in different
parts of the country, there are striking similarities between the regional
economies of Ottawa–Gatineau and Calgary. Due to Ottawa’s role as
the national capital, public administration accounts for over 21 per
cent of the city’s labour force with a location quotient of 3.7. The
city also has a large ICT sector, and nearly 10 per cent of its labour
force is employed in professional, scientific, and technical services,
also referred to as knowledge-intensive business services (KIBS). The
KIBS sector has grown in response to the federal government’s demand
for these higher-order services.
The origins of the high-tech sector—which is concentrated in the
software, telecommunications, microelectronics, and photonics subsectors—lie in the original decision by Northern Electric (later Nortel)
to establish a research facility in Ottawa, after a judicial decision in the
U.S. in the mid-1950s cut off its access to patents from the Western
Electric Co. Its purchase of a tract of land on the outskirts of Ottawa
as the home of Bell-Northern Research (BNR), largely because of
the concentration of the federal government’s telecommunications
28 Ibid.
Chapter 3
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laboratories in the nation’s capital, resulted in thousands of industrial
engineers, researchers, and managers moving into the region. Many
of the leading entrepreneurs in the Ottawa telecommunications and
photonics cluster began their careers as researchers for BNR. Both
technical and entrepreneurial talent left Nortel over the years to form
new firms in the region.29
An analysis of the innovation process in both the high-tech and
KIBS sectors in Ottawa reveals that most innovative firms draw on
cooperative relations with other partners for their knowledge sources,
but the pattern of these relations varies across the two sectors. For firms
in high-tech manufacturing, the most important interactions are with
other firms along the value chain, principally customers and suppliers.
In contrast, KIBS firms rely more on their customers, their competitors, and public research institutions for their knowledge base and
new ideas. They tend to focus on nearby clients more than high-tech
manufacturing firms do. Given the diverse economic sectors served by
KIBS firms, this suggests that knowledge flows across a diverse range
of industries tend to be more important for service firms than for traditional manufacturing ones, even in the ICT industry.30 This finding is
consistent with the broader view of the different patterns of innovation
that prevail in these sectors of the economy.
Innovation Patterns in Canada’s Medium-Sized and Small Cities
Canada’s medium-sized cities share some characteristics with
Calgary and Ottawa–Gatineau, although they have a greater degree of
concentration in a smaller number of sectors. Innovation processes tend
to draw on knowledge flows that occur largely within the confines of
existing industrial sectors. However, many of the traditional manufacturing industries are increasingly organized into global supply chains
29 Matthew Lucas, Anita Sands, and David A. Wolfe, “Regional Clusters in a Global Industry: ICT
Clusters in Canada,” European Planning Studies 17, 2 (February 2009), pp. 189–209.
30 David Doloreux and Henrik Mattson, “To What Extent Do Sectors ‘Socialize’ Innovation Differently? Mapping Cooperative Linkages in Knowledge-Intensive Industries in the Ottawa Region,”
Industry & Innovation 15, 4 (August 2008), pp. 351–370.
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21st Century Cities in Canada
that tap into larger knowledge networks around the world. Pressures
on firms to innovate and sustain their competitive advantage in global
markets are shifting the structure of advanced manufacturing industries
toward a pattern typical of nimbler high-technology clusters. Industries
that have historically been organized through vertical supply chains
between lead firms and a limited number of suppliers, and that have
relied on internal R&D activities to support innovation, are adopting a
clustered pattern of industrial organization, characterized by regional
concentrations of networked suppliers, inter-firm learning, and a decentralized and flattened production chain.31 The challenge for small and
medium-sized cities hoping to retain their attractiveness as locations
for firms in these industries is to strengthen the local research infrastructure and skill profile that will embed their local firms into global
supply chains. The restructuring of the steel industry in Hamilton and
the biotechnology industry in Saskatoon provide instructive lessons in
how this process is playing out in specific Canadian cities.
Saskatoon stands out as one of the more successful mid-sized
cities in Canada, due to the large concentration of federal and provincial research facilities and the critical role of Innovation Place, the
research and industrial park. The presence of the National Research
Council’s (NRC) Plant Biotechnology Institute has served as a magnet for a critical mass of multinational and local companies that form
the nucleus of a dynamic cluster around the production of canola. The
central role of the NRC Institute has inserted Saskatoon into the global
networks of knowledge flows that are crucial to the innovation process
in this industry. Many firms indicate that the dense labour market in
the local economy provides them with a ready supply of high-quality
talent. A large proportion of the collaboration that occurs in the city
appears to be done on an informal basis through personal contacts and
brief consultations. Given the relatively high degree of specialization
in the local economy in biotechnology, mining, and software, there
31 Peter Warrian and Celine Mulhern, “From Metal Bashing to Materials Science and Services:
Advanced Manufacturing and Mining Clusters in Transition,” European Planning Studies 17, 2
(February 2009), pp. 281–301.
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81
is little evidence of cross-sectoral knowledge flows among innovating firms. Careers tend to progress along pathways within the same
sector, rather than cutting across different sectors within the city.
Overall, it appears that the creative spark that drives innovation locally
occurs within the specialized solitudes of existing industrial sectors, in
a manner characteristic of medium-sized cities with a limited degree
of specialization. The ability of local firms to capitalize on the unique
characteristics of Saskatoon’s dynamic research infrastructure provides
the basis for tapping into the broader global knowledge flows that
characterize its specialized industries.32
Hamilton offers some similarities but also notable contrasts to the
Saskatoon case. Although it is one of Canada’s 10 largest cities, with
a population greater than 700,000, it is not considered to be a hub city
because of its proximity to the Greater Toronto Area. Hamilton’s current economic situation is compounded by the ongoing restructuring
of the Canadian steel industry, which has long been the mainstay of
the local economy. Innovation in the steel industry has historically
been a sectoral phenomenon, largely occurring within communities of
practice constituted by professional engineering organizations, such
as the National Open Hearth Conference, and the technical committees of the American Iron and Steel Institute and the International Iron
and Steel Institute. The takeover of Canada’s leading steel companies
by major multinationals has resulted in their integration into global
supply chains and knowledge networks. Hamilton’s leading steel company, Arcelor Mittal Hamilton (formerly Dofasco), is currently valued
for its contribution to the knowledge base and technological capabilities
of the parent company. Innovation strategies are focused on deepening the
research connections with McMaster University and the newly developed
McMaster University Innovation Park (which will soon be home to the
32 Innovation and Knowledge Flows in the Saskatoon City Region [paper]. Presented by Peter
W.B. Phillips and Michael Kunz at 11th Annual Conference of the Innovation Systems Research
Network. Halifax, N.S.: April 29–May 1, 2009.
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21st Century Cities in Canada
federal government’s CANMET metallurgical laboratories), as well as
on attracting one of Arcelor Mittal’s global research centres to locate
in Hamilton.
The other key side of Hamilton’s innovative economy is the network of emerging biomedical and health sciences firms based around
the McMaster health sciences complex. Firms in this network tend to
be oriented toward medical devices and the delivery of innovative medical services, often building on aspects of the unique teaching model
at McMaster’s medical school. Interviews for the ISRN case study
revealed an unexpected linkage between the industrial manufacturing
sector and the emerging health sciences one. Steel company executives have traditionally played key leadership roles in the governance
structures of the health sciences complex, and the well-endowed health
benefit plans of local unions have provided the financial basis for new,
innovative firms in health services. That is a surprising twist on the
conventional innovation model, where cross-sectoral linkages within
the consumer or demand side of the local economy have stimulated the
development of innovative ideas generated on the supply side.33
The Kitchener–Waterloo–Cambridge (Waterloo) region is located
an hour west of Toronto. It has benefited from its unique blend of traditional manufacturing (with roots dating back to the mid-19th century)
and information technology firms with international reach (a sizable
concentration that dates from the 1970s). The Waterloo region has been
home to major national and international corporations for more than
a century, from Dominion Electrohome Ltd. to present-day success
Research In Motion—manufacturer of the iconic BlackBerry and now
Canada’s largest information technology firm. Although the region is
only about half the size of Ottawa, its more diversified industrial base—
as well as the success of some of its leading industrial firms, such as
Electrohome (now part of Christie Digital), in making the transition
from older industrial technologies to newer digital ones—has been a
33 Biotech in Lunch Buckets: The Curious Knowledge Networks of Steeltown [paper]. Presented by
Peter Warrian at 11th Annual Conference of the Innovation Systems Research Network. Halifax,
N.S.: April 29–May 1, 2009.
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83
continuing source of economic resilience. A hallmark of the innovation process in the region has been the application of digital technology
to advanced manufacturing processes, evidence of a relatively uncommon, but critical, dimension of knowledge transfer across two of the
core areas of specialization within the regional economy.
The emergence and dynamism of the high-tech sector in the
Waterloo region owes its success to critical decisions made by industrial leaders in the local economy in the years following the Second
World War, which led to the creation of the University of Waterloo.
The high-technology cluster in the Waterloo region grew out of its
strong industrial base in advanced manufacturing, combined with the
early focus of the new university on engineering, math, and computer
science. Two of the early firms in the cluster, WATCOM and Dantec
Electronic, were spun off from the university in 1974. A subsequent
generation of firms followed in the 1980s, including Dalsa (1980),
Virtek Vision (1986), and Open Text (1989). Although the university
remains central to the continuing development of the regional economy, its primary contribution is no longer through the process of new
firm formation, as relatively fewer firms have been spun off directly
from the university since the late 1980s; other mechanisms for knowledge transfer now play a more significant role.34
Most of the firms in the Waterloo high-tech cluster are engaged
in research focused more on product development than exploratory
research. While the region is best known for the radical innovation
associated with Research In Motion, the emphasis in many of the other
medium-sized and small firms is on solutions-focused, incremental
innovations rather than research-intensive, first-generation products.
Product and process improvements involve development activities such
as modifying existing software platforms, creating product updates
and new releases, applying the core technology to different applications within the same factory, or making software web accessible. A
34 Allison Bramwell, Jen Nelles, and David A. Wolfe, “Knowledge, Innovation and Institutions:
Global and Local Dimensions of the ICT Cluster in Waterloo, Canada,” Regional Studies 42, 1
(February 2008), pp. 1–16.
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21st Century Cities in Canada
critical type of knowledge transfer within the region seems to occur
through dense peer-to-peer networks of highly qualified workers, who
have developed extensive relationships during their university education and subsequent work careers. Thus, while the Waterloo region has
developed strong specializations in particular sectors, such as information technology and advanced manufacturing, its innovative strength
lies in the ability of local firms to transfer knowledge effectively across
sectors and to find innovative ways—based on dense interpersonal networks—to develop technology products.35
Smaller cities in the Canadian landscape present a different picture
of the innovation process, but share some features with the mid-sized
ones discussed above. A representative example is Trois-Rivières,
Quebec. The pattern of interaction observed among firms in the local
economy and their propensity for collaboration are a function of the trajectory along which the firms have developed, as well as the sector in
which they are located. The economy in Trois-Rivières has historically
been based on metal fabrication, along with forestry, wood products,
and energy generation, based on hydroelectricity from Shawinigan.
These sectors are still the mainstays of the regional economy, but new
ones are emerging in areas such as hydrogen and bioprocesses. A relatively small services sector in areas such as professional, scientific
and technical services, and business services has experienced significant growth in recent years. Innovations within the traditional sectors
are focused on incremental product and process improvements, while
radical innovations are rare and little basic research is performed in
the region. Firms tend to have relationships with local research organizations, including universities, colleges, and public research organizations, for the purposes of innovation and technology transfer. The vast
majority of highly qualified personnel is drawn from the local university (Université du Québec à Trois-Rivières) and the local CEGEP,
and the most important sources of knowledge tend to be locally and
35 Harald Bathelt, Dieter F. Kogler, and Andrew K. Munro, Social Foundations of Regional Innovation and the Role of University Spin-Offs: The Case of Canada’s Technology Triangle (Toronto:
University of Toronto, June 2008).
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85
sectorally based. A different pattern of interaction characterizes the two
emerging sectors in industrial biotech and hydrogen and hydroelectricity. In these cases, the networks and relationships for firms in these
sectors tend to be extra-regional. They draw most of their knowledge
and technical know-how from partners in Montréal, the rest of Quebec,
and the rest of Canada, as well as in the U.S. and Europe. While there
is little evidence of cross-sectoral knowledge flows in small industrial
cities such as Trois-Rivières, the emerging and integrative sectors are
effectively linked into external knowledge networks.36
The Role of Talent and Creativity in Canadian Cities
There is growing recognition that a critical set of skills, associated
with knowledge-based and cultural and creative occupations, contributes significantly to the economic vibrancy of city-regions. Local
concentrations of highly skilled and creative workers can attract and
embed globally mobile investment, as well as stimulate innovative
growth in the local economy. From this perspective, the social characteristics of particular places—those which make them attractive to
talented workers—are of primary importance in sustaining local economic growth and prosperity. Such talent is attracted to and retained by
cities that offer a richness of employment opportunity, a high quality
of life, a critical mass of cultural activity and social diversity—in other
words, cities with low barriers to entry for newcomers. The success of
city-regions in attracting and retaining creative talent depends on their
quality of place and community characteristics that promote strong
neighbourhoods and social cohesion.
36 Local ou International? Diversité des Patterns de Résautage des Entreprises de la Région de
Trois-Rivières [paper]. Presented by Michel Trépanier, Rosemarie Dallaire, and Pierre-Marc
Gosselin at 10th Annual Conference of the Innovation Systems Research Network. Montréal,
Que.: May 1–2, 2008.
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21st Century Cities in Canada
However, questions remain about which factors contribute most to
the concentration of creative workers in the first place. Is it the presence of a high quality of life and an abundance of lifestyle amenities in
a particular city that draw larger numbers of talented and creative workers to the urban scene? Or is it the presence of a high degree of employment opportunities and a dense labour market in creative and cultural
industries that provide talented and creative workers with strong job
opportunities? Either way, recent research provides evidence of a
critical linkage between the location of cultural and creative industries
and employment opportunities in talented and creative occupations, as
well as those in more scientific and professional occupations. However,
the role played by creative and cultural industries in the growth of
Canadian cities varies considerably, and it is important to understand
the different ways in which talent attraction and retention contribute to
cities’ economic performance.
Several indices are used to measure talent. An early study of the ranking of Canadian cities on talent, creativity, and diversity indices found
strong correlations between the ranking of individual cities on these
three measures and their relative standing with respect to the concentration of employment in technology-intensive industries. The talent index
is defined as the proportion of the population 18 years of age or over
with a bachelor’s degree or higher. The bohemian or creativity index
relates to employment in creative and artistic occupations; the mosaic
or diversity index is calculated as the proportion of the total population that is foreign born; and the tech-pole index compares a region’s
share of national employment in high-technology industries with the
region’s overall share of national employment.37 The study found that
the same correlations between diversity and creativity, and the location of knowledge-intensive industries, hold as true for Canada’s urban
centres as for those in the U.S. Overall, Ottawa–Gatineau and Halifax
37 Meric S. Gertler, Richard Florida, Gary Gates, and Tara Vinodrai, Competing on Creativity:
Placing Ontario’s Cities in North American Context. Report prepared for the Ontario Ministry
of Enterprise, Opportunity and Innovation and the Institute for Competitiveness and Prosperity
(Toronto: Authors, 2002), pp. 3–4. These definitions are based on the original definitions in
Florida, The Rise of the Creative Class, Appendix.
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87
were ranked highest on the talent index, in terms of the percentage of
the population over 18 with a university degree, followed closely by
most of the other major cities, including Toronto, Calgary, Victoria,
Vancouver, Québec City, Saskatoon, and London. The largest cities in
the country ranked at the top in terms of creativity on the bohemian
or creativity index, but Victoria and Halifax were also included in this
group. Toronto and Vancouver topped all other Canadian cities in terms
of their degree of diversity, by a considerable margin. And, finally,
the five largest cities—Montréal, Toronto, Ottawa, Vancouver, and
Calgary—outpaced the other Canadian cities in terms of their relative
concentrations of technology-intensive employment. When the various
indices were compared, both the talent and the bohemian indices were
found to correlate strongly with the tech-pole index, but the bohemian
index displayed the strongest overall correlation, which “provides evidence of the strong relationship between creativity and employment in
knowledge-intensive economic activity.”38
When the leading Canadian cities were compared with leading ones
in the U.S., the findings were remarkably similar. If anything, the key
relationships were even stronger for Canadian cities than for U.S. ones.
The bohemian or creativity index was most strongly associated with
the level of a city’s employment in technology-intensive industries
and consistently provided the best explanation of a city’s technological
trajectory. The talent index was the next most reliable indicator, while
the mosaic or diversity index was the weakest of the three. Also interesting was the fact that all three indicators performed much better for
the largest cities, with populations over 1 million, than for the mediumsized and small cities. This finding reinforces the linkage between city
size and some of the key indicators of talent and creativity that provide strong support for the development of more technology-intensive
industries and employment. The study concluded that many Canadian
cities with a diverse population and concentration of talent contain the
critical factors needed to thrive as creative communities.39
38 Gertler, Florida, Gates, and Vinodrai, p. 14.
39 Gertler, Florida, Gates, and Vinodrai.
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A more recent study by Florida and his colleagues explored the
relationship among the indices sketched out above and analyzed their
effects on the technological intensity of employment in Canadian
cities, as well as their effects on income levels in the same cities. Two
of the indices, the talent index and the bohemian index, are strongly
correlated with regional and urban economic development in Canada.
However, the results also show that a higher concentration of technologically intensive industries in a city has a positive effect on income
levels, especially in those cities with a strong concentration of the
creative class, when combined with openness to bohemian and gay
people.40 This finding suggests that there is a significant relationship
between the two key components of the creative class—the scientific
and professional occupations that are employed more directly in innovation-related industries and the artistic and creative workers who are
employed in cultural and creative industries. The importance of this
relationship between the technological and artistic sides of the creative
process is strongly supported by research from Statistics Canada, which
concludes that scientists and engineers have the greatest impact on
urban economic growth when their presence is combined with a large
and diverse pool of skilled workers, and that “cities with large concentrations of degree holders in non-science, non-culture occupations
experience more robust science and engineering growth than others.” In
other words, cities benefit when they are home to people in occupations
that draw on both the left side and the right side of the brain.41
This research suggests that discussions of the contribution of talent
and creativity to urban economic development need to be tempered by
a better understanding of the different kinds of creative occupations
40 Richard Florida, Charlotta Mellander, and Kevin Stolarick, Talent, Technology and Tolerance in
Canadian Regional Development, Working Paper 2009-WPONT-010 (Toronto: Martin Prosperity
Institute, University of Toronto, 2009).
41 Desmond Beckstead, W. Mark Brown, and Guy Gellatly, Cities and Growth: The Left Brain of
North American Cities: Scientists and Engineers and Urban Growth, occasional paper, Cat. No.
11-622-MIE, No. 017 (Ottawa: Statistics Canada, 2008). Also Ann Markusen et al., “Defining the
Creative Economy: Industry and Occupational Approaches,” Economic Development Quarterly
22,1 (2008), pp. 24–45.
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that contribute to the talent base of cities. It is also important to recognize the critical distinction—introduced by both Florida and his collaborators, and by the researchers at Statistics Canada—between the
creative workforce employed in occupations closely associated with
cultural and design-based industries (such as artists, designers, musicians, theatre performers, and film and television producers) and the
creative part of the workforce employed as scientists, professionals, and
managers in research- and technology-oriented occupations. The key
question is whether significant concentrations of both types of creative
occupations are more likely to be found in large cities with a certain
type of industrial structure, or whether these occupations also have a
significant presence in small and medium-sized cities.
Creative Industries and Creative Occupations in Canadian Cities
In order to shed light on the contribution of talent and creativity to innovation and growth in Canadian cities, it is helpful to sort
out whether creative occupations or creative industries have the most
important effect. Recent discussions suggest the two tend to develop
together in a cumulative and mutually supportive spiral. In other words,
creative industries, like many others, follow a historically conditioned
pattern of development, and it is important to understand how the prior
development of the cities in which the creative and cultural industries
are rooted laid the groundwork for their development. Why do creative
industries develop in specific locations at specific times, and how does
the urban geography of those locations shape the way in which the
industries develop? The concentration of creative and cultural industries in Canada’s largest cities—particularly Vancouver, Montréal, and
Toronto—did not emerge out of the blue, but they are grounded in a
range of similar and related industries in those three cities.
Recent work by both Statistics Canada and members of the ISRN
underlines the extent to which the cultural industries in Canada are
concentrated in Canada’s largest cities. The three largest urban centres
—Toronto, Montréal, and Vancouver—accounted for 64 per cent of all
cultural workers in the country in the 2001 Census, even though these
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three cities made up only 52 per cent of the total national labour force.42
ISRN researchers examined the role of creative and cultural clusters in
Ontario using the broader definition of industrial clusters discussed
earlier in this chapter. Ontario’s creative, cultural, and new media
industries employed 224,195 people in 2001. This workforce is primarily an urban one, with 11 cities in the province accounting for 87 per
cent of the workforce. Furthermore, the workforce is overwhelmingly
concentrated in Toronto, which accounted for almost 60 per cent of
creative and cultural workers in the province, as compared to only
42 per cent of the overall provincial workforce.43
There are strong synergies among the industries associated with
the creative and cultural economy that share a focus on the importance of design. These include more well-established industries such as
architecture, industrial design, fashion and clothing, jewellery, advertising, and even consulting, as well as some of the industries related
to the new economy, such as software design, computer graphics and
imaging, digital media, the production of video games, and a range of
support services associated with the rise of digital technologies and
the Internet. The notion of design conveys a strong sense of creativity but also “carries with it a manifestly industrial application both in
its contemporary and more historical applications.”44 Equally important is the linkage embodied in these industries between consumption,
innovation, and the design of new creative products, whether they are
commercial or artistic. While these industries are not tied directly to
traditional cultural industries (such as book and magazine publishing, film and television production, and music and sound recording),
42 David Coish, Census Metropolitan Areas as Cultural Clusters, Cat. No. 89–613-MIE, No. 004
(Ottawa: Statistics Canada, 2004).
43 Tara Vinodrai and Meric S. Gertler, Measuring the Creative Economy: The Structure and Economic Performance of Ontario’s Creative, Cultural and New Media Clusters, report prepared for
the Ontario Ministry of Culture (Toronto: PROGRIS, University of Toronto, 2007).
44 Tom Hutton, The Geography of Design in the City (Vancouver: University of British Columbia,
n.d.).
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they share certain key sensibilities and are attractive to similar kinds of
personalities—namely, individuals who comprise the greater proportion of the creative class.
The tendency of this range of design, creative, and cultural industries to exhibit distinctive spatial tendencies, similar to the more traditional technology- and science-based clusters, is a defining feature of
the urban core in Canada’s larger cities. Proximity to market leaders,
access to a common pool of talent, and linkages to local customers and
suppliers have all been identified as reasons for collocation. There are,
however, some important differences between traditional technologybased industries and those in the creative and cultural sectors. Foremost
is the nature of the innovation process itself; innovation in the creative
and cultural industries is primarily fuelled by the process of design
in the form of fashion, architecture, or industrial products, as well as
through the creation of content that is then brought to market through
a particular medium, such as publishing, sound recording, film, television, or digital media. While process innovations may also be an
important source of value for these industries, the process of creating
original content for each of the different media is central to the creation
of value in these clusters. Developing, attracting, and retaining creative
talent is thus critical, as are the social and institutional aspects of the
clusters that support the development of this talent pool.
The urban geography of the creative and cultural industries displays
distinctive characteristics. These industries tend to locate in similar
parts of Canada’s largest cities, particularly inner-city areas near the
central business district that were once home to traditional manufacturing industries. As these industries have been restructured through the
adoption of new labour-saving technologies and the relocation of their
lower-cost and more labour-intensive aspects of production to offshore
sites, they have opened up new urban spaces for development by industries associated with the cultural and creative economy, which share a
strong emphasis on design. Artists often play a key role in the rediscovery and development of these older underutilized and undervalued
neighbourhoods within a city. The movement of artists into these
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parts of the city is often followed by other creative activities that take
advantage of the low cost and easily adapted space of these neglected
factories and warehouses.45
These districts can be found in different parts of Canada’s three largest cities. Creative, cultural, and design-intensive industries are drawn
to these neighbourhoods by a number of related factors, including the
availability of highly skilled labour, especially artists and workers with
the skills required by the specific industries; the combined attraction of
highly adaptable space and relatively low rents in reconfigured industrial buildings; and the proximity of these districts to some of the leading cultural institutions and attractions of the inner city, as well as the
vibrant nightlife of the downtown core.
Vancouver’s urban core—including neighbourhoods such as
Yaletown, Victory Square, Gastown, and the cultural district—has
gradually been redeveloped as an area devoted to the emerging economy of cultural production, with an emphasis on software development,
computer graphics and design, and related digital media activities.46
Toronto’s creative and cultural industries represent a significant proportion of the urban economy, employing 133,000 people in advertising, architecture, film and television production, performing arts, sound
recording, specialized design, software, and new media. Much of this
employment is concentrated either in the downtown core or in adjacent
districts stretching from lower Spadina Avenue along King Street West
to Liberty Village.47 Montréal retains a strong role as a leading centre
for fashion and design industries, located in neighbourhoods such as
Mile End. It is also prominent in a wider range of cultural industries,
due to its central position as the home of French-language productions,
and its recent development as a key centre for digital media.
45 Meric S. Gertler, Creative Cities: What Are They For, How Do They Work, and How Do We Build
Them? Background Paper F/48 (Ottawa: Canadian Policy Research Networks, 2004); Hutton,
The New Economy of the Inner City.
46 Barnes and Hutton.
47 Meric S. Gertler, Lori Tesolin, and Sarah Weinstock, Toronto Case Study (Toronto: London–
Toronto Strategies for a Creative City, July 2006).
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The location of these industries in the central core of Canada’s largest cities has also been influenced by the past tendency of new immigrants to congregate close to these central areas (although in more
recent years, many immigrants have settled in the suburban ring around
the metropolitan cities). Immigration flows to Canada’s largest cities
undoubtedly enrich their cultural economies by endowing them with
distinctive forms of cultural capital. In Toronto and Vancouver, the
influence of immigrant talent, creativity, and dynamism is strongly felt
in key sectors such as literature, publishing, music, filmmaking, gastronomy, and specialty food. The presence of these immigrant communities has produced a more multicultural and diverse urban identity
in Canada’s cities, which people employed in creative occupations
and industries report as a vital source of inspiration for their work. In
short, “immigration enhances the diversity and distinctiveness of these
places, further strengthening their long-run economic prospects.”48
That is not to suggest that immigration has been without its problems
in this country, an issue discussed in more detail below.
Detailed case studies of the fashion industries in Toronto and
Montréal note some similar features. Interviews with fashion and
graphic designers in Montréal’s Mile End neighbourhood illustrate
how important it is for people in these occupations to be located in
a culturally rich and open environment that contributes to a sense of
experimentation. The Mile End neighbourhood consists of a rich mix
of successive waves of new immigrants into the Montréal economy.
Housed in a former industrial neighbourhood that went through a
period of significant decline in the 1980s as Montréal lost many of
its former industries, Mile End has been reborn through an influx of
students, artists, writers, and musicians who provide the creative focus
that has attracted designers’ workshops, fashion boutiques, and design
galleries to the area.
48 See Meric S. Gertler, “Urban Economy and Society in Canada: Flows of People, Capital and
Ideas,” Isuma: Canadian Journal of Policy Research 2, 3 (Autumn 2001), pp. 119–130.
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The Montréal case highlights the importance of the same factors that
have contributed to the vitality of inner-city districts in Vancouver and
Toronto: a compact and tightly constrained district, with easily adaptable space in heritage buildings, located close to attractive cultural
and creative venues. The aesthetic of the older architecture in these
neighbourhoods provides a creative stimulus for designers and other
artists. The character of these inner-city neighbourhoods also reinforces the tendency of people working in the fashion or design industries
to commingle with musicians and other bohemians.49 A related point
was made in a recent study undertaken for Culture Montréal, which
found that the artistic and cultural environment in Montréal generally
attracts technical workers who enjoy the nightlife and the energetic
atmosphere the city offers. This synergy among cultural, artistic, and
technical occupations is manifested in numerous examples of technically oriented companies drawing on the independent design firms and
individual workers in Montréal’s cultural and artistic industries.50 A
key implication of this research is that in addition to strategies focused
on attracting cultural and creative types to the city, urban development
policy should pay greater attention to preserving the diverse physical
settings that provide a nurturing environment for these types of creative
industries.51
Similar results are observed in the case study of the fashion industry in downtown Toronto. While not one of the largest fashion sectors
in North America, Toronto has a substantial number of designers and
apparel manufacturers that employ more than 50,000 people in total.
Toronto does not appear to act as a significant draw for the inward
49 Bringing the Material Back In: The Role of Space in Creative Production [paper]. Presented
by Norma Rantisi and Deborah Leslie at 10th Annual Conference of the Innovation Systems
Research Network. Montréal, Que.: May 1–2, 2008.
50 Kevin Stolarick and Richard Florida, “Creativity, Connections and Innovation: A Study of Linkages in the Montréal Region,” Environment and Planning A 38, 10 (2006), p. 1808.
51 The importance of providing adequate physical space for artistic and creative endeavours was a
central part of the recommendations in the recent report of the Strategies for Creative Cities Task
Force, Imagine a Toronto: Strategies for a Creative City (Toronto: Strategies for Creative Cities
Task Force, 2006).
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migration of fashion designers from other countries, yet it does have
a large number of foreign-born workers in the sector, most of whom
came to Canada for personal reasons. Also, a significant number of
Canadian-born designers who were attracted to Toronto primarily to
pursue an education in design ended up staying because of the employment opportunities the city afforded.
One of the key attractions for creative workers in the fashion and
design industry is the presence of a wide range of related cultural industries, such as film, theatre, dance, art, architecture, and music. These
related industries generate a wide range of synergies that contribute to
the overall attractiveness of Toronto as a city for design work. Fashion
designers in Toronto reported how important it was to be located in a
city with a large, live-theatre sector—as well as dance and film production—where they could realize their passion for design by creating the
more elaborate costumes needed by performers in these productions.52
That closely parallels the responses from other interviews with editors,
publishers, and writers in the magazine publishing sector, who noted it
was essential for them to be located in a large city with a vibrant dance,
literary, or fashion scene, depending on whether they worked for a
dance, literary, or fashion magazine. The cross-sectoral fertilization that
Jane Jacobs viewed as central to the process of innovation and urban
growth clearly seems to flourish in the cultural and creative sectors, concentrated in our larger cities.
Few other cities in the country demonstrate the same concentration of cultural, creative, and design industries as Vancouver, Toronto,
and Montréal. Calgary differs significantly from the other large urban
centres in Canada because of its high degree of specialization in a
smaller number of sectors. Employment growth—although it has
slowed recently—has been nearly double the national average over the
past 10 years and has proved to be a magnet for in-migration from other
Canadian cities. However, the rapid employment growth in the city is
52 Evaluating the Role of “Quality of Place” for Fashion Designers in Toronto [paper]. Presented by
Deborah Leslie and Shauna Brail at 11th Annual Conference of the Innovation Systems Research
Network. Halifax, N.S.: April 29–May 1, 2009.
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associated predominantly with the boom in the oil and gas industry,
and the resulting labour shortages are concentrated in a specific range
of both highly skilled and less skilled occupations associated with the
industry. In contrast to a variety of other factors—such as the physical
attractiveness of the urban setting, the presence of lifestyle amenities,
or the density of social networks and the patterns of interaction within
them—the clearest driver of employment growth and in-migration to
Calgary’s booming economy is the strength of the labour market and a
consistent demand for highly skilled talent.53
Cities on the margins of the country experience greater challenges
in attracting and retaining creative talent and in sustaining their creative
industries. The prospects for these cities must be viewed in the context
of their position within Canada’s urban system. Cities such as Halifax
and St. John’s exist on the periphery of not only the Canadian, but
also the North American, economy, yet they serve as regional metropoles for their respective hinterlands. Halifax has certain advantages
that strengthen its position as an attractive site for creative workers. It
is strategically located as the regional metropolis for much of Atlantic
Canada, not just Nova Scotia. As a consequence, it is large enough to
attract a critical mass of creative workers, while at the same time being
small enough to maintain easy accessibility to valued lifestyle amenities, such as the ocean and other natural attractions. The smaller size of
the city and its slower pace facilitate a sense of community that many
find attractive. While most workers in the creative and high-technology
sectors of Halifax appreciate the amenities associated with its natural
beauty and medium size, their decisions about moving to or staying in
the city are primarily influenced by the employment prospects within
their sector. Interviews in Halifax with highly skilled workers revealed
that it is an important centre for innovation and the site of diverse
sectors of the cognitive-cultural economy, ranging from biomedical
research to the vibrant music scene for which the city is well known.
53 Building the Pool of Creative Talent: The Case of Calgary [paper]. Presented by Cooper H. Langford, Ben Li, and Cami Ryan at 10th Annual Conference of the Innovation Systems Research
Network. Montréal, Que.: May 1–2, 2008.
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As in the case of Hamilton, there were some unanticipated but
noteworthy linkages across diverse sectors. Researchers are attracted
to the city because of the quality of its universities and the research
opportunities they afford. The universities benefit from the quality and
number of students, many of whom come to Halifax from other parts
of the country. Students, in turn, are attracted both by the quality of
universities and by the city’s dynamic music scene and lively nightlife, both of which thrive because the steady influx of students constantly replenishes the audiences for the numerous bands in the city.
“Halifax illustrates the artistic dividend which Markusen and Schrock
argue that artists can generate for places; in this case the music industry
helps drive the research engine so vital to innovation in the region.”54
The strong synergies between the city’s scientifically based research
sector and the creative-cultural sector provide a fascinating confirmation of the important linkage between the right side and the left
side of the brain that was noted by researchers at Statistics Canada.
Interestingly, Halifax has weathered the current recession better than
most other cities in the country; it had the best full-time job growth
over the past 12 months and home prices held steady. Its steady supply of university graduates has also proven to be a powerful magnet in
attracting recent investments by insurance and hedge fund firms from
the U.S., Research In Motion from Waterloo, and defence companies
such as Lockheed and General Dynamics.55
In the case of St. John’s, there is some evidence of small but
dynamic creative industries, especially in creative fields such as
music. However, despite the presence of a dense network of creative
people, there is uncertainty about the precarious nature of employment within the local economy. St. John’s exhibits some of the characteristics of other large cities in Canada because of the functional role
54 Smart City/Cool City: Attracting and Retaining Talented and Creative Workers in Halifax [paper].
Presented by Jill L. Grant and Karin Kronstal at 11th Annual Conference of the Innovation
Systems Research Network. Halifax, N.S.: April 29–May 1, 2009, pp. 14–15. Also Markusen
and Schrock.
55 Sinclair Stewart and Tavia Grant, “Canada’s Safe Harbour,” The Globe and Mail, June 15, 2009.
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it plays within the urban system of Newfoundland. At the same time,
its small size and relative isolation from other cities in the national
and international urban system restrict its ability to attract and retain
talent. There is thus a dual character to St. John’s as a city-region—as
a metropolis on the margin that also serves as a launching pad for creative and educated workers before they further pursue their careers in
other locations outside the province. In contrast to other large cities in
the country, such as Vancouver, which has evolved beyond its origin
as an urban metropole for the staple-producing hinterland to a more
diversified economy with a solid grounding in the emerging cognitivecultural economy, St. John’s is still an urban metropole; however, its
staple is now principally oil and gas, rather than fish. The urban economy is undergoing a major expansion as the city faces the challenge of
attracting and retaining the highly educated workers required to maintain the rapid rate of growth in the oil and gas industry. In contrast
to the period prior to 2001, when its population declined, St. John’s
subsequently experienced a population increase of almost 5 per cent
between 2001 and 2006. The depopulation of the more peripheral parts
of the province is reinforcing the central position of St. John’s within
the provincial economy. This example supports the view that it is the
specific nature of the production activities and work opportunities in an
individual city that determines its overall attractiveness to highly educated and creative workers, rather than the quality of the lifestyle amenities found in the city.56
In the central corridor of the country stretching from Windsor to
Québec City, medium-sized and small cities face substantial challenges
in attracting the creative talent found in larger cities. They do not enjoy
the advantages of being a regional metropole like Halifax or St. John’s.
These cities, which are characterized by their unexceptional nature,
face an entirely different set of problems. They may have an industrial profile in one or two sectors or clusters, but they have not been
56 Josh Lepawsky, Crystal Phan, and Robert Greenwood, “Metropolis on the Margins: Talent
Attraction and Retention to the St. John’s City-Region, Newfoundland,” (St. John’s, Nfld.,
forthcoming).
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successful in creating a distinctive local brand associated with their
urban economy. Their in-between size is neither large enough to create
the distinctive buzz found in major cities, nor small enough to benefit
from the natural beauty found in more compact cities.
London, Ontario, is a classic example of such a city. Recent policy
reports aimed at formulating an economic development strategy for
the city have documented a number of issues it faces. They include an
inability to attract talented newcomers, especially immigrant professionals, and the failure to retain the young knowledge workers who
move to the city to attend its university but who leave shortly after
graduation. In contrast to the creative city hypothesis, highly skilled
workers are drawn to London primarily for specific employment opportunities or for family reasons. Even when younger, talented workers
move to the city, they recognize that the lack of head offices in the city
potentially limits their opportunities for career mobility and promotion
to senior management positions. One exception is the medical science
sector, where the high-quality research networks at the University of
Western Ontario were identified as a potential source of leading-edge
discoveries, with the potential for being spun off into new enterprises.57
Research conducted for the ISRN case study confirms some elements of this view of the city, yet paints a slightly different picture. A
number of highly innovative and globally recognized firms are able to
attract the talent they need to sustain their growth. However, it is the
prestige of the firm and the prospect of employment that draws talent to
the city, not the attractiveness or “buzz” of the region. The most notable
difficulty innovative firms faced was recruiting candidates for certain
senior management roles, but this problem has been noted across a
range of Canadian cities. However, many senior managers in the firms
that were surveyed had been involved in founding or growing the
firm, and therefore had the requisite niche skills to run the company.
Beyond the realm of innovative firms, most of which were launched
57 Innovation and Creativity in the Ordinary City? Talent Matters in London, Ontario [paper].
Presented by Neil Bradford at 11th Annual Conference of the Innovation Systems Research
Network. Halifax, N.S.: April 29–May 1, 2009.
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in London, the city faces a broader image problem. Its urban landscape lacks the physical attributes associated with an attractive quality
of place. Interviewees commented on the lack of the kind of inspired
urban design and the older, reconfigured industrial buildings that are
essential features of the rediscovered creative hubs in Canada’s larger
cities. While civic leaders have made progress in revitalizing the downtown core and in welcoming immigrants and students to the city, the
perception persists of London as a city that faces major challenges in
creating an urban environment attractive to talented and highly skilled
workers.58
Kingston, Ontario, faces a similar but even more challenging
problem. Kingston and a number of other cities have a high ranking on
the talent index but a relatively low ranking on the other indices associated with creative cities. As a result, they are perceived as uncompetitive in the creative city sweepstakes. Looking at these cities only
through the lens of creativity potentially sets them up for failure and
implies there is little that can be done to make them more attractive or
competitive in these terms. That compounds the problem these cities
already face, given their relative position within the urban system. In
the specific case of Kingston, its geographic proximity to three of the
larger cities in the country—Montréal, Ottawa, and Toronto—means
that it faces a constant challenge in retaining both individual talent
and firms who are tempted by the advantages of relocating to a larger
urban setting. It has been suggested that these cities need to be evaluated along a different range of indicators that may provide a more useful sense of their relative attractiveness—indicators that focus on their
quality of life, liveability, and affordability. Given the empirical trends
noted by the OECD regarding the decreasing returns associated with
cities that grow beyond a certain size and the ensuing limits to sustainability, and given Kingston’s proximity to the largest urban agglomeration
58 Ibid.
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in the country, it has been suggested that its competitive advantage may
lie in stressing the relative attractiveness of Canada’s smaller cities as
alternative locations.59
London and Kingston share an inability to capitalize on the presence
of strong post-secondary institutions, in sharp contrast to Halifax and the
Waterloo region. The latter has successfully rebranded its entire regional
economy based on the reputation of its leading university. The University
of Waterloo has been highly successful in growing its own talent base,
due to its internationally recognized research and teaching strengths and
to its unique cooperative education program. It runs the largest co-op
program in the world, involving more than 11,000 students (60 per cent
of the student body) and 3,000 employers each year. Not only are graduates well trained within the university; they also gain practical experience through their co-op placements, both in local firms and in firms all
over North America. Many of the larger Waterloo firms, as well as global
ones, have deep and enduring links with the co-op program and rehire
students they first encountered through the co-op program. Although
local firms often compete with leading global firms for talent, they view
that as a strength of the regional economy, not a weakness. The international competition to hire the best graduates of the university is viewed
as a validation of the depth and quality of the local talent pool.60
Immigration, Creativity, and Inclusion in Canadian Cities
As noted in Chapter 2, the pursuit of a talent-based strategy inclusive of all elements of Canadian society is essential for tapping into
the full knowledge resources of the labour force and realizing its creative potential. A more inclusive labour force strategy has the potential to draw upon a larger pool of labour market participants for the
creative processes essential for innovation. Such a strategy explicitly
59 N. Lewis and Betsy Donald, “A New Rubric for ‘Creative City’ Potential in Canada’s Smaller
Cities,” Urban Studies (forthcoming).
60 Allison Bramwell and David A. Wolfe, “Universities and Regional Economic Development: The
Entrepreneurial University of Waterloo,” Research Policy 37, 8 (September 2008), pp. 1175–1187.
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recognized that those groups that have traditionally faced greater barriers to employment opportunities represent an important part of the
creative labour force in the future economy.
Attractive as this argument may be, the evidence that such strategies are actually being pursued remains mixed. A number of studies
have identified the increasing trend toward greater income polarization
and the growing pockets of poverty in specific parts of Canada’s large
metropolitan centres.61 There is also evidence that Canada’s immigrant communities, generally viewed as a valuable component of our
creative and cultural mosaic, face greater barriers to integration within
the labour market than do other groups in Canadian society. That raises
the issue of whether the talent requirements of the emerging cognitivecultural economy are leading to economic outcomes in Canada that disproportionately benefit a select group of highly talented professionals
to the social detriment of other members of Canadian society.
The inter-regional and international migration of skilled labour has
been one of the most important flows reshaping the character and geography of Canadian cities in recent years. For the largest metropolitan
areas, especially Toronto, Vancouver, Montréal, Calgary, and Ottawa,
international immigration has brought incredible dynamism and vitality
by providing a key source of human capital and talent.62 The impact of
immigration on particular places, however, has varied according to city
size and relative location. In recent years, over 70 per cent of all immigrants have chosen to settle in the three largest cities in the country.
This choice is influenced by the availability of employment opportunities and a rich multicultural environment in those cities. Over time, it
is expected that the gap between the large cities and the remainder will
increase in terms of the locational choices of Canada’s new immigrants,
61 Meric S. Gertler, “Urban Economy and Society in Canada: Flows of People, Capital and Ideas,”
Isuma: Canadian Journal of Policy Research 2, 3 (Autumn 2001), pp. 119–130. Also United Way
of Greater Toronto, Losing Ground: The Persistent Growth of Family Poverty in Canada’s Largest
City, research report (Toronto: United Way of Greater Toronto, 2007).
62 The Conference Board of Canada, City Magnets: Benchmarking the Attractiveness of Canadian
CMAs (Ottawa: The Conference Board of Canada, 2007).
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as the existing advantages will become self-reinforcing.63 Mid-size and
small cities face significantly weaker prospects of sharing in the benefits of inter-regional and international migration. Many of these cities
are already contending with the loss of their homegrown talent to other
Canadian cities, such as Calgary, Toronto, or St. John’s. This internal
migration makes the challenge of attracting and retaining well-educated
immigrants from other countries all the greater. For Canada’s small and
medium-sized cities, the prospects of successfully pursuing a talentbased strategy to focus on promoting local innovation, creativity, and
economic dynamism seem more remote.
Despite the positive effects of immigration on Canadian cities, the
process of integrating new immigrants into society is not inexpensive
and takes time, especially when English is a new language. One indicator of the scope of the challenge is that recent immigrants are consistently among the most economically disadvantaged groups in Canadian
urban society. A recent study by TD Economics found that the economic status of new immigrants to Canada has been deteriorating over
the past 25 years, as the gap between their earnings on entering the
labour market and those of workers born in Canada has widened. As a
result of this trend, immigrant families face a much greater risk of falling into poverty than non-immigrant families do.64 A major challenge
facing Canada’s metropolitan regions—especially the larger centres—
is to build on their enviable legacy of diversity and tolerance while
generating new institutions to deal more effectively with emerging
obstacles to social inclusion.
However, new Canadians are not the only ones experiencing poverty, exclusion, and social polarization. Urban labour markets feature
an expanding service sector, whose relative weight in the national
economy is increasing as a result of the current recession. Employment
opportunities in that sector are ever more divided between well-paid,
creative, and rewarding careers in research, finance, and consulting in
63 Filion.
64 TD Bank Financial Group, Literacy Matters: Helping Newcomers Unlock Their Potential (Toronto:
TD Bank Financial Group, 2009).
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21st Century Cities in Canada
knowledge-intensive public sector and industrial activities, and poorly
paid, contingent, insecure, and unsatisfying jobs in retail sales, cleaning,
data entry, and personal support care. Canada is not alone in dealing
with this challenge, as the recent OECD report on competitive cityregions made clear.65 Failure to deal effectively with this issue will
ultimately undermine our overall effort to transform our leading cities
into dynamic and innovative hubs in the cognitive-cultural economy.
Final Thoughts
This chapter suggests that the conventional way of framing the
debate about urban economic growth in terms of whether specialization or diversity is more beneficial to cities is being transcended. The
evidence from the case studies reported on suggests that the most
dynamic and innovative cities are starting to move beyond the narrower
limitations of specialization or diversity. They are being reconstituted
as “Schumpeterian hubs” of innovation and creativity—centres where
existing resources are recombined to create innovations, new products,
and entire new industries. Part of this transformation involves the growing integration of a number of leading sectors, in areas such as high-end
business services, the cultural industries, fashion, design, and advertising, into the cognitive-cultural economy. But it is important to recognize
that this is happening in the context of the integration of these centres
into the global economy, where local innovation capabilities are becoming part of broader, global knowledge networks. There are relatively few
centres in the world that are completely self-sufficient in the production
of any good or any product. The potential of knowledge-intensive economic activities to create wealth does not automatically translate into
similar growth of employment opportunities. Wealth and employment,
and poverty and under- or unemployment, are spatially concentrated in
cities where the negative externalities of poverty, social polarization,
65 OECD, Territorial Reviews: Competitive Cities in the Global Economy (Paris: OECD, 2006).
Chapter 3
105
and poor social cohesion are becoming more evident. Community-wide
efforts to address these problems from both an economic efficiency
and a social justice perspective require a more focused and coordinated
approach to the management of urban economies.
The key issue for cities and regions is the extent to which their
industries are moving beyond the narrow confines of traditional areas
of industrial specialization toward more advanced knowledge platforms. To succeed, innovative firms must be grounded in a strong local
economy capable of utilizing its local knowledge assets and research
infrastructure, but they must also be linked effectively into the global
economy. Coordinated approaches need to be devised at the level of the
city-region to improve the capabilities of firms in the local economy,
as local governments simply lack the resources and funding to implement these strategies on their own. The resources needed to support
such strategies reside at the federal and provincial level. Local development initiatives must be able to tap into existing federal and provincial resources and put them to work in the local economy. Successful
and effective policy has to be the responsibility of more than just one
level of government—local, provincial, or federal. Those cities and
regions that are implementing a more coordinated approach to economic development have a strong, engaged civic community, capable
of reaching a consensus around its future economic trajectory. Chapter
4 turns to a consideration of this process.
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21st Century Cities in Canada
4
From Government
to Governance
The Role of Civic Capital in
Urban Economic Development
Introduction
A
s the global economy struggles to recover from the shock of
the past year, the industrial landscape of Canada’s major cities
is being dramatically reconfigured. Some of the most successful companies that have anchored key sectors of the economy in core
city-regions—such as Nortel in Ottawa, Stelco in Hamilton, General
Motors in Oshawa, and Chrysler in Windsor—have shrunk substantially
or virtually disappeared. This decline has had devastating implications
for the cities in which they have long been the anchor companies.
Larger city-regions are better insulated from such changes because
of the more diversified economic base on which they rest. Even some
of the mid-sized cities with a more specialized economic base and a
strong concentration in manufacturing have begun to recognize the need
to shift their economies to more knowledge-based strategies that cut
across existing sectors and to reposition themselves for future growth.
In most instances, however, the success of these strategies depends on
the ability to draw on existing federal and provincial programs to support
new or expanded research facilities and other institutions. The cascading
requests for government assistance from a growing number of sectors,
and the current constraints on federal and provincial funding, highlight the need for more strategic thinking about the role of government
support for economic development, in general, and at the urban level, in
particular. The impossibility of meeting all these demands accentuates
the need for governments to align new and existing policies more
effectively across competing jurisdictions and to ensure that future
investments make the maximum contribution to urban economic
development. Such an approach requires that policy development and
implementation take into account the perspectives of a broad array of
local actors with significant interests in, and concerns about, the economic prospects of the communities where they live and work.1 It
involves a shift in focus from government to governance, often referred
1
Maryann Feldman and Roger Martin, “Constructing Jurisdictional Advantage,” Research Policy 34, 8 (October 2005), pp. 1235–1249.
Chapter 4
109
to as “governing beyond government.” The key distinction between government and governance turns on the recognition that policy outcomes
are not merely the product of actions taken by formal governmental
authorities but also depend on the interaction of a broad array of civic
interests. Central to the concept of governance is the development of
styles of governing in which the boundaries between public and private
actors, and even between different levels of government, become blurred.
A broader and more inclusive approach to economic development strategy
in city-regions requires a reorientation from government to governance
that cuts across existing programs and levels of government to achieve
a more effective degree of “policy alignment.”
The critical issue is how the conditions that affect the trajectory of
growth for an urban economy can be influenced most effectively. Future
development in city-regions will be driven by the knowledge-intensive
innovation, and creative and design-based activities, associated with the
cognitive-cultural dimension of the economy. The preceding chapter
demonstrated that the fruits of knowledge-intensive economic activity
are distributed unequally among cities of different sizes, industrial
specialization, and labour markets, as well as among individuals
within those cities. Efforts to improve the economic performance of
city-regions, therefore, need to take into consideration the underlying
institutions in those city-regions that can support their industrial transformation. Relatively few Canadian cities enjoy the same diversified
economic base as Vancouver, Montréal, or Toronto, but each has its own
institutional assets and capacity to develop its local economy. There is
growing interest in the ability of cities to alter their economic fortunes,
but if they are to do so, civic leaders need to develop a concrete
understanding of the existing assets and deficiencies of their cities.
They need to develop strategies that build on the strengths, and work
to strengthen the linkages among networks and institutions within their
communities.
A key to the success of these efforts is to build connections between
civic actors and the associations in their communities. Communities
that are able to do so effectively can establish the basis on which
to design and implement new economic development strategies.
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21st Century Cities in Canada
Communities and cities, like companies, need to innovate and adapt
to remain competitive. They must engage in strategic planning exercises that identify and cultivate their assets; undertake collaborative
processes to plan and implement change; and encourage a civic mindset that fosters growth. Strategic planning processes place particular
emphasis on the role of social learning, since learning dynamics are
fundamental to the ability of urban economies to achieve and sustain
knowledge-based dynamism over the long run.2 Moreover, strategic
planning exercises are, at their most fundamental level, socially organized learning processes involving learning by individuals, by firms,
and by community-based organizations.3
This chapter explores the influence of three interrelated dimensions
of local governance and policy development on the strategic response
by cities and communities to the economic challenges they face.4 The
first dimension involves governance arrangements at the city-region
level—both the existing administrative structures that govern the cityregion and the relative openness of those governmental structures to the
influence and participation of a broad range of social actors and civic
associations. The complexity of economic development challenges
requires the active involvement of a broad cross-section of community
actors to devise effective policy solutions.
The second dimension concerns the nature of the relations among
various interests and associations active at the local level. In most cities,
influence has traditionally been exercised to a great extent by a local
2
The strategic planning approach to urban economic development, also referred to as innovationbased strategic planning, was elaborated in a series of reports for the U.S. Economic Development
Administration in the late 1990s and early 2000s. See J. Montana et al., Strategic Planning in
the Technology-Driven World: A Guidebook for Innovation-Led Development (Washington, DC.:
Collaborative Economics and the Economic Development Administration, U.S. Department of
Commerce, 2001).
3
Meric S. Gertler and David A. Wolfe, “Local Social Knowledge Management: Community Actors,
Institutions and Multilevel Governance in Regional Foresight Exercises,” Futures 36, 1 (February
2004), pp. 45–65.
4
Governing the Local Economy? Challenge and Change in London, Ontario [paper]. Presented by
Neil Bradford at 10th Annual Conference of the Innovation Systems Research Network. Montréal,
Que.: May 1–2, 2008, p. 7.
Chapter 4
111
development coalition representing those organizations and actors in the
community with the strongest interest in promoting the city’s economic
development. In recent decades, the role and influence of these coalitions have been contested by a wider range of social and community
interests, which are concerned about the way the benefits of economic
growth are shared among the population of the city at large, and about the
degree of inclusion or exclusion that prevails in local decision-making
processes. In cities where the contours of the development coalition are
successfully expanded, the conditions are laid for the creation of a networked set of collaborative organizations that can contribute to the city’s
economic development strategy. That, in turn, leads to the presence of
higher levels of “civic capital” in the local community, which become
an invaluable asset in the pursuit of the development strategy.
The third dimension involves the policy framework adopted to guide
urban economic development. The traditional approach to urban economic development, which dates to the post-war era from the 1950s
to the 1970s, focused on strategies to attract individual firms to a cityregion, frequently by providing low-cost land and services, and by
giving the targeted firms increasingly generous direct subsidies or tax
reductions.5 While this practice has been recognized as a relatively
high-cost approach to economic development that can degenerate into
a zero-sum game for the communities involved, it is still employed to a
surprising extent across North America. The second approach emerged
in the 1980s, when a growing number of states and provinces reacted
to the industrial restructuring of that decade by focusing their development efforts on building the educational and technological infrastructure
to support the growth of more technologically intensive firms and to
attract new investments on the basis of local research capabilities. In the
late 1980s, however, a growing number of regional and local governments
began to perceive the limits of this approach. Although the approach
5
In Canada, the use of tax subsidies to attract investment to a municipality was restricted by some
of the provinces, thus limiting the extent to which this device was used. However, many still
relied on the provision of low-cost serviced land or lower overall property taxes as a key aspect
of their economic development strategy.
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recognized the shift from an industrial economy to a knowledgebased one, it relied on the same public sector organizational dynamics
employed in the past to meet policy needs. As the focus of economic
development policy changed from chasing smokestacks to building
research infrastructure and stimulating innovation, state and provincial
governments created a mix of new policies administered by discrete
branches of individual line departments—often with little coordination
or integration across programs, and with minimal involvement from the
urban level of government or the local community the policies targeted.6
In response to the perceived weakness of the earlier approaches, a
growing number of city-regions have seen the need to adopt this strategic
approach to urban economic development. Clarke and Gaile, who
employ a slightly different typology of urban development strategies,
suggest that a potential fourth wave will build on the strategic planning
approach. Of necessity, it will emphasize the role of human capital in
urban economic development and the need for improved information
infrastructure to link urban economies more effectively into the global
one.7 In a world of increasing policy complexity and constrained
government resources, this approach will also require new forms of
governance to engage a broader spectrum of economic, social, and
cultural actors in the policy process and realize a greater degree of
policy alignment. Despite the benefits of including this broader range
of actors under the “big tent,” most urban jurisdictions rely principally
on the role of formal, institutionalized structures of local government
to devise and implement economic development policy. Where outside
civic interests are involved, they often are narrowly based on traditional
development coalitions.8
6
Doug Ross and Robert E. Friedman, “The Emerging Third Wave: New Economic Development
Strategies in the 1990s,” Entrepreneurial Economy Review 9, (1990), pp. 3–10.
7
The alternative typology of three waves of urban economic development strategies and a potential
fourth wave is outlined in Susan E. Clarke and Gary L. Gaile, The Work of Cities (Minneapolis,
Minn.: University of Minnesota Press, 1998), pp. 9, 80–83.
8
Brender, Cappe, and Golden, p. 76.
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113
In recent years, new economic development partnerships between
business and local government, such the Greater Halifax Partnership and
The Ottawa Partnership, have begun to emerge in a number of Canadian
cities. There are also new organizations, such as the Toronto City
Summit Alliance, which aim to represent a broad cross-section of the
local community. The experience with these new forms of partnership
and governance organizations provides instructive examples of an
alternative approach to economic development policy that shares
responsibility for development with a more inclusive range of actors
outside the administrative structures of urban governments: it may
even share formal administrative authority for development with them.
Despite the appearance of these inspiring “green shoots” of civic
innovation, there remains considerable scope for more bottom-up,
negotiated approaches to local governance. This chapter draws on a
broad conceptual literature on alternative modes of governance and civic
engagement, and investigates the prospects for adoption of a strategic
approach to local economic development.
Changing Patterns of Governance
The role of city-regions as drivers of economic growth and prosperity,
as well as the primary sites where the social dynamics of innovation
play out on the ground, underlines the significance of those conditions
that facilitate the transmission of knowledge among both leading-edge
and more traditional economic sectors in city-regions. The creation
of better linkages among relevant institutions and associated actors,
and the fostering of collaboration among a range of community-based
actors, are integral to the effective coordination of policy and its implementation at the local level. However, recognizing the importance of
linkages and collaboration to effective policy coordination is only part of
the challenge; better coordination also requires an understanding of the
conditions that support its emergence and development. Such an understanding requires that urban administrative structures be appropriate
for the city-regions they have jurisdiction over and that responsibility
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21st Century Cities in Canada
for relevant aspects of policy be shared with a range of local organizations capable of providing specialized knowledge and helping to
deliver programs or services.
The growing focus on the role of governance, as opposed to govern­
ment activities, encompasses recognition that policy outcomes are
not purely the product of what formal governments do. Governance
requires the development of styles of governing in which the boundaries between public and private actors, and even across different levels
of government, become blurred. Governance focuses on the mecha­
nisms of governing that do not rely just on the authoritative distribution of resources derived from traditional governmental structures.9
For Peters and Pierre, the underlying novelty of this approach is its
emphasis on the processes of governing, rather than the exercise of
formal authority through institutional structures. It recognizes “the
process through which public and private actions and resources are
coordinated and given a common meaning and direction.”10
This concept of governance builds on the insight that there is often
a substantial gap between the formulation of policy and its implementation. Policy outcomes are not merely the product of legislative or administrative actions taken by national, provincial, or local governments.
Senior levels of government may legislate in any one of a number
of areas within their jurisdictional authority, but the implementation of
that policy occurs on the ground in a specific geographic locality, where
the policy’s effectiveness will be determined. The extent to which it
achieves the desired outcome depends on the interaction among governmental authorities (operating a variety of arm’s-length governmental
agencies), private sector firms, and a wide range of industry and other
voluntary associations. For instance, the impact of federal and provincial
research policies is a product of the responses to the initiatives by private
9
Gerry Stoker, “Governance as Theory: Five Propositions,” International Social Science Journal 50,
155 (1998), p. 17.
10 Guy Peters and Jon Pierre, “Multi-Level Governance and Democracy: A Faustian Bargain?” In
Ian Bache and Matthew Flinders, eds., Multi-Level Governance (Oxford, U.K., and New York:
Oxford University, 2004), p. 78.
Chapter 4
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firms, public and private laboratories, post-secondary educational institutions, and intermediary associations. What ends up being implemented
may even differ radically from what the policy makers originally had in
mind. Consequently, the pattern of governance cannot be reduced to the
actions of any one actor but results from the combined interaction of a
wide range of public and sector organizations.11 More effective policy
alignment can be achieved if this complex set of governance relations
is recognized at the outset and the perceptions of the relevant groups
of actors are taken into account in both the formulation and the implementation of that policy.
A key challenge for governments operating in this mode of governance
is to establish the conditions under which a broad cross-section of actors
can engage in a consultative and interactive fashion with government
authorities across different levels of jurisdiction. Where this works, it
may involve the delegation of certain tasks from formal government
agencies to accredited business associations or community-based
organizations. The latter frequently possess specialized knowledge
of important issues and credibility with their members, which can be
of invaluable assistance to public sector agencies in improving policy
design and implementation. The dispersal of power to a broader range
of civic actors creates the opportunity for more meaningful dialogue
to take place at the city-region level of governance. That is important,
because dialogue or discussion is central to the process by which parties
come to reinterpret themselves and their relationship to other relevant
actors within the urban economy, and formulate alternative visions of
how the economy can develop. The involvement of these multiple actors
gives them a greater sense of ownership of the strategies adopted and
places greater responsibility for the outcome onto those organizations
that will be directly affected.
The adoption of this approach does not imply an abandonment of
a central role of the formal or institutional level of government but,
rather, a rethinking of that role. In this approach, the various levels of
11 Rhodes, p. 657.
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government work with civic associations and social actors, rather than
operating in a traditional command-and-control fashion. Government
agencies continue to establish the basic rules governing the operation
of the economy, but greater emphasis is placed on the devolution of
responsibility to a wide range of associative partners by consulting with
them and giving them a voice.12
Urban Governance in a Multi-Level Setting
Urban governance applies these principles on a local scale. As one
definition puts it, urban governance “refers to the process through which
local authorities, in concert with private interests, seek to enhance
collective goals.”13 Included in this concept are the mechanisms
by which civic associations and social actors participate in decisionmaking processes in city-regions, and the way in which public and
private interests are coordinated. It also involves the formulation of
strategies to promote the future development of the urban economy.
There is growing recognition that effective governance mechanisms
are a critical factor in supporting high-performing cities. The OECD
has devoted considerable attention to studying the relationship between
effective governance at the local level and higher economic performance.
A recent report notes that:
The analysis of governance issues in relation to [the]
drivers of growth suggests that improving local governance is conducive to economic and employment
development and prosperity. . . . Several new forms of
governance have emerged over the past years. The
main thrust of these developments has been to stimulate
co-operation between public, private and civil society
12 David A. Wolfe and Tijs Creutzberg, “Community Participation and Multilevel Governance in Economic Development Policy.” Panel on the Role of Government. Toronto: Office of the Premier,
December 2003.
13 Jon Pierre, “Models of Urban Governance: The Institutional Dimension of Urban Politics,” Urban
Affairs Review 34, 3 (1999), p. 374.
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actors; to bolster a strategic approach to economic and
employment development at local and regional levels;
and to take a co-ordinated approach to implementation.14
A related, but unresolved, issue concerns the appropriate scale of
urban governance and the relationship between formal administrative
structures and the economic boundaries of a city-region. As noted in
the Introduction, the natural boundaries of a regional economy are often
broader than the jurisdictional boundaries of the various municipalities
that comprise the region.15 The Conference Board has noted there
is considerable consensus that the administrative structures of cityregions must be sufficiently broad to address region-wide issues that
often extend beyond the boundaries of a particular city, including fiscal
issues, the coordination of regional transportation needs, land-use planning, the adoption of comprehensive economic development strategies,
and provisions for dealing with social disparities. Many municipal policy
issues—ranging from providing basic services to ensuring affordable
housing and maintaining environmental sustainability—spill over into
neighbouring jurisdictions. The existing geographic boundaries of most
cities are rarely broad enough to address these issues, particularly those
requiring the adoption of economic development strategies.16 However,
past efforts to establish administrative structures at the appropriate
scale have met with mixed success, as we shall see in the next chapter.
In some instances, the development of more effective governance
mechanisms involving a broad range of community-based and nongovernmental actors can compensate for the absence of formal governmental structures at the appropriate scale. A recent study suggests that
14 Sylvain Giguère, “The Drivers of Growth: Why Governance Matters.” In OECD, Local Economic
and Employment Development, Local Governance and the Drivers of Growth (Paris: OECD,
2005), p. 34.
15 OECD, Territorial Reviews: Competitive Cities in the Global Economy (Paris: OECD, 2006).
16 Brender, Cappe, and Golden, p. 69.
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21st Century Cities in Canada
emerging forms of inter-municipal cooperation in Europe and Canada
provide an effective means of overcoming the existing fragmentation of
municipal jurisdictions. To the degree that inter-municipal cooperation
is one of several forms of regional coordination, it offers some insights
into the factors that contribute to more effective governance. The study
offers a framework that analyzes the diversity of approaches to intermunicipal cooperation. It suggests that a combination of regional,
structural, institutional, and strategic factors can help explain the emergence of cooperation among local governments in the realm of regional
economic development. Notably, it emphasizes the contribution of
strong regional identities embodied in civic networks and the role
of these networks in promoting political cooperation across existing
municipal boundaries within a city-region. Regardless of their structural,
strategic, or institutional constraints, regions with higher degrees of civic
engagement and more interconnected civic networks have greater success in achieving high degrees of inter-municipal political cooperation.17
A related concept, multi-level governance, speaks to the relationships
among governments across different geographic scales and levels of
jurisdiction. The concept is derived from the analysis of the complex
relationships among the various levels of government within the
European Union. Whereas the governance literature focuses on
the integration of a broader array of non-governmental actors into
governing processes, multi-level governance emphasizes the need
for greater cooperation across different levels of government that
share overlapping or competing spheres of jurisdictional authority across a related set of policy areas. This idea stems from the
passage of the Single European Act of 1992, which created a third
tier of policy making, the European Union. It introduced the principle of subsidiarity—the idea that the level of government closest
to the population should provide the service in question—and profoundly altered the relative powers of both national and regional
17 Cooperation and Capacity: Exploring the Sources and Limits of City-Region Governance Partnerships [paper]. Presented by Jennifer Nelles at Annual Meeting of the American Political Science
Association. Toronto: September 3–6, 2009.
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governments in Europe. The core idea of multi-level governance
is that the national level no longer monopolizes policy making and must
engage in a collaborative decision-making process with other levels
of government and relevant actors. In so doing, it inevitably cedes control
over some aspects of the policy-making process; decision-making
competencies are shared among a range of governmental actors, with
no one level exercising a monopoly over another.18
In North America, where federalism is the norm, the notion of
multi-level governance underscores the fact that the areas of federal
and provincial jurisdiction have long since ceased to be the “watertight compartments” described in classical theories of federalism.
Understanding the interdependent nature of governmental roles and
responsibilities, as well as those of social actors outside the formal political process, is increasingly important to achieving successful policy
outcomes. Similarly, the sharing of effective decision making among
several levels of government promotes a process of interactive learning—
not just within public agencies, but also among firms, industry and
community associations, as well as other institutions—which is essential to economic success on an urban scale. However, as Sellers reminds
us, interactive learning does not occur in a vacuum. The context
for urban governance is strongly influenced by the formal institutional
structures of government at the national and sub-national levels, as well
as by the prevailing pattern of politics in different countries. Thus, the
pattern of urban governance varies across national infrastructures, and
the patterns of governance that emerge at the local level need to be
analyzed in this context.19 Governance, as it now exists, describes the
multi-faceted aspects of social and economic coordination across various
formal levels of government, as well as with a range of non-governmental
18 Lisbet Hooghe and Gary Marks, Multi-Level Governance and European Integration (Lanham,
Md.: Rowman and Littlefield Publishers, 2001), p. 4.
19 Jeffrey M. Sellers, “The Nation-State and Urban Governance: Toward Multilevel Analysis,” Urban
Affairs Review 37, 5 (May 2002), pp. 611–641.
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actors, to achieve a desired set of goals. The governance of city-regions,
in particular, must be viewed as part of a larger issue of coordination
across multiple geographic scales and jurisdictional levels.20
In summary, a growing literature on the importance of urban governance identifies several key elements. First, the increasing complexity
of a range of policy issues has shifted the focus from government to
governance. Developing policy in horizontal, coordinated networks
that involve both public actors and civic associations is seen as a more
effective way to achieve solutions than using traditional, bureaucratic,
and hierarchical approaches. Second, urban governance assumes greater
relevance as the effects of proximity on an innovative and learning
economy are better understood. City-regions are seen not only as the
primary engines of national economic competitiveness and prosperity,
but also as the places where public problems are experienced most
acutely and, therefore, where innovative governance mechanisms are
most needed. The growing appreciation of the value of flexible, associative forms of governance at the urban level has helped encourage
experimentation with different locally based partnerships across a wide
range of city-regions in Europe and North America.
Governance and Social Learning
A key to this evolving pattern of governing relationships is the
importance of learning. As Bengt-Åke Lundvall and Björn Johnson
point out, the knowledge frontier is moving so rapidly in the current
knowledge-based economy that access to, or control over, knowledge
assets affords merely a fleeting competitive advantage. The speed of
change means that the economic value of knowledge tends to diminish
the more widely that knowledge is disseminated. In tandem with this
tendency, the tacit forms of knowledge that cannot easily be codified
and transmitted electronically increase in value. Hence, it is the ability
to acquire knowledge, especially in its tacit form—in other words, the
20 Allen J. Scott, John Agnew, Edward W. Soja, and Michael Storper, “Global City-Regions.” In
Allen J. Scott, ed., Global City-Regions: Trends, Theory, Policy (Oxford, U.K., and New York:
Oxford University Press, 2001), p. 22.
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capacity to learn—that is critical to developing and maintaining innovative capacities.21 Learning refers here to the building of new competencies and the acquisition of new skills, not just acquiring information. In
this sense, “learning and innovation are best understood as the outcome
of interaction . . . interactive learning is a socially embedded process.”22
Learning dynamics are central to the innovation process, since these
dynamics are essential to the ability of regional and urban economies to
sustain their knowledge-based dynamism over the long run.
In recognition of this change, organizations are becoming more
adaptive by tapping into the knowledge and capabilities of their members. The challenge for both the public sector and private organizations
is to manage knowledge and intelligence in social ways, through
“social learning,” rather than accessing them on an individual basis.
“Learning” in this sense is defined as the capacity to improve current
performance as a result of experience by redefining the organization’s
objectives, and modifying behaviour and structures as a result of new
circumstances.23 The idea of social learning assumes that innovation
and economic development are interactive processes that rely on
establishing supportive social relationships among a range of actors,
and communicating insights and knowledge for successful outcomes.
Regional economic development processes concern, at their most basic
level, socially organized learning processes involving learning by individuals, by firms, and by institutions.
The prerequisite for improving governance mechanisms at the local
and regional scale, then, is to establish effective systems for socially
organized learning. A number of processes are central to this. In his
21 Bengt-Åke Lundvall and Björn Johnson, “The Learning Economy,” Journal of Industry Studies 1.2 (December 1994), pp. 23–42.
22 Bengt-Åke Lundvall, National Innovation System: Analytical Focusing Device and Policy Learning Tool, Working Paper R2007:004 (Ostersund, Swe.: Swedish Institute for Growth Policy
Studies, 2007), p. 10.
23 Gilles Paquet, “States, Communities and Markets: The Distributed Governance Scenario.”
In Thomas J. Courchene, ed., The Evolving Nation-State in a Global Information Era: Policy
Challenges (Kingston, Ont.: John Deutsch Institute for the Study of Economic Policy, Queen’s
University, 1997), pp. 25–46.
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study of successful cities and communities, Neil Bradford identifies
three dynamics that contribute to successful instances of social learning.
The first is a civic learning process that results in recognition among
local public and private organizations of the importance of equity,
diversity, and interdependence, and the need to accommodate these
realities in their collaborations. Equally important is the second
dynamic, administrative learning, whereby administrators learn new
skills for building relationships, seeking consensus, assessing risk, and
measuring performance. Such skills help foster a government that is
effectively engaged in ensuring balanced representation of social interests, addressing systemic differences in the capacity to participate, convening and organizing meetings, establishing protocols for monitoring
progress, and maintaining the focus and commitment of social partners.
Finally, civic and administrative learning culminate in the third
dynamic, policy learning. At this stage, experience gained through
working with the various actors involved in the process helps to refocus
the policy agenda and policy goals.24
Civic Capital and Urban Governance
Research on urban economic development has long been concerned
with the factors that contribute to the success of some regions and the
failure of others. Among the relevant factors noted has been the character
of relationships among actors in a city-region and the actors’ capacity
to collaborate in the pursuit of common goals. Empirical studies of
urban governance have begun to generate several useful typologies of
the variation in governance dynamics across different cities. Perhaps
most importantly, they have focused attention on questions of the way
the values and objectives of governance participants shape political
choices about governance structures. Social actors’ ability to cooperate is a critical element that contributes to, or undermines, an urban
24 Neil Bradford, Cities and Communities That Work, p. 11.
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economy’s capacity for social learning. A key question concerns the
best way to foster more effective cooperation within a wide array of
urban settings.
The concept of social capital has been used to explain why some
urban regions are more successful in overcoming the obstacles to
establishing cooperation than others. It also suggests why some regions
continue to be “sticky” in attracting strong concentrations of firms in
related activities. The process of globalization has transformed what
were previously local advantages into factors of production that firms
can easily transfer to a variety of locations around the globe. Firms
faced with this increase in factor mobility search for local advantages
on which to base their competitive edge. Such advantages must have
a high potential value and be difficult to imitate or replicate. Social
capital is one such factor. It is defined as the “social relations among
agents, resting upon social institutions that allow for cooperation and
communication.”25 It refers to various features of the social organization of a region, such as the presence of shared norms and values, that
facilitate coordination and cooperation among individuals, firms, and
sectors for their mutual advantage. As Kevin Morgan has perceptively
commented, “it has a value, but it has no price.” Social capital is not
equally available in all communities; it cannot be purchased or transferred; and it is difficult to imitate or replicate.
An important distinction is made between the business realm and the
civic realm of social capital. Business relationships include technological
learning within the firm, and inter-firm trade and knowledge exchanges.
Trust, as a component of social capital, is based on the understanding
that business partners are competent and can be relied on to perform
as expected. Brown and Duguid note that people are remarkably well
informed about what other firms are doing in Silicon Valley—who’s good
at a particular task, who’s not, who can be relied on, and who can’t. Social
capital can help reduce market costs for firms located in densely related
networks with high levels of trust by supporting stable and reciprocal
25 Mark Lorenzen, “Social Capital and Localised Learning: Proximity and Place in Technological
and Institutional Dynamics,” Urban Studies 44, 4 (April 2007), p. 807.
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relationships among them.26 Civic relationships, on the other hand,
include those that exist between people in a community who interact
with each other through their involvement with schools, various cultural and leisure activities, and civic associations. The civic dimension
of social capital is particularly sensitive to geographic distance because
many of the activities that strengthen civic relationships are based
on the specific catchment area of a civic association or membership
in a cultural organization. These relations frequently entail face-to-face
meetings that are limited by distance.27
Building on this distinction between the business and the civic dimensions of social capital, the concept of civic capital is used to analyze
the contribution that more cooperative forms of behaviour make to the
success of urban economies. Civic capital focuses on the critical role
that dense networks of civic associations play within successful communities. It offers a useful lens to examine the mechanisms that facilitate
effective coordination at the urban level and to elaborate an approach
to effective urban governance. Civic capital is defined as a set of relationships that emerge from interpersonal networks tied to a specific
region and that contribute to the development of a sense of community
based on a shared identity and on shared goals and expectations.
It encompasses the many conditions that support civic engagement
among a wide range of individual actors or associations and that contribute to the emergence of collaborative forms of governance.28
Civic capital is generated when key actors are able to formulate a
common vision of a city-region’s future and make decisions about that
future in a collaborative and inclusive manner. Civic capital is rooted in
26 John Seeley Brown and Paul Duguid, “Mysteries of the Region: Knowledge Dynamics in Silicon
Valley.” In Chong-Moon Lee, William F. Miller, Marguerite Gong Hancock, and Henry S. Rowen,
eds., The Silicon Valley Edge (Stanford, Calif.: Stanford University Press, 2000), p. 36. Also Peter
Maskell, “Social Capital, Innovation and Competitiveness.” In Stephen Baron, John Field, and
Tom Schuller, eds., Social Capital (Oxford, U.K.: Oxford University Press, 2000), pp. 111–123.
27Lorenzen.
28 David A. Wolfe and Jen Nelles, “The Role of Civic Capital and Civic Associations in Cluster
Policies.” In Charlie Karlsson, ed., Handbook of Research on Innovation and Cluster Policies
(Cheltenham, U.K.: Edward Elgar Publishers, 2008), pp. 374–392.
Chapter 4
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a dense network of civic associations within the city-region that supports
the community’s efforts to intensify the strength of the connections
among them. Finally, civic capital also focuses on the need to nurture
new community leaders and provide resources and support for them.29
Civic leaders, or civic entrepreneurs, are critical in articulating a
shared vision or orientation for their community, and in intensifying
and formalizing collaborative networks within and between communities. Civic entrepreneurs build bridges between localized networks and
different communities of actors. They are also effective at broadening
the social base of local development coalitions to involve a wider range
of actors in strategic planning exercises to formulate new approaches
to urban economic development. Recent experience suggests that in
order to formulate strategies to improve their prospects for economic
development, city-regions require the presence of strong, responsive
relationships between the economy and community that give both firms
and the community a sustained advantage.30 These relationships are
mediated by civic entrepreneurs and by collaborative organizations that
bring the respective economic, social, and civic interests together to
cooperate on strategies for the community.
The degree of mutual understanding and trust available to build civic
capital is facilitated by processes that strengthen the interaction among
actors so that understanding and trust become a more institutionalized
feature of the local economy. The value of building better understanding
and trust is reflected in the role of “talk” in creating the institutions
of the learning economy. “Talk refers to communicative interaction,
designed not simply to transmit information and relay preferences, but
to achieve mutual understanding. In the case of prospective learning,
information from other experiences where learning has worked . . .
29 William R. Potapchuk and Jarle P. Crocker Jr., “Exploring the Elements of Civic Capital,” National
Civic Review 88, 3 (Fall 1999), p. 176.
30 Douglas Henton, John Melville, and Kimberly Walesh, Grassroots Leaders for a New Economy:
How Civic Entrepreneurs Are Building Prosperous Communities (San Francisco: Jossey-Bass
Publishers, 1997).
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can be valuable as a stimulus.”31 Talk must be supported by a range
of incentives that encourage the parties to maintain their involvement
with these institutions. Small, repeated experimental interactions can
be effective in getting the parties to work together in a limited fashion
and facilitate institutionalized learning. The creation of appropriate
forums to support this kind of interaction at the civic level can improve
access to critical pieces of knowledge vital to building civic capital and
creating the conditions needed to launch successful strategic planning
exercises. Knowledge of other civic actors’ strategies and positioning
on key issues can reduce uncertainties and foster greater buy-in to a
common vision.
The concept of civic capital provides insight into the processes and
dynamics that contribute to more successful urban governance. Cityregions with higher degrees of civic capital, where the social actors
and civic associations have formed an effective basis for cooperation,
contain networks of collaborative institutions that contribute to more
effective governance. Collaborative institutions, which include local
chambers of commerce, industrial associations, and social organizations,
embody values and attitudes intrinsic to the city-region and help build
civic capital. Based on their experience with launching community-based
economic development initiatives, Doug Henton and his colleagues
argue that what we have termed civic capital is critical for the success
of urban economic development initiatives. Civic capital can be created,
they say, by establishing collaborative relationships between various
elements of the business and civic communities. “[T]hese alliances, networks and other relationship-building mechanisms create connections
and linkages vital to economic development in a technology-driven
world. . . . Relationships matter.”32
31 Michael Storper, “Institutions of the Knowledge-Based Economy.” In Meric S. Gertler and
David A. Wolfe, eds., Innovation and Social Learning: Institutional Adaptation in an Era of
Technological Change (Houndsmill, U.K.: Palgrave Macmillan, 2002), p. 140.
32 Montana et al., p. 10.
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127
Successful urban economies benefit from the presence of colla­
borative institutions, which help communicate the respective needs of
different community actors to each other, establish local and regional
priorities for economic development, and build effective bridges
across different segments of the economic community that might not
otherwise be linked. “Collaboration is most effective when it draws
new people together, not just the ‘usual suspects.’”33 Collaborative
institutions can also provide the critical building blocks for local
development coalitions. Above all, they contribute to the articulation of a shared vision for the economic community and the local
economy and build a consensus among key civic actors and associations around that vision. In doing so, they build civic capital by creating relationships and developing collective institutions that benefit
the community, identifying common strengths or mutual needs, and
contributing to the development of a common economic agenda.
Henton maintains that a good measure of Silicon Valley’s ability to
ride the five major technology waves that have shaped its economy
since the end of the Second World War has been due to a corresponding
set of changes in its style of governance over the same period:
As the Silicon Valley economy was going through
transition, so were its governance institutions in a
rough parallel to the economic changes. Silicon Valley
has shifted from essentially a laissez-faire limited
government, market-driven region, first into a more
business-driven model, and then into new models of
collaboration and networks.34
The question of which social actors and civic associations participate
in the process of urban governance is critical to understanding the
development strategies they pursue and how those strategies are devised.
33 Potapchuk and Crocker Jr., p. 179.
34 Douglas Henton, “Lessons From Silicon Valley: Governance in a Global City-Region.” In Allen
J. Scott, ed., Global City-Regions: Trends, Theory, Policy (Oxford, U.K., and New York: Oxford
University Press, 2001), p. 396.
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21st Century Cities in Canada
More inclusive theories of civic capital presume a willingness on
the part of social actors and civic associations to reach beyond the
narrowly defined interests of their respective constituencies to forge
broadly based development coalitions and agree on common strategies
for promoting urban economic growth. Yet the danger with this
assumption is a tendency to overlook prevailing differences in power
resources among the actors and to assume they will overcome those
differences for the sake of pursuing an agreed-upon agenda.
. . . substantive power differentials between social actors
are often an obstacle to developing a common strategic
vision, and the varying capacity of different groups
to participate—and to represent the views of their constituencies—must be recognized and addressed.35
As Sean Safford has pointed out, what separates communities with
strong reservoirs of social and civic capital from those that lack them is
not the presence of these networks and leaders, but the social context in
which they operate. Different kinds of social networks affect the ability
of key leaders to form coalitions within their communities and formulate
clear strategies in response to current crises and emerging opportunities.
In his comparison of the economic growth trajectories in two “rustbelt”
cities—Youngstown, Ohio, and Allentown, Pennsylvania—Safford
attributes the relative failure of the first and success of the second to
the quality of social networks in each place. “Differences in the underlying structure of inter-organizational relationships in the two cities
shaped the strategic choices and possibilities for mobilization among
key organizational actors” and “these differences were the source of the
regions’ economic divergence.”36 In this sense, it is not the amount of
social or civic capital within a community that matters, but the way in
35 Neil Bradford, Why Cities Matter: Policy Research Perspectives for Canada, CPRN Discussion
Paper No. F/23 (Ottawa: Canadian Policy Research Networks, 2002), p. 51.
36 Sean Safford, Why the Garden Club Couldn’t Save Youngstown: Civic Infrastructure and Mobilization in Economic Crises, Working Paper (Cambridge, Mass.: MIT Industrial Performance
Center, 2004), p. 3.
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which the distribution of power and the network of relationships among
key actors affects their ability to deploy the civic capital available
to them in the pursuit of economic development strategies. The formulation of new approaches for the development of urban economies
must be analyzed in the context of these networks of relationships
among key actors in the city.
Strategic Planning in the Urban Economy
Strong reservoirs of civic capital at the local level and better governance mechanisms are valuable, but far from sufficient, advantages
that can help Canada’s cities respond to the cascading shocks buffeting
the global economy. Adopting city-regions as the focus for economic
development initiatives has a number of consequences for the design
and implementation of those strategies. Emphasizing the importance
of a territorial rather than a sectoral approach highlights the need for
policy coordination across a range of policy domains and jurisdictional boundaries. That, in turn, draws attention to the existing nature
of governance arrangements and the benefits of bottom-up, more
participatory approaches. This approach has recently gained more
widespread acceptance in encouraging experimentation with locally
driven collaborative mechanisms based on partnerships in a growing
number of OECD countries. Empirical research on the best practices
and variations in governance arrangements arising from these experiments is beginning to emerge.37
However, a number of obstacles lie in the path of the successful
implementation of these participatory development strategies. One
of the limitations city-regions face when using a governance-based
approach is the lack of financial resources to fully support the desired
initiatives. This problem can be compounded by the absence of a formal
tier of government institutions corresponding to the actual economic
37 OECD, Local Economic and Employment Development, Local Governance and the Drivers of
Growth (Paris: OECD, 2005).
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21st Century Cities in Canada
territory of the city-region. Smaller and less dynamic city-regions
may also face a greater challenge in accessing provincial and national
government resources, or even gaining a significant place on these
governments’ policy agendas. An additional danger lies in zero-sum,
competitive approaches, associated with traditional development strategies that use financial incentives and subsidies to attract investment
away from more established centres. Engaging in these kinds of bidding
wars can reduce the economic benefit to the larger city-region or the
nation as a whole.38
Rather than concentrating on the zero-sum competition for inward
investment, the most successful places focus on searching for and generating new economic knowledge that drives innovation and export
success.39 As Feldman and Martin note, most jurisdictions pursue a
strategy defined by the collective decisions that actors within the jurisdiction make over time, whether these decisions are coordinated or
not and whether they are articulated or not. Successful jurisdictional
strategies are those that contribute to high and rising wages for local
workers over time. City-regions offer a relevant scale for consideration
because of the benefits of industrial agglomeration that accrue to
them. Jurisdictions can benefit from creating an economic base with
unique and valuable assets that provides a differentiated advantage
for their city-region. However, Feldman and Martin emphasize that
“constructing jurisdictional advantage takes the will of all the actors—
a consensus vision and vision of uniqueness.”40
Following this line of thinking, one approach to constructing jurisdictional advantage at the level of the city-region takes the form of
strategic planning. At the core of this approach is the cultivation within
the urban economy of local assets that cannot be transferred across
38 Andrés Rodríguez-Pose, “The Rise of the ‘City-Region’ Concept and Its Development Policy
Implications,” European Planning Studies 16, 8 (September 2008), pp. 1037–1039.
39 Allison Bramwell, Jen Nelles, and David A. Wolfe, “Knowledge, Innovation and Institutions:
Global and Local Dimensions of the ICT Cluster in Waterloo, Canada,” Regional Studies 42, 1
(February 2008), pp. 101–116.
40 Feldman and Martin, p. 1245.
Chapter 4
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geographic space cheaply and easily. In his analysis of the factors that
contribute to innovation at the urban level, David Audretsch argues that
innovation does not depend on a narrow conception of economic factors
alone but must also include a consideration of the broader set of organizational and institutional factors discussed above. He maintains that the
greater the competition for new ideas within a city, the more conducive
the urban environment is to innovative activity. Effective strategic planning exercises are concerned with identifying a city-region’s unique
jurisdictional assets that can support the development of its economy.41
They can include its knowledge economy assets, such as workforce
skills, knowledge and research development institutions, creativity,
advanced telecommunications infrastructure, quality of place, and
financial capital; the strength of its collaborative institutions and organizations, such as regional development organizations, professional
networks, research consortia, and entrepreneurial support networks;
and the civic culture, including the values, attitudes, and regional mindset
that govern its approach to urban economic development.
The successful adoption of a strategic planning approach requires a
new style of policy development at the urban level that involves the kind
of socially organized learning processes discussed above. Successful
city-regions are able to draw on the presence of networks of key
actors and associations to launch exercises that identify and cultivate
their assets; undertake collaborative planning processes to implement
change; and encourage a regional mindset that fosters growth. These
exercises can succeed only if the prevailing structures of urban governance provide the support they need to be effective. Variations in
the capacity of individual city-regions to engage in these processes are
linked as much to the “collaboration between agents and their ability
to mobilize assets” as to the city-region’s ability to create and diffuse
new knowledge.42
41 Audretsch, “The Innovative Advantage of U.S. Cities,” pp. 172–173.
42 Simmie and Wood, “Innovation and Competitive Cities,” p. 149.
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21st Century Cities in Canada
An essential criterion for success is the ability to engage key
members of the local community in planning for future economic
development. The presence of a committed, creative, and collaborative
leadership is the most essential factor in the success of a strategic planning
process. However, the evidence from numerous case studies suggests
that the sources of that leadership may vary. In some cities, it comes
from political institutions or industry associations. In others, it originates
with an inspirational figure in a university setting or anchor firm who
attracts like-minded individuals in other firms or industry associations.
These kinds of leaders mobilize those in the community with an interest
in altering its economic trajectory and forge a development coalition.43
The process of developing a strategic plan and formulating related
initiatives is an important stepping stone to building a development
coalition with a shared sense of how to achieve the projected economic
future of the city-region. To create buy-in for the strategy at the community level, the initiatives must respond to real needs identified by
the members of the development coalition. Finally, the entire process
must be an iterative one. No strategic plan is carved in stone. Economic
conditions change, and the challenges and opportunities facing a cityregion are constantly evolving. To remain realistic, both the strategic
plan and the initiatives that comprise the action plan must be revisited.
The process of revisiting the strategy is also an effective device for
renewing civic engagement in the overall planning exercise. Even the
most successful city-regions, including Silicon Valley, have adopted
regular strategic planning processes to help them face the challenge of
the continual need to refocus and renew. They have also used these processes as an effective means of re-engaging strong civic leaders with
the regional economy.44
43 Henton, Melville, and Walesh, pp. 31–35.
44 Doug Henton, Kim Walesh, and Liz Brown, Next Silicon Valley: Riding the Waves of Innovation [online]. (San Jose, Calif.: Next Silicon Valley Leadership Group of Joint Venture, 2001).
www.jointventure.org/PDF/nsvpaper.pdf.
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From Government to Governance: Final Observations
The preceding analysis outlines the conditions needed for, and the
elements of, an emerging paradigm for economic development policy in
city-regions that is based on the underlying principles of participatory
and multi-level governance. Achieving more effective policy alignment
in the pursuit of an economic development strategy requires a greater
degree of coordination across various levels of government, at both
the jurisdictional and spatial levels, as well as among their respective economic development agencies. It also requires a more engaged
involvement on the part of a broader range of societal actors, through
the mobilization of civic capital and the recruitment of active “civic
entrepreneurship” that contributes to social learning. In a globalizing,
knowledge-based economy confronted with increasingly complex policy
problems, the search for effective solutions must draw on all relevant
actors, not just those employed in formal governmental bureaucracies.
Nor does any one level of government have a monopoly on the policy
instruments and approaches necessary to create an effective economic
development strategy on an urban scale. The coordinated approach to
economic development policy requires a more integrated approach to
policy planning at the governance level.
The framework set out at the beginning of the chapter identifies three
key elements that improve or constrain the ability of individual cities
and regions to formulate a strategic management approach to urban economic development. Within that broad framework, there is great variation
across countries, and even within an individual country, in the way
this approach is implemented. The next chapter examines the extent to
which the elements are present in a cross-section of Canadian cities, and
the extent to which these cities have been successful in responding to
the current economic challenge and mapping alternative approaches to
their economic future. Both the broader conceptual approach outlined
in this chapter and the cases presented in the next one provide some
insights into how new governance models are evolving at the urban level
to chart strategic responses to the current economic restructuring.
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5
Urban Governance and
Strategic Planning in
Canadian Cities
Introduction
T
he current recession is accelerating the shift away from
the traditional manufacturing industries that have anchored
the economy of cities in the industrial corridor of Central
Canada toward knowledge-intensive business services and sectors
associated with the creative and cultural economy. While recent
upward trends in commodity prices have raised some hopes that
smaller cities in the hinterland of the country might ride a renewed
“staples” boom to growth and prosperity, the evidence suggests that
the effects of this boom will be limited to a few large cities, such as
Calgary and Edmonton, and a limited number of “metropolises on
the margin,” such as St. John’s. Overall, the path of development
in Canada’s urban system points to increased growth in the largest
cities combined with greater challenges in adapting to the evolving
global economy for our small and medium-sized cities.
The strategic planning approach outlined in the previous chapter
suggests that city-regions have some capacity to influence their trajectory of economic development. In fact, given the balanced distribution
of knowledge assets and research infrastructure across the country,
there are relatively few cities that do not have the potential to mobilize
those resources in the pursuit of a local development strategy. A key
challenge in implementing this approach is the adoption of governance
mechanisms to ensure a better coordination of relevant civic interests,
and more effective alignment across available programs and policy
instruments at all three levels of government. No one level of government has a monopoly on the policy instruments necessary for an effective economic development strategy. Although the federal and provincial
governments control the majority of the policy levers that can influence
urban economic development, the full benefit of those policies cannot
be realized without coordination at the city-region level. A prerequisite
for the success of this approach is the development of new governance
mechanisms that enhance the level of civic capital in cities and communities. Economic development policies work most effectively when
Chapter 5
137
an inclusive group of social actors and civic associations are brought
under the “big tent” and involved directly as active participants in the
design and implementation of a strategic planning process.
However, as the analysis in Chapter 4 suggested, the implementation of this approach depends on the state of three critical factors at the
urban level:
the appropriateness of governmental structures at the city-region
level to the natural boundaries of the regional economy, and the
openness of those structures to participation by a broad range of
social actors and civic associations;
the extent to which the contours of the local development coalition
have been expanded to include a variety of actors and associations,
laying the foundation for a networked set of collaborative organizations that can contribute to the city-region’s economic development
strategy; and
the degree to which city-regions have adopted a strategic planning
approach to urban economic development.
This chapter surveys the levels of civic engagement in a sample of
cities across the country and these cities’ success or failure in adopting
a more strategic approach to local economic development. While there
is no clear blueprint for how such an approach should be implemented,
the case studies provide a number of interesting examples of the ways in
which Canadian cities are beginning to use a new mode of governance
and fashion innovative approaches to local economic development. At
the same time, the case studies also contain warnings of the numerous
obstacles that lie in the way of successfully implementing this approach.
Urban Governance and Civic Engagement in Canada’s
Largest Cities
A major challenge confronting many city-regions in Canada is the
discrepancy between the economic boundaries of the regional economy
and the formal administrative boundaries of the individual municipalities
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21st Century Cities in Canada
within it. To recap, the common feature of city-regions, as defined in
Chapter 1, is the presence of a core city linked by a number of “flows” to
a wider hinterland. The flows can include regular flows of people, information, or goods, including daily commuting patterns or the circulation of
a local newspaper. In Canada, the definition of a census metropolitan area
(CMA) used by Statistics Canada provides the closest empirical measure
of city-regions across the country, although some city-regions encompass
a larger area than the CMA. In most Canadian cases, the effective economic region dramatically outgrew the existing boundaries of its municipal government over the course of the post-war period. As a consequence,
each of the three largest cities—Vancouver, Montréal, and Toronto—as
well as some medium-sized ones such as Halifax, underwent a restructuring of their regional governments in the 1990s. In some instances, as in
the cases of Toronto and Montréal, the restructuring involved a wholesale
reorganization of the municipal government; in others, such as Vancouver,
the changes were more incremental than transformative. In each case,
the new structures replaced previous arrangements that were put in place
over a period from the mid-1950s to the early 1970s.1 However, it is clear
that there is no consensus on the most suitable structure to match the
administrative capabilities of municipal governance with the needs of the
economic region. The new administrative arrangements involve varying
degrees of coordination and jurisdiction on the part of the regional administrative units. The result is that relatively few city-regions in Canada, such
as Calgary and Halifax, are now governed by a single authority that corresponds to the economic contours of the CMA, while most others are
hobbled by the presence of multiple, often recalcitrant, local jurisdictions.2
1
Richard Gilbert and Don Stevenson, “Governance and Economic Development: The Regions of
Toronto, Vancouver and Montréal.” In OECD, Cities for Citizens: Improving Metropolitan Governance (Paris: OECD, 2001), pp. 199–241.
2
There is a substantial literature on the question of the appropriate governmental structures for
city-regions, but this question lies well outside the bounds of the current study. See Andrew
Sancton, The Limits of Boundaries: Why City-Regions Cannot Be Self-Governing (Montréal and
Kingston: McGill-Queen’s University Press, 2008); and Enid Slack, Managing the Coordination of
Service Delivery in Metropolitan Cities: The Role of Metropolitan Governance, Policy Research
Working Paper 4317 (Washington, DC.: The World Bank, 2007).
Chapter 5
139
The presence of a formal tier of government that corresponds to
the natural economic boundaries of the city-region clearly facilitates
efforts to coordinate economic development across the regional economy. However, it is far from a sufficient factor. The development of
more effective economic strategies requires the presence of a strong
civic leadership capable of building bridges across disparate groups
of business and social interests at the urban level, as well as forging
local development coalitions that bring the relevant players in the community to the table to engage in the kind of strategic planning process
outlined in the previous chapter. The following case studies provide
numerous examples of the way these issues are currently playing out
across the country—often with decidedly mixed results. Some of the
most successful cases described below, such as Waterloo, diverge from
the model in key respects. The limitations of this approach should not
necessarily be taken as indications of its failure; rather, the case studies
in themselves provide some valuable lessons about the challenges that
need to be addressed in implementing the approach. In the end, there
is no single blueprint for how that can be done. In other words, “one
size does not fit all.” However, the approach can be tailored to the particular circumstances of individual city-regions. The case studies should
be viewed as part of a socially organized learning process for undertaking
this kind of strategic planning. Civic Engagement and Multi-Level Governance in the Greater
Vancouver Region
In the case of Vancouver, the city proper represents just 27 per cent of
the population of the total CMA. (See Exhibit 2.) Since 1967, Vancouver
has had a second tier of government, formerly known as the Greater
Vancouver Regional District (GVRD) but now called Metro Vancouver,
which takes in most of the economic region. Its creation was part of a
more general process that affected the entire province and was intended
to establish joint service or planning arrangements for previously existing
municipalities. Over the course of the ensuing years, the responsibilities of the GVRD expanded to include regional planning, public housing, water, sewage and drainage, parks and pollution control, collective
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bargaining, and solid waste management. Metro Vancouver now includes
22 municipalities, one electoral area, and a treaty First Nation. It involves
four nominally separate entities that share offices, staff, and similar board
memberships. In addition to the GVRD, Metro Vancouver includes the
Vancouver Water District, the Vancouver Sewage and Drainage District,
and the Vancouver Housing Corporation.3
Urban politics in Vancouver are characterized by a local civic culture
that blends a high degree of social activism with a fiscally conservative
policy approach. The practice of civic politics in Vancouver displays
three distinct characteristics: it is diverse, democratic, and open to the
involvement of a wide range of socially differentiated groups. The city
has a systematic process for open consultations managed at the local,
city-wide, and regional levels of government. This practice results in
continuous negotiations on a range of policy and program areas. In
large measure, it is the source of Vancouver’s unique blend of civic
politics and policy. The municipality of Vancouver alone has 22 agencies that afford citizens the means to provide some degree of input into
decisions made at the municipal level. The city has also adopted a systematic process for reviewing the role of its various advisory bodies, as
well as the nature of public involvement with those bodies.
One particular organization is the Vancouver Economic Development
Commission, which was created in 1996. The Commission comprises
15 representatives of the business community, plus a variety of ex officio
members from city council and Tourism Vancouver, and representatives of the federal and provincial industry and economic development
departments. Its role is to plan for sustainable development within the
municipality, promote marketing initiatives in key sectors, and benchmark Vancouver against a number of competitor cities around the world.
Its task is complicated somewhat by the lack of a clear, coherent voice
for the business community in Vancouver. There are also a number
of organizations representing various segments of the business
3
Alan F.J. Artibise, Ken Cameron, and Julie H. Selig, “Metropolitan Organization in Greater Vancouver: ‘Do It Yourself’ Regional Government.” In Donald Phares, ed., Metropolitan Governance
Without Metropolitan Government (Aldershot, U.K.: Ashgate Publishing, 2004), pp. 195–211.
Chapter 5
141
Exhibit 2
The Vancouver CMA, 2006
Source: CMA and municipal boundaries and shorelines from Geography Division, Statistics Canada,
2006 Boundary Files, Catalogue no. 92-160-XWE/F.
community, including the Vancouver Board of Trade, the Business
Council of B.C., the Urban Development Institute Pacific Region, the
Real Estate Board of Greater Vancouver, and the Greater Vancouver
Chamber of Commerce. Each of these groups assertively protects its
own “turf,” with the result that there is no cohesive development coalition in the Vancouver city-region. As noted in Chapter 3, with the
decline of the forestry and resource industries, the Vancouver economy
has been based on tight clusters of small and medium-sized firms in
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the high-technology and cultural and creative sectors. These clusters
draw their strength in part from major investments by the senior levels
of government in the region’s research infrastructure, such as its
dynamic biomedical complex and fuel cells cluster. There is a feeling
among members of the city’s business community that the GVRD does
not provide a sufficient level of leadership for economic development,
and that the absence of a regional economic development strategy has
limited the region’s success in attracting major corporations and new
investments. There has been some inward investment by major firms
within Vancouver through corporate buyouts, particularly in the area
of digital gaming. Corporate investment by foreign firms has largely
flowed to the suburbs: Microsoft in Richmond, Electronic Arts in
Burnaby, Hollywood studios operating out of North Vancouver. In
addition to the active role of the business community, Vancouver has a
strong district labour council with several large unions involved in the
political process. One observer has summarized Vancouver’s structure
this way:
. . . like many North American cities, the power system
in Vancouver seems to be split into two large and mixed
networks of citizen and business organizations: a rather
social democratic group, which may be more inclusive
and represents progressive segments of society, particularly citizens and unions, and an entrepreneurial and
neoliberal group, which emphasizes business organizations but also believes in the social and economic benefits of public goods. . . . although competition between
the complex networks of groups may be contentious at
times, competition for influence is also viewed as fundamentally positive, hence strengthening the perceptions of
strong popular control over the destiny of the city.4
4
Emmanuel Brunet-Jailly, “Vancouver: The Sustainable City,” Journal of Urban Affairs 30, 4
(October 2008), p. 381.
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Despite the absence of a cohesive development coalition in
Vancouver, the city-region has been the beneficiary of major investments by the provincial and federal governments, beyond the research
infrastructure investments mentioned above. Throughout the post-war
period, the province consistently invested in major infrastructure projects. Since the mid-1980s, both the province and the federal government have supported Vancouver’s economic development through joint
investments aimed at improving the regional transportation infrastructure and helping finance Expo ’86 and the 2010 Winter Olympics.
The participation of the federal government in Vancouver’s staging
of the 2010 Winter Olympics over the past few years signifies the role
of multi-level governance in the Vancouver region. The Vancouver
Olympic Committee includes representatives of all three levels of government, plus the private sector and the Canadian Olympic Committee,
and is the institutional embodiment of multi-level governance for this
event. The committee is responsible for the overall direction of planning and implementation for the Olympic Games, including construction of the venues needed for the games themselves and much-needed
improvements to the transportation infrastructure. Major investments
include the new $2-billion Canada rapid transit line and the Olympic
village, which represents the final rehabilitation of Granville Island and
the Expo lands. The successive investments by the federal government
over the last 25 years have made a major contribution to the regional
economy, particularly in the realm of transportation infrastructure.5
Another initiative that illustrates the benefits of multi-level governance, although on a much smaller scale, is the series of Urban
Development Agreements between Western Economic Diversification
(the federal government’s economic development agency for the Prairie
provinces and B.C.), three provincial governments, and the municipalities of Winnipeg, Edmonton, and Vancouver.6 The Vancouver
Agreement (VA) emerged through the initiative of a community-based
5
Tom Hutton, Multilevel Governance and Urban Development: A Vancouver Case Study (Vancouver:
University of British Columbia, 2009).
6
OECD, OECD Territorial Reviews: Canada (Paris: OECD, 2002).
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coalition focused on crime prevention and drug treatment in the
Downtown Eastside neighbourhood. The coalition was composed of
a cross-section of partners from business organizations, community agencies, the police, the school board, and local universities. It
successfully applied for a $5-million grant from the federal national
crime prevention centres to undertake an action research project on
the Downtown Eastside. Subsequently, two agencies of the federal
government, Western Economic Diversification and Health Canada,
became involved in formulating an intergovernmental agreement that
could lead to policy action. The VA, reached in March 2000, committed the three levels of government to working with the community to
implement a coordinated strategy for the promotion of sustainable
community development. The agreement had three priority concerns:
improving community health and safety; supporting economic and
social development in the neighbourhood; and contributing to capacity
building in the local community.
In 2003, the provincial and federal governments each made a
$10-million contribution to the project. In total, 12 federal departments
were involved in the agreement, along with 19 provincial ministries and
agencies, 13 municipal organizations, and an estimated 300 community
organizations. The decision to provide direct federal and provincial funding was tied to Vancouver’s bid for the 2010 Olympic Games. Linking
the revitalization of the Downtown Eastside to the 2010 Olympics was
viewed as a commitment to addressing concerns that the Olympic event
would increase disparities in the city by diverting funding from needed
social initiatives. According to Bradford, “the VA projects involve noteworthy collaborations not just among the three governments, but also
between government and the community sector, and in some cases
government and . . . business.”7 However, recent assessments are less
sanguine, suggesting that there have been significant disagreements
between business interests and those social organizations concerned
7
Rescaling for Regeneration? Canada’s Urban Development Agreements [paper]. Presented by
Neil Bradford for Annual Meeting of the Canadian Political Science Association. Vancouver, BC.:
June 4–6, 2008, p. 18.
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with issues of housing affordability and provision. An investigation by
The Globe and Mail concluded that in spite of a total of $1.4 billion in
public and private spending in the area since the VA was signed, most
observers, including some of the original sponsors of the agreement,
believe that it has failed to achieve its objectives.8 Despite this mixed
evaluation, the VA remains significant in two respects: it linked major
infrastructural investments for economic development to a broad range
of concerns about social disparities in the city; and it involved the form
of multi-level governance that will become increasingly relevant as cityregions try to alter their trajectories of economic development.
The Toronto Region: Strong Cities, Weak Region
Regional government in the Greater Toronto Area (GTA) stands in
sharp contrast to that in Vancouver. In 1998, the Ontario government
rejected the recommendation of the Task Force on the Greater Toronto
Area to establish a regional level of government that would correspond
more appropriately to the economic boundaries of the GTA. Instead,
the government created the current City of Toronto, which covers only
a small portion of the rapidly growing regional economy that comprises
not only the CMA, but a much greater area as well. The City of Toronto
itself accounts for roughly 50 per cent of the population in the CMA,
but there are 23 other municipal governments in the CMA, with no
overarching administrative unit responsible for the region as a whole.
(See Exhibit 3.)
Several key agencies established at the time of amalgamation to
deal with region-wide issues have met with mixed success. The Greater
Toronto Service Board, established at the time of amalgamation, failed
to fulfill its initial mandate, while the Greater Toronto Marketing
Alliance (GTMA) has had some achievements but is perceived to lack
clout in pursuing its mandate to promote the economic development of
the entire region.9 The GTMA was designed to promote the GTA internationally, to help establish international partnerships, and to act as a
8
Robert Matas, “The Money Pit,” The Globe and Mail, February 13, 2009.
9
The following discussion draws on Nelles, Cooperation and Capacity.
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Exhibit 3
The Toronto city-region and associated CMAs, 2006
The Greater Toronto Area (GTA) comprises the City of Toronto and the Regional Municipalities of
Halton, Peel, York, and Durham.
Source: CMA and municipal boundaries and shorelines from Geography Division, Statistics Canada,
2006 Boundary Files, Catalogue no. 92-160-XWE/F.
regional portal for site selection information and advice on provincial
and Canadian regulations. As a public-private partnership, the alliance is
managed by a board of directors composed of an equal number of public
and private sector members. However, there are significant indications
that buy-in from the members is largely symbolic and not determined
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by functional considerations. For instance, some key municipalities in
the region, including the cities of Toronto and Mississauga, have opted
to mount their own foreign trade missions without the participation of
the GTMA. The City of Toronto has also created a new agency, Invest
Toronto, whose role overlaps substantially with the GTMA’s mandate.
While local actors have criticized the effectiveness of the GTMA as an
organization, it is telling that local municipalities have opted to pursue
individual goals rather than striving to improve regional governance. A
recent regional economic forum formulated a 12-point action plan to
stimulate economic recovery in the GTA, but it was greeted by a certain
amount of skepticism as to whether it would lead to concrete results.10
In 2007, the landscape of regional transportation coordination
changed with the establishment of the Greater Toronto Transportation
Authority (GTTA), now known as Metrolinx. This regional transportation agency has also faced major challenges in fulfilling its mandate, set out in provincial legislation, to provide leadership in the
coordination, financing, planning, and development of a multi-modal
transportation network that conforms to the provincial plan for the
development of the economic region. Metrolinx was envisioned as a
coordinating body for inter-regional transit issues, but it is also responsible for operating the region’s GO Transit commuter rail and bus
system. It is significant that the formalization of regional coordination
was imposed by provincial dictate; it is doubtful that such a regional
partnership would have emerged without provincial intervention. Its
governing structure was originally designed to give effective decisionmaking power to the representatives of local municipalities; however,
after a series of public disagreements between local mayors and the
board, the provincial government replaced the local politicians with
private sector experts. Overall, the economy of the GTA remains hampered by the lack of region-wide administrative structures to coordinate economic development strategies.
10 Greater Toronto Region Economic Summit, Choosing Our Future: An Action Plan for Economic Recovery [online]. (Toronto: Greater Toronto Region Economic Summit, 2009).
www.gtreconomicsummit.com/pdf/GTR_Summit_20090709_web.pdf.
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Since the 1990s, Toronto has been recognized as the most economically influential city-region in the country. It is Canada’s financial and
business services centre, with 28.2 per cent of its labour force working in this sector, and it is home to the head offices of many leading
Canadian companies. Although its sheer size affords it significant economic advantages and is the source of much of its current economic
dynamism, it lacks some of the key institutional supports needed for
the effective coordination of economic development strategies. Before
2009, the presence of the federal government was much less noticeable in the GTA than in other parts of the country. That was due in
part to the absence of a federal regional development agency, which
made it difficult to implement multi-level governance approaches in
the Toronto city-region. With the recent establishment of the Economic
Development Agency for Southern Ontario (FedDev Ontario), this
deficiency has been remedied, but it is too early to determine what role
it will play at the level of the city-region. The sheer geographic scale of
the region and the physical barriers created by commuting times alone
make it difficult to bring key actors and civic associations together on
a region-wide basis. Until relatively recently, both the City of Toronto
and the broader city-region lacked strong, integrated civic leadership
that could forge a unified local development coalition. The business,
social, and environmental communities are relatively well-organized
and there is a wide array of organizations representing their respective
interests at the municipal, rather than the city-region, level, but prior to
the early 2000s, there were few instances of the social and civic leadership uniting around an agreed-upon set of goals.
Some of the shortcomings in the Toronto region associated with
the lack of committed civic leadership have been overcome with the
formation of the Toronto City Summit Alliance. The original City
Summit was a one-day event organized in June 2002 on the initiative
of the mayor of Toronto and with strong participation from a number of
community organizations, including the United Way and the Canadian
Urban Institute. At the conclusion of the summit, a group of 40 local
leaders from the private, labour, voluntary, and public sectors decided
to create the Toronto City Summit Alliance (TCSA). The TCSA set up
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a number of working groups to analyze the economic and social challenges confronting the greater Toronto region and devise a strategy for
addressing those challenges.
The plan, released in April 2003, set out a wide-ranging agenda for
change in a number of areas, including physical infrastructure, tourism, research infrastructure, education and training, immigration, and
social services. While the name of the alliance suggests its mandate
was restricted to the city, many of the initiatives identified in the plan
were targeted at the city-region level. The release of the report was
followed up with a second summit held in June 2003 and the commitment to proceed on a number of key initiatives, including the creation
of the Toronto Region Research Alliance (TTRA) and the Toronto
Region Immigrant Employment Council (TRIEC).11 However, some
of these initiatives, such as the TRRA, continue to struggle with the
inherent challenge of overcoming the competition for both public and
private research investments among different parts of the region. What
is unique about the Toronto City Summit Alliance is that the leadership has come almost entirely from the private and voluntary sector—
including true “civic entrepreneurs,” such as David Pecaut—and its
agenda has included a wide range of economic (TRRA), social (TRIEC
and the Strong Neighbourhoods Task Force), and cultural (Luminato)
initiatives, undertaken using many of the elements of the strategic planning approach.
Both the City of Toronto and the broader city-region are home to a
dense network of educational and research institutions, with particular strength in medical and biomedical research, as well as a number
of traditional engineering fields and computer science. The potential
contribution of the research infrastructure has been enhanced by federal and provincial investments in new initiatives such as the MaRS
Discovery District and the Ontario Commercialization Network, as
well as through existing research programs, such as the Centres of
Excellence and the Canada Foundation for Innovation.
11 Toronto City Summit Alliance, Enough Talk: An Action Plan for the Toronto Region (Toronto:
Toronto City Summit Alliance, 2003).
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21st Century Cities in Canada
The City of Toronto has undertaken several initiatives over the past
decade aimed at formulating a strategic planning approach to its economic development. However, both economic planning exercises undertaken by the city have displayed more of the form of strategic planning
than the actual substance. In the first instance, an initial study was
undertaken by a U.S. consulting firm in partnership with local consultants and under the direction of the city’s economic development and
planning offices.12 Although the study fed directly into the formation
of the Toronto Economic Development Strategy, with a strong focus on
cluster development, its implementation was hampered by a lack of sustained funding, as well as an uneven degree of community engagement.
In part, that reflected the absence of a cohesive leadership committed to
the economic success of the city-region, and the absence of “civic entrepreneurs” in the local community to assume leadership of the strategic
planning process. However, the strategy development process did lead
to several subsequent undertakings focused on the promotion of specific
strategies to support the growth of key sectors in Toronto’s economy.
One initiative was the launch of the Toronto Financial Services Alliance,
under the leadership of the city’s economic development office. That
involved the participation of 40 key organizations, including the major
financial institutions, representatives of all three levels of government,
and local post-secondary education institutions.
There have been several subsequent attempts to develop strategic
plans for the City of Toronto. In June 2006, the mayor established the
Economic Competitiveness Advisory Committee, composed of senior
executives from business and academia, elected officials, and a limited
number of representatives of labour and the broader social and environmental sector of the city. Its mandate was to foster an atmosphere of
partnership to promote the economic future of Toronto. The committee
12 ICF Consulting, with the assistance of GHK International, Metropole Consultants, and WEFA
Canada, Toronto Competes: An Assessment of Toronto’s Global Competitiveness, City of
Toronto Economic Competitiveness Study (Toronto: Economic Development Office, 2000).
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worked closely with public officials in the municipal administration to
devise the next iteration of Toronto’s economic development strategy,
which was released in January 2008 as the Agenda for Prosperity.13
The agenda laid out a vision for Toronto as a global business city
that is a hub for environmental innovation, a centre for global education
and training, and a location for new and distinctive cultural products
that draw on creativity and diversity, as well as technological excellence. The report presents a number of areas for priority attention but
contains little that departs dramatically from the previous economic
development focus of the city. The most significant initiatives that
emerged from it were the creation of two new municipal development
agencies—Build Toronto and Invest Toronto—but both seem structured
more along the lines of traditional approaches to economic development, rather than the strategic planning approach. Most notable is the
relative absence of any overlap between the members of the Economic
Competitiveness Advisory Committee and the members of any of the
numerous initiatives launched by the Toronto City Summit Alliance.
That signifies a lack of coordination among the city’s civic constituencies and the absence of a unified development coalition in Toronto,
even on a city-wide basis, let alone a regional one.
In sum, while civic governance in the City of Toronto has made
significant progress over the past decade through the leadership of the
Toronto City Summit Alliance, its impact has been limited by a lack
of coordination with elected municipal governments in the city, as
well as by an ongoing degree of intra-regional competition. There is
no shortage of entrepreneurial civic leadership or organizational presence in the city, but the lack of coordination with the city’s strategic
planning efforts signifies an inability to forge a cohesive development
coalition at the city level. This weakness is even more apparent with
respect to questions of broader governance at the city-region level.
Thus, the Toronto city-region remains characterized by the lack of an
integrated approach to economic development at the city-region scale.
13 Toronto Mayor’s Economic Competitiveness Advisory Committee, Agenda for Prosperity
[online]. (Toronto: City of Toronto, 2008). www.toronto.ca/prosperity.
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The adoption of a strategic planning approach in the Toronto cityregion is hampered by the puzzling contradiction of relatively strong
civic capital at the local or city level that has not translated into a
unified development coalition. This limitation is compounded by the
weak links at the level of the city-region, the absence of administrative
structures that correspond to the economic boundaries of the region,
and the uncertainty surrounding a still-untested federal agency for
regional economic development.
Civic Engagement, Multi-Level Governance, and Strategic Planning
in the Montréal Region
Montréal is distinctive from the other large cities in the country along each of three dimensions of interest to this discussion.
The Montréal region is governed by one of the most complex
sets of administrative structures of any city-region in the country.
Overall administrative responsibility for the city-region rests with the
Communauté métropolitaine de Montréal (CMM). It is divided into
five administrative regions that include all of the cities in Montréal
plus part of the regions surrounding it in the Lanaudière to the north
and Montérégie on the south shore of the river. The City of Montréal
includes just over 40 per cent of the region’s total population, but it is
just one of 16 cities that comprise the Communauté métropolitaine de
Montréal. The city itself is divided into a series of boroughs, each of
which has its own Community Economic Development Corporation
(CDEC) that allows for the involvement of local actors in issues of
local economic and social development. (See Exhibit 4.)
The overall degree of political coordination within the city-region
is enhanced by the fact that the mayor of Montréal also serves as the
chair of the CMM, a tradition that predates the current administrative
arrangement. Relationships between the province and the federal agencies in the region are closely interlinked, based on what is referred to
as the Quebec model of state intervention and economic development.
Although not always in full agreement on every issue, the relevant
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Exhibit 4
The Montréal Metropolitan Community and CMA, 2006
The Kahnawake First Nation is not part of the Montréal Metropolitan Community. Demerged
municipalities are not shown for Montréal and Longueuil.
Sources: CMA and municipal boundaries and shorelines from Geography Division, Statistics Canada,
2006 Boundary Files, Catalogue no. 92-160-XWE/F. Montréal Metropolitan Community boundary is
adapted from Communauté métropolitaine de Montréal, “Territoire de la Communauté métropolitaine
de Montréal : limites (en vigeur le 1er janvier 2006),” (Feb. 2009).
www.cmm.qc.ca/fileadmin/user_upload/carte/territoire.pdf.
agencies at the senior levels of government are usually at the table for
most economic development initiatives. As a follow-up to amalgamation, the Province of Quebec and the City of Montréal signed a five-year
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agreement to invest a combined total of $2.5 billion in upgrading infrastructure and supporting cultural, social, and community development
to improve the overall competitiveness of the city.14
Montréal has one of the highest levels of civic engagement of any
Canadian city, and there is a significant degree of coordination among
the key economic, social, and cultural organizations in the city. It has
an active and engaged set of civic associations operating from the
neighbourhood level to the regional level. This wide network of social
actors and civic associations plays its role in the governance of the
Montréal region within the context of a complex set of institutional
compromises that have been referred to as the Quebec model. The
key elements of this model are the ongoing relationships between the
public sector trade unions and a range of actors in the social economy,
and the partnership between these actors and the government in the
provision of public services. The model assumes a distinctive form in
Montréal because of the unique structure of organizations at the neighbourhood level, which forms the basis for the bottom-up coalition of
civic actors.15
At the city level, the key civic actors include the Board of Trade of
Metropolitan Montréal, Culture Montréal, Montréal International, and
the Chantier sur l’economie sociale. The unique features of the governance structure in Montréal are the incredible diversity and involvement
of the cultural community in both the networks of civic associations
and the city’s key development coalition. The cultural community is
represented on a city-wide basis by Culture Montréal. The leadership
of this organization views the arts and cultural community as essential to retaining Montréal’s position as a leading metropolis on both
a national and a continental scale. One of the most effective features
of the governance structure in Montréal is the key role played by the
leaders of these organizations, several of whom would easily qualify as
14 Brender, Cappe, and Golden, p. 71.
15 Juan-Luis Klein and Diane-Gabrielle Tremblay, “Social Actors and Their Role in Metropolitan
Governance in Montréal: Towards an Inclusive Coalition?,” GeoJournal [online]. (March 11,
2009). www.springer.com/geography/human+geography/journal/10708.
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civic entrepreneurs. There is a solid consensus among the major social
actors and civic associations on the need for an inclusive form of governance that integrates all actors into decision-making processes on a
region-wide, as well as a city and neighbourhood, level. There is also
recognition of the lack of synergy between the existing administrative
structures that govern the region and the existing networks of civic
associations that create numerous opportunities for active participation.
However, the leaders of the associations agree on the virtue of forging
strong networks and connections among themselves to compensate, in
part, for the challenge of governing such a complex region. The social
networks in the city are governed by a relatively high degree of consensus that does not preclude conflict but sees the value in overcoming
conflict by negotiating effective compromises.16
Another respect in which Montréal differs from the other large
city-regions is with respect to formulating a more cohesive economic
development strategy built around a common vision of strategic sectors
and clusters for the entire regional economy. There is also substantial
involvement by the provincial Ministry of Economic Development,
Innovation and Trade, as well as the federal government’s regional
development agency for the province, Canada Economic Development,
which incorporates a significant degree of multi-level governance.
Building on the respective roles and responsibilities of the public and
private sector partners identified in its economic development plan, the
CMM has created one of the most formal processes in the country for
selecting and supporting cluster strategies in the key sectors identified.
As noted in Chapter 3, the economic development strategy adopted
by the CMM emphasizes the strategic importance of the manufacturing and knowledge-intensive sectors and clusters where the region has
demonstrated a strong export capability, as well as several associated
with the creative-cultural industries. The CMM’s economic development plan sets out four key strategies: making Montréal a “learning
region”; creating a competitiveness strategy focused on developing
16 Ibid.
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industrial clusters and enhancing the dynamics of innovation; making
Montréal an attractive region by modernizing municipal infrastructure, consolidating urban and inter-city transportation systems, and
improving the quality of life in the region; and, finally, promoting the
region on global markets and attracting foreign direct investment to
the region.17
The strategy divides the regional economy into four groups of
clusters—competitive clusters, visibility clusters, manufacturing clusters, and emerging technology clusters. Three out of the four fall primarily within the manufacturing sector, while the visibility clusters
include a range of activities more often associated with the creative
sector of the economy, such as film, culture, tourism, and services. The
economic development plan identifies the key partners in its strategy,
including the CMM itself, local economic development organizations
down to the level of the CDECs, Montréal International, the Board
of Trade of Metropolitan Montréal, and the federal and provincial
economic development agencies.18 In this respect, Montréal has progressed farther toward the adoption of a strategic planning approach
than either of the other two major cities. The strategy is open to the
criticism that it focuses too narrowly on the existing sectoral and cluster areas of strength, at the possible expense of providing support for
new and emerging areas of the economy. Nonetheless, it is well thought
out and effectively coordinated, with significant levels of buy-in from
all three levels of government in the Montréal region, as well as key
civic associations and private sector partners.
Regional Governance in Ottawa
Ottawa–Gatineau is the fourth largest city-region in Canada, with
a combined population of 1.1 million located in two cities across
the Ottawa River from each other. Ottawa, which contains about
17 CMM, Charting Our International Future.
18 Clusterize This! Challenges and Policy Lessons [presentation]. Presented by Yves Charette
at 10th Annual Conference of the Innovation Systems Research Network. Montréal, Que.:
May 1–2, 2008.
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three-quarters of the CMA’s total population, is home to one of the
leading high-technology clusters in Canada. The city, which had a
staples-based economy in pulp and paper dating back to the 19th century, missed out on the expansion of industrial manufacturing that characterized post-war economic growth in much of the rest of Ontario.
However, it has more than made up for it through the dramatic expansion of the size and influence of the federal government, and the
emergence and rapid growth of its high-technology cluster, based on
the western edge of the city-region in Kanata and once anchored by
Northern Telecom. The economic shock of the dot-com meltdown after
2000 dealt the regional economy a blow from which it has never fully
recovered, as dramatized by the auction of some of Nortel’s key assets
in a New York law office to a group of leading international firms in
the summer of 2009.
The ability to enhance civic capital at the regional level and
foster better governance mechanisms has been critical in helping
Ottawa respond to the cascading shocks currently buffeting the global
economy. The rise of the high-technology sector in Ottawa’s economy has clearly been influenced by the location of a disproportionate number of federal government research facilities in the region.
Despite its endowment of an exceptional research infrastructure that
includes two strong research universities, as well as one of the mostly
highly regarded civic associations in the country, the city’s ability
to weather the current shock to its concentration of high-technology
firms will test its capacity for civic engagement and the strategic
coordination of the regional economy.
Since the 1980s, Ottawa has been characterized by a higher degree
of civic governance than exists in most other urban centres in the
country. The relative success in building this form of governance has
been noted by other cities, such as Waterloo, and there have been
some efforts to reproduce elements of the model. The distinguishing
feature of the Ottawa case is the strength of its local “institutions of
collaboration” and the unusual degree to which they are integrated
with the formal institutional structure of the regional municipality. The
Ottawa Centre for Research and Innovation (OCRI) is a not-for-profit
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organization originally set up in 1983 by partners from industry, the
regional municipality, the local post-secondary institutions, and federal laboratories. Since its founding, it has served as the organizational
focus for Ottawa’s high-tech community. OCRI has had a charismatic
series of leaders, several of whom have played the role of local civic
entrepreneurs. OCRI’s role expanded significantly in 2001 when it
merged with the Ottawa Economic Development Corporation, effectively assuming major responsibility for economic development in
the city-region. As the overarching civic association concerned with
regional economic development, OCRI serves as the basis for the local
development coalition in Ottawa, although other organizations have
been established to lead local planning exercises.
OCRI currently has 625 members and a budget of approximately
$8 million, of which 20 per cent is funded by the City of Ottawa, with
the remainder coming from a variety of sources, including municipal,
federal, and provincial governments; membership fees; professional
development programs; and private sector contributions. OCRI delivers
a wide range of services to the local economy and sponsors a host of
networking events through its partnership with the City of Ottawa. It
is also involved in a dense network of partnerships with many of the
locally based federal and provincial research and technology organizations, including national research laboratories and provincially funded
research networks, aimed at strengthening the region’s innovation
capabilities. Virtually all accounts of the rise and growth of the Ottawa
high-tech sector agree on the fundamental role that OCRI has played in
the process since its inception.19
Since the late 1990s, Ottawa has been at the forefront of efforts
to adopt a strategic planning approach to regional economic development that also incorporates key elements of multi-level governance.
It launched an innovative strategic planning exercise in the late 1990s
19 Jocelyn Ghent Mallet, “Silicon Valley North: The Formation of the Ottawa Innovation Cluster.”
In Larisa V. Shavinina, ed., Silicon Valley North: A High-Tech Cluster of Innovation and Entrepreneurship (Amsterdam: Elsevier, 2004), pp. 21–31. Also Alan O’Sullivan, “How TechnologyIntensive Clusters Are Organized in the Ottawa Region.” In Shavinina, Silicon Valley North,
pp. 143–166.
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in partnership with the Province of Ontario under the leadership of
The Ottawa Partnership (TOP). OCRI was closely involved with the
resulting Economic Generators Initiative led by TOP, a group of public
and private leaders committed to advancing the local economy. The
mandate of TOP was “to provide leadership and advice at a strategic
level, on action required to improve and grow Ottawa’s economy.”20 Its
membership included the chairs of the region’s business and economic
development agencies, and representatives of its municipal council, the
higher education sector, and the business community at large.
The TOP leadership undertook a detailed study of the region’s
“economic generators” and used the study to prepare a strategic plan
for the further development of the key engines driving the local economy. Three hundred individuals participated in the work of the various groups that formed around the visioning exercise and formulated
33 specific goals to promote seven key clusters identified as growth
generators for the regional economy. The economic generators initiative identified a series of flagship projects that were designed to cut
across the individual clusters and generate positive effects for the
regional economy as a whole. Unfortunately, the report was released
just as the high-tech sector entered the post-2000 downturn. An update
of the report, Innovation Ottawa, was released in January 2003. It
set out a strategy for strengthening the links between the region’s
research infrastructure—especially its post-secondary education sector
and national laboratories—and the local sources of enterprise within
existing and emerging clusters, but it failed to generate the same degree
of momentum as the first report from TOP.21
That was attributable, in part, to the lack of a comparable degree of
civic input into the second report and the lingering effects of the dotcom bust of 2001–02 on the regional economy. The overspecialization
20 ICF Consulting, with the assistance of WEFA Canada and FoTenn Consultants, Choosing a
Future: A New Economic Vision for Ottawa (Ottawa: The Ottawa Economic Generators Initiative,
2000), p. i.
21 ICF Consulting, Innovation Ottawa: A Strategy for Sustaining Economic Generators (San
Francisco: ICF Consulting, 2003), p. 3.
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of the Ottawa region’s high-technology cluster in telecom-based technologies was revealed as a major weakness in its industrial structure
during the dot-com bust. A related aspect of this highly concentrated
industrial structure is that Ottawa has one of the highest levels of postsecondary education among the members of its labour force. However,
the skills of these workers are highly specialized in the particular field
in which they are employed and are not easily transferable to other
industrial sectors. In response to the massive restructuring of the leading telecom and photonics firms in the region, attention was focused
on the challenge of launching a series of training and labour adjustment measures to help find new employment for high-tech workers
who had lost their jobs with the region’s leading firms. The initiatives included O-Vitesse, a joint undertaking of the National Research
Council’s Regional Innovation Centre and the region’s two universities to provide skill upgrading for underemployed or unemployed,
often foreign, professionals22; the Ottawa Talent Initiative, organized
by unemployed high-tech workers with federal and provincial government representatives and community organizations; TalentWorks,
launched under the auspices of TOP in 2003 and managed by OCRI, a
community-based initiative to build Ottawa’s talent pool by providing
integrated support to targeted sectors23; and a more recent initiative
intended to build linkages among employers, immigrant-serving agencies, and other stakeholders to expand employment opportunities for
skilled immigrants in Ottawa.24
22 Arvind Chatbar, “An Innovative Model for Skill Development in Silicon Valley North: O-Vitesse.”
In Larisa V. Shavinina, ed., Silicon Valley North: A High-Tech Cluster of Innovation and Entrepreneurship (Amsterdam: Elsevier, 2004), pp. 293–310.
23 Gilles Paquet, Jeffrey Roy, and Chris Wilson, “Ottawa’s TalentWorks—Regional Learning and
Collaborative Governance for a Knowledge Age.” In Larisa V. Shavinina, ed., Silicon Valley
North: A High-Tech Cluster of Innovation and Entrepreneurship (Amsterdam: Elsevier, 2004),
pp. 311–329.
24 Economic Development, Institutions, and Urban Governance in the Region of Ottawa, Canada
[paper]. Presented by Caroline Andrew and David Doloreux at 10th Annual Conference of the
Innovation Systems Research Network. Montréal, Que.: May 1–2, 2008.
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While the number and diversity of these post-2002 training initiatives
reflects the breadth of Ottawa’s civic governance mechanisms, most have
failed to deliver on their original intent. No one body has emerged as the
central focus for training initiatives in the city-region, with the result that
there is an excessive fragmentation of the respective networks and a lack
of clear champions. The decision to house TalentWorks within OCRI
has also been seen as limiting its focus to the high-tech sector. Ottawa–
Gatineau continues to rank high on its level of civic engagement, but it
has been unable to extend the boundaries of the local development coalition to include social and other voluntary organizations concerned with
issues of labour force development and social inclusion.25
Despite this weakness, OCRI continues to be the cornerstone of the
regional economy and has sustained the intense level of collaborative
activities that has been its hallmark since the 1980s. Employment in the
Ottawa high-tech sector has remained around 80,000 since the dot-com
meltdown, and the shedding of labour by leading ICT firms resulted
in a more significant decline in earnings for high-tech workers there
than in any other ICT-intensive region in the country.26 It also led to
the formation of a large number of small start-ups over the past decade,
but it is too early to tell whether any of them will enjoy the rapid rate
of growth experienced by an earlier generation of firms. Overall, the
Ottawa case provides a striking illustration of the difficulties encountered by a region in overcoming the legacy of an excessive reliance on
a relatively small number of industrial sectors, despite the strong support of its governance institutions. While it has many of the prerequisites needed to alter the development trajectory of its local economy, to
date it has not succeeded in fully deploying these assets to overcome
the legacy of its past pattern of economic development.
25 Allison Bramwell, “Networks Are Not Enough: Workforce Development and Urban Governance
in Ontario,” Ph.D. dissertation (Toronto: University of Toronto, 2009).
26 Marc Frenette, “Life After High-Tech,” Perspectives (July 2007), pp. 5–13. Statistics Canada
Cat. No. 75-001-XIE.
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Prospects and Challenges for Urban Governance in
Mid-Sized Cities
As we saw in Chapter 3, Canada’s mid-sized cities are differentiated from the largest ones by their relatively greater degree of specialization in a smaller number of industries, often in the manufacturing
sector of the economy. That has allowed them to reap the benefits of
the economic advantages derived from collocating with similar firms
in related industry segments, the presence of thick labour markets in
their areas of specialization, and the benefits derived through knowledge transfers from local research institutions and through labour
mobility between firms. However, it also has exposed them to the challenges of competitive restructuring, especially in the automotive and
related industries in the Central Canada industrial corridor. Mid-sized
cities, such as Halifax, which serve as a regional metropolis in more
distant parts of the country, share certain features of the large cities
in terms of their concentration of higher-end financial and producer
services, and some have been included in the category of hub cities
by The Conference Board of Canada.27 In either case, what is most
revealing about these cities is the extent to which they perceive their
existing economic base as vulnerable and have launched various efforts
to reorient their local economies in terms of the emerging cognitivecultural economy.
Civic Engagement and Strategic Management in Waterloo
and London
Waterloo and London are two of the traditional manufacturing
centres in the heart of the industrial corridor that has long been a hallmark of the Canadian urban system. The manufacturing heartland in
Ontario enjoyed a privileged economic position during most of the postwar period but has experienced increasing economic volatility since the
early 1980s due to restructuring. This restructuring can be linked to
27 Mario Lefebvre and Natalie Brender, Canada’s Hub Cities: A Driving Force of the National Economy, The Canada Project (Ottawa: The Conference Board of Canada, 2006).
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broader processes of globalization, but it was accentuated after 1989
by Ontario’s deeper integration into the North American economy following the signing of the Free Trade Agreement (FTA) with the U.S.
and the deal’s successor, the North American Free Trade Agreement
(NAFTA).28 Both cities were buffeted by the economic aftershocks
of the dot-com bust in 2001–02 and the global financial crisis of
2008–09. In each case, their ability to manage the economic restructuring of the 1980s and 1990s and to weather the economic storms of the
current decade has been affected by the breadth and inclusiveness of
their local development coalitions and their success in building civic
capital through effective governance mechanisms.
Despite the absence of a formal administrative structure with jurisdiction over the broader Kitchener–Waterloo region, Waterloo is marked
by both relatively strong regional governance and dense civic capital,
which has grown and intensified over time. From the founding of the
University of Waterloo to the establishment of Canada’s Technology
Triangle Inc. (CTT), Communitech, and the recent formation of the
Prosperity Council of Waterloo Region, the private sector has played an
instrumental role in the economic development of the region.
CTT is the regional marketing association for the region and widely
regarded as one of its keystone organizations. Communitech was established in 1997, though its roots stretch back to the early 1990s to an
informal group of 12 CEOs, whose goal was to facilitate the exchange
of ideas and improve networking relations between high-technology
companies. That led to partnerships with technology companies, service firms, academic institutions, business support organizations, and
government, and a role as one of the most visible “spokes organizations” for regional economic development in the Waterloo region. The
association provides a number of services to the technology community in Waterloo region that are widely subscribed to. Among the more
effective of these services are its Peer2Peer networking events that
28 David A. Wolfe and Meric S. Gertler, “Globalization and Economic Restructing in Ontario:
From Industrial Heartland to Learning Region,” European Planning Studies 9, 5 (July 2001)
pp. 575–592.
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allow firm managers, such as CEOs, CIOs, and CTOs, as well as technical professionals to share information and discuss best practices for
their firms. Communitech also plays a broader role in the Waterloo
community, through its involvement with many local initiatives.
The high visibility of the regional economy is also linked to the
success of some of the leading local firms that anchor the information
technology cluster, such as RIM and Open Text, and the leadership role
played by the senior executives of those firms. Especially noteworthy
has been the level of charitable donations by the co-executives at RIM
to fund local research institutions, such as the Perimeter Institute, the
Centre for International Governance and Innovation, and the Institute
for Quantum Computing at the University of Waterloo, all of which
have attracted considerable attention from other members of the local
business community.29
The Prosperity Council of Waterloo Region is a relatively new
venture in regional governance. It is a private sector led, but broadly
inclusive, association geared toward regional foresight and policy
exercises. It was initiated as a joint undertaking of the Greater
Kitchener–Waterloo Chamber of Commerce, the Cambridge Chamber
of Commerce, CTT Inc., and Communitech. Together, they represent
more than 3,000 businesses in the Waterloo region. The council’s goals
are to build a collaborative regional vision; brand and market the region
as a successful area for business, arts, and lifestyle; enhance regional
health institutions; strengthen local post-secondary institutions; and
create and fund a regional arts and culture development and promotion body. A meeting of the council in the fall of 2008 established
several strategic research priorities, which will underpin the region’s
arts and cultural agenda. This activity is indicative of the willingness
of the private sector to support regional cultural initiatives, as well as
a public willingness to let civic groups drive the cultural agenda at
the regional level. This willingness is symptomatic of the high degree
29 Allison Bramwell, Jen Nelles, and David A. Wolfe, “Knowledge, Innovation and Institutions:
Global and Local Dimensions of the ICT Cluster in Waterloo, Canada,” Regional Studies 42, 1
(February 2008), pp. 1–16.
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of inclusiveness that exists within the region’s development coalition
and its ability to forge a consensus around the key economic development issues.
A key feature of Waterloo’s resilience has been the ability of local
firms to recognize emerging technology trends and to mobilize key
segments of the local business community, civic associations, and the
regional research infrastructure in support of new iniatives to capitalize
on those trends. Somewhat surprising in this context is the absence of a
broad-based strategic planning exercise in the region. Despite this lack,
local municipalities and civic associations have supported a number of
important measures to expand the region’s post-secondary institutions
in the area of digital media. The most recent initiative involves linking a new branch of the University of Waterloo in Stratford, Ontario—
the Stratford Institute, which has a strong focus on the creation of
content for digital media—to the parallel creation of a Digital Media
Convergence Centre in downtown Kitchener. The combined initiative recently succeeded in attracting federal funding for a new Centre
of Excellence, the Corridor for Advancing Canadian Digital Media
(CACDM). The undertaking enjoyed strong initial support from the
CEOs of key local firms, such as Open Text and Christie Digital. The
drive to secure a wide range of private sector support, which was a prerequisite for federal funding, was led by Communitech. The federal
funding of $12 million is being matched by private sector contributions.
The Centre of Excellence aims to create Canada’s largest concentration of digital media R&D and commercialization expertise,
and to develop internationally competitive and sustainable capacity
in digital innovation. It will provide common space for the corporate
and academic communities to converge and develop new expertise in
digital media and mobile technology. What is most innovative about
the initiative is the inspiration to marry the well-established capabilities of the Waterloo region in digital technologies with the cultural
and creative capabilities that the City of Stratford had long been
recognized for. It represents a significant effort to shift the regional
economy onto the path of becoming a preeminent site in the emerging
cognitive-cultural economy.
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These recent initiatives to reposition the region to recover from the
current restructuring of its industrial base are an important indication
that civic capital in Waterloo is relatively strong, and its mobilization
is a key factor in the region’s resilience. The region is characterized by
a high degree of civic engagement and well-developed organizational
linkages, which have coalesced behind a relatively wide local development coalition. Those collaborative networks are being deployed
effectively to reposition the local knowledge infrastructure in support
of future economic growth through initiatives such as the CACDM that
draw on available federal and provincial funding to expand the region’s
knowledge infrastructure and innovative capabilities.
It is also important to recognize that the Waterloo region deviates in
some key respects from the model laid out in Chapter 4. In the absence
of overarching strategic planning exercises of the type found in some
other cities, the civic leadership in the region has focused its efforts on
a more targeted set of initiatives to support and reposition its knowledge
infrastructure. Similarly, the political fragmentation of the region into a
number of smaller municipalities has been offset by the high level of civic
capital outside of the public sector that links the different municipalities
into the broader regional economy. Most of the key leaders, groups, and
initiatives that have been influential in promoting the regional agenda
have emerged from the private and higher education sectors. However,
unlike their counterparts in Toronto, they readily acknowledge the high
degree of networking and interaction that exists across the public and private sectors in support of the region’s economic future.
London, Ontario—just a short hour’s drive down the highway
from the Waterloo region—faces a different set of challenges. London
is a mid-sized city with a population about the same as that of the
Kitchener–Waterloo region. Although it has traditional strength in
financial services and strong post-secondary educational institutions,
it was hard hit by the economic restructuring of the 1980s and 1990s.
Despite the presence of a leading research university with a dynamic
medical sciences complex, London’s governance structures and
development strategy were dominated until recently by a traditional
approach that relied on the plentiful supply of serviced industrial land
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along the 401 transportation corridor and a readily available labour
force to attract conventional manufacturing plants, primarily in the
automotive assembly and parts sector. In recent years, this approach
has been criticized by different interests within the local business community, which stress the need for an indigenous economic development strategy, based on leveraging the region’s internal knowledge
assets and its potential to grow the cognitive-cultural dimension of the
local economy by embracing a “creative city” strategy.
In the process, three distinct development coalitions have emerged
in London around these contrasting visions for the city’s future. They
differ in their understanding of the key drivers of the city’s growth
and in the extent to which they view both the social and the cultural
dimensions of the economy as integral to that growth. In this sense,
the London case stands in contrast to the Montréal and Waterloo cases
described above, where social actors are more effectively integrated
into the development coalition and the expansion of the cognitivecultural dimension of the economy is perceived as essential to the city’s
future growth and development. The three groups in London and their
respective visions for the city’s future have been described as a classic
“growth machine” in the spirit of traditional development strategies,
with a continued emphasis on the provision of low-cost land and the
potential for urban sprawl to attract more industries to the region; a
“knowledge mobilization” coalition, more in the spirit of the researchoriented development strategies, which believes that London can emulate the success of the Waterloo region by building on its strength in
the medical sciences and its existing research infrastructure—such as
the Stiller Centre, the Regional Innovation Network, and the London
TechAlliance—to grow an indigenous high-technology cluster; and,
finally, a “social sustainability” coalition that favours the integration of
concerns about the social sustainability of the regional economy more
directly into its economic development strategies.30
30 Governing the Local Economy? Challenge and Change in London, Ontario [paper]. Presented
by Neil Bradford at 10th Annual Conference of the Innovation Systems Research Network.
Montréal, Que.: May 1–2, 2008.
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Each of these coalitions is grounded in an existing set of local institutions and civic organizations, but they are considerably less well integrated than the coalitions in some of the other cases examined above.
The institutional base for the coalition focused on traditional growthoriented strategies is the London Economic Development Corporation
(LEDC). It was established in 1998 following the convening of a
group of 40 business leaders by the London Chamber of Commerce
to develop a new economic strategy for the city. The mandate of the
LEDC is to strengthen the city’s business environment. Structured as
a public-private partnership, it shares its economic development role
with the city. The city provides funding for the corporation and has
approval over its annual budget. The LEDC has assumed primary
responsibility for investment attraction and internal business growth
and retention, similar to the role assumed by OCRI in Ottawa after its
merger with the city’s economic development corporation. LEDC has
strong political support in certain parts of the city council, as well as
in major segments of the local business community. Working closely
with the city, it continues to pursue the strategy of promoting London
as the centre for an automotive cluster in Southwestern Ontario.
The second coalition has its institutional basis in the smaller but
significant set of interests involved with the high-tech sector. The
key organizational bases for this coalition are the Stiller Centre for
Biotechnology Commercialization, the University of Western Ontario
Research Park and its technology transfer agency now known as
WORLDiscoveries,TM and the TechAlliance. The coalition has also
received a certain amount of support from the provincial Ministry of
Research and Innovation in the form of funding from the Regional
Innovation Network program, aimed at transforming the Stiller Centre
and the TechAlliance into a viable commercialization hub for the
region’s knowledge-based clusters. The key obstacle standing in the
way of this coalition’s vision is London’s underperformance on most
indicators relating to innovation and the high-technology sector, as well
as persisting skill shortages in key sectors of the local economy.
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The third group is more a potential than an actual coalition. Its
major limitation rests in the fact that social organizations in London
have historically been weakly organized and relatively fragmented.
They have been unable to coalesce around a socially sustainable
development agenda for the city.
None of the development coalitions is hegemonic, leaving London as
a city whose development trajectory remains contested across a number
of issues. Unlike other cities, such as Toronto or Waterloo, there is no
institutional setting or governance mechanism through which these different coalitions can work together to agree on their common interests
and build a consensus around the city’s economic future.31
The lack of a cohesive development coalition with a unified vision
for the city is reflected in a number of competing strategic planning
exercises undertaken in the last several years. The first was a Creative
City Task Force established in 2004 with the goal of strengthening
the connections among the arts community, culture, and economic
development in the city. After a civic engagement process lasting
nearly a year, the task force delivered a report to the city with 87 recommendations aimed at ensuring that the city recognizes the integral
role of its creative industries in the broader economy. As the Creative
City Task Force completed its work, another initiative—London’s Next
Economy—was launched by a leading London technology entrepreneur, aimed at altering the city’s development trajectory. The underlying vision of this initiative was to transform the London region into
a centre for high-technology growth and development on a par with
leading Canadian and U.S. cities. The London’s Next Economy report
reflects the interests and the vision of the knowledge mobilization
coalition described above. While neither of these reports has received
sufficient support to qualify them as strategic planning exercises for
the city as a whole, they illustrate the extent to which leading elements
in the city are attempting to reconceptualize its development strategies
and chart a new direction for the city’s future economic growth.32
31 Ibid.
32 Ibid.
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Civic Engagement and Creative Planning in Halifax, Nova Scotia
Halifax occupies a unique position within the economy of Atlantic
Canada. Although only a medium-sized city within the Canadian urban
system, its central position as the commercial and economic hub for the
Atlantic provinces affords it a greater degree of significance than it would
have based on its size alone. Halifax serves as an important administrative centre for the federal and provincial governments. It is also a leading
centre for post-secondary education, with five local universities, drawing students from across the country. The city has a complex of research
hospitals engaged in biomedical research and is home to major cultural
facilities for the region.
In the late 1990s, Halifax benefited from a major reorganization of
the administrative structure that governs the economic region, which
was part of a province-wide scheme of municipal reorganization. In
an effort to improve the administrative efficiency of the Halifax area’s
regional government, the Province of Nova Scotia amalgamated four
existing municipalities centred on Halifax Harbour into the Halifax
Regional Municipality in 1996. With a population of 373,000, it represents almost 40 per cent of the total provincial population.
An important innovation on the governance front was the creation
of the Greater Halifax Partnership (GHP), which represents the business constituency in the city’s central business district. Another notable
addition to the institutions of governance was the Halifax Regional
Development Agency, which is based in the social community and has
a mandate to develop inclusive strategies for more vulnerable residents
in the inner and outlying areas of the city.
Halifax, along with the other municipalities in the region, had historically pursued an economic development strategy that concentrated on
building industrial parks, and offering serviced land for incoming manufacturers or big-box retailers. It corresponded closely to the traditional
approach followed by many municipalities in the post-war period. The
intense competition this strategy generated among neighbouring municipalities opened it to questioning, and a consensus developed in the
mid-1990s that the approach was unsustainable. This shift coincided
with the creation of the Halifax Regional Municipality and resulted in
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the adoption of new approaches to local economic development. The
first manifestation of the change occurred in 1996 with the creation of
the GHP. Its mandate is to leverage the region’s technological assets in
pursuit of new employment opportunities; to brand Halifax as a smart
city; and to actively pursue development opportunities in the creative
and knowledge-based sectors of the economy. The GHP is a joint
public-private venture that is funded 60 per cent by local businesses. Its
governance structure involves a cross-section of leaders from the local
business community, universities, and all three levels of government,
and it is focused on four key sectors of the economy: energy, biotechnology, information technology, and transportation. The merger of the
GHP and the Halifax Regional Development Agency in 2007 enhanced
the ability of the regional municipality to adopt a strategic planning
approach to urban economic development.33
Over the course of the current decade, the Halifax Regional
Municipality has attempted to shift the regional economy onto a
development trajectory that deliberately incorporates key aspects of the
creative city discourse. At the request of the municipality, the Halifax
Chamber of Commerce convened an economic summit in 2004 to
formulate recommendations about future directions for the region’s
economic growth. Its report focused on the importance of strategic
initiatives to enhance the city-region’s quality of place, thereby improving its attractiveness to creative talent. That approach was reflected in
the economic development strategy the city-region adopted in 2005,
Strategies for Success, which explicitly incorporated notions of partnership and talent attraction as key elements. The city-region adopted
two other plans in 2006: one, based on smart growth planning principles, led to an implementation strategy to enhance the attractiveness
and growth potential of the urban core; the other, a cultural plan for
the region, explicitly highlighted the importance of culture as a source
33 Neil Bradford, Cities and Regions That Work: Profiles of Innovation (Ottawa: Canadian Policy
Research Networks, 2003), pp. 38–42. Also Jill Grant, Robyn Holme, and Aaron Pettman,
“Global Theory and Local Practice in Planning in Halifax: The Seaport Redevelopment,”
Planning, Practice & Research 23, 4 (November 2008), pp. 517–532.
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of economic growth for the region. In 2007, a consulting report done
for the GHP focused on strategies the region could adopt to attract and
retain talented young people. That led to the establishment of Fusion
Halifax, an organization devoted to helping young professionals meet
and interact. The organization has subsequently become an outspoken
advocate for the regional municipality’s new urban design plan for the
downtown, which was approved in June 2009. These initiatives illustrate the growing influence of ideas about creative cities and smart
growth on the economic development strategies promoted by the local
development coalition in Halifax.34
The influence of these concepts is also reflected in the Seaport
Redevelopment Plan formulated by the regional municipality to transform underutilized portions of the Halifax Port into a cultural district.
The plan was patterned after other redevelopment projects, such as
Harbourfront Centre in Toronto and Granville Island in Vancouver.
The thinking in the plan reflected key ideas about the role of the creative class in economic growth, presented in a study of Halifax’s ranking as a creative city in Canada. A recent analysis of the strategic
planning process associated with the seaport redevelopment project
found that the concept of the creative city had gained widespread
influence among a diverse set of groups within the regional economy,
including local development agencies, cultural associations, and key
government representatives. However, despite the broadening of the
base of local civic governance mechanisms that has occurred in the
region, many social and cultural interests remain relatively excluded
from the local development coalition and feel their concerns are not
fully reflected in the development agenda. Notable in the seaport
redevelopment planning process was the relative exclusion of socially
disadvantaged groups.
Planning for the seaport redevelopment project involved important
compromises among key local interests, including those that wished
to maintain the seaport area as a historic working port and those that
34 Jill Grant, Halifax Regional Municipality: Summary Overview and Integrative Paper [working
paper]. Prepared for the Innovation Systems Research Network (Halifax, N.S., 2009).
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stressed the need to provide studio space for local artists as part of the
redevelopment. The planning process reflected the network of interrelated social and professional associations operating both within the
local Halifax environment and across the national professional design
field. In the end, the process ensured that the redevelopment was undertaken with widespread support within the region, especially from the
local cultural community. As such, it represents an instructive example
of the effective formation of a relatively broad-based development
coalition that was able to adopt and use some of the key concepts and
ideas associated with the strategic planning approach to launch a significant local redevelopment initiative with high public visibility and a
substantial level of buy-in from the community.35
Civic Engagement and Strategic Planning in Canadian
Cities: Key Findings
Cities across the country face numerous challenges in responding
to the rapidly changing global economic environment. Traditional
approaches to local economic development are subject to increasing
limitations, leading cities to experiment with alternative approaches as
they have emerged. Yet, as we saw in Chapter 4, city-regions are subject to numerous constraints in the pursuit of their economic development goals, not least of which are the lack of jurisdictional authority
over many of the key policy levers and the fiscal resources to implement those policies. The irony of this limitation rests on the fact that
innovative and dynamic firms are locally based. To succeed, they have
to be grounded in a strong, dynamic urban economy capable of tapping
into local knowledge assets. Local strategies need to be devised and
implemented to improve the capabilities of local firms in the regional
economy. A number of obstacles stand in the way of developing these
strategies: the lack of symmetry between the existing administrative
35 Grant, Holme, and Pettman.
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structures for city-regions and the effective boundaries of the regional
economy; the absence of a cohesive development coalition in the cityregion capable of cutting across social and economic divisions; and the
failure to adopt a strategic planning approach based on an inclusive and
participatory approach to decision making.
The case studies analyzed above indicate that social actors and civic
associations in a significant number of Canadian cities recognize the
need to forge an alternative approach to urban economic development.
While not all of these attempts have met with a full degree of success,
they suggest that an important change in how we think about the relationships between innovation, creativity, and urban economic dynamism is underway. It would be convenient to rank the relative degree
of success or failure achieved in the individual cases described above.
However, such an exercise would belie the principal insights that the
case studies afford: namely, that there is no single blueprint for increasing civic engagement and adopting a strategic approach to local economic development. Even the cases that appear most successful on the
surface, such as Montréal or Waterloo, differ in significant ways from
the basic approach outlined in Chapter 4. Some city-regions that were
viewed as models for civic engagement a decade ago, such as Ottawa–
Gatineau, have encountered adverse economic conditions that even
the most strategic of planning exercises have struggled to surmount.
Halifax succeeded in a strategic infrastructure redevelopment initiative
but has not been able to translate this success into a broad and inclusive
development coalition. Vancouver and Toronto have made some major
economic gains in the past decade without key elements of the model.
Although London has failed to forge a unified development coalition,
the competition among rival visions of the city’s economic future is
evidence of a considerable degree of civic engagement among different
segments of the local community. The main conclusion arising from
the cases is that each city-region is unique and none offers a simple
model that can be easily replicated in other communities.
Most important, however, is the fact that none of these efforts can
succeed without support from the senior levels of government. That
support must take several forms. As we have seen, some provincial
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governments have been instrumental in beginning to redraw the administrative boundaries of regional jurisdictions to more accurately reflect
the underlying realities of the regional economy. In some instances,
they have even provided significant fiscal resources to support the
new regional level of government. There have also been instructive
examples of the three levels of government working together in the
true spirit of multi-level governance. In other instances, innovative
city-regions have been creative in tapping into existing federal and
provincial programs to access the fiscal resources needed to support
the growth of new sectors associated with the cognitive-cultural economy. Those cities and regions that are implementing these strategies
most effectively also have a strong, engaged civic community, which
is increasingly a prerequisite for a dynamic and innovative economy.
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6
Challenges and Choices
for Canadian Cities
Introduction
T
he current economic recession and restructuring are accelerating
the shift toward a more knowledge-based or cognitive-cultural
economy. This shift poses a set of challenges and creates new
opportunities for city-regions in Canada, but those challenges and
opportunities are distributed unevenly across the country. Canada’s
largest city-regions have demonstrated more resilience in adapting to
this shift because of their diverse economic base, while many of the
medium-sized cities in the industrial heartland of the country have
borne the brunt of the restructuring more directly. City-regions whose
economy is tied more closely to the resource base have experienced a
different set of problems but are clearly banking on a return to prosperity as the demand for their exports picks up. The greatest danger is
that a resumption of global demand for our commodity exports will lull
us into a false sense of security about our economic future. If Canada
fails to build the collective skills and innovative capabilities that a more
innovative economy requires, we will consign ourselves and future
generations to a steadily falling standard of living, as has recently
been argued by a number of observers. As the previous chapters have
documented, city-regions are critical sites for innovation and creativity,
because the spatial proximity between economic actors in related and
diverse economic sectors facilitates the transfer of knowledge among
key economic actors that underpins innovation. Cities must, of necessity,
be at the centre of any policy response to influence the future direction
of Canada’s economic development: an innovation agenda is, by
default, an urban agenda.
However, regions and cities cannot just alter their trajectory of economic development by fiat or an act of political will. Their pattern of
development is strongly influenced by the industrial structure of their
existing economy, as well as by the broader set of institutions that have
supported those sectors. Those sectors in which the urban economy has
historically been specialized will constrain its future ability to create
opportunities for new sectors to emerge. The basis on which those sectors
can emerge will be influenced, in turn, by the capacity of firms and
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institutions within the city-region to develop and exploit both new
sources of knowledge and their existing knowledge infrastructure, as
well as the talents and skills of the urban workforce. The more inclusive
the basis on which they do so, the broader the potential set of skills and
ideas that firms in the city can draw on. However, in the end, the past
will strongly affect the range of possibilities that lie open in the future.
Industrial Structure and Economic Growth
in City-Regions
To formulate a strategic response to the challenges it faces, an
individual city-region must start by understanding the underlying
structure of the urban economy, and the relevant skills and knowledge
assets that the city can build on. The case studies of innovation and
creativity presented in this monograph are intended to contribute to
that understanding. Urban economies change in path-dependent ways
that are shaped and constrained by past decisions. The concept of
path dependence is used to explain why certain technologies prevail
in the competitive setting of the marketplace, although they may not
always be technologically superior. The evolutionary approach argues
that economic systems change over time, but in ways that are shaped
and constrained by past decisions, random events, and accidents of
history. As a result of past choices and events, certain possibilities
are easier to pursue in the present than others. When applied to urban
economies, the evolutionary approach suggests that their trajectory of
development is rooted in a series of economic, social, and political
factors that influence their development over time.
The challenge is to reconcile the significance of random or chance
events in endowing a region with its specific industrial structure and
institutional capabilities, and the role of political leadership in fashioning
subsequent changes in its institutional structures and development strategies. The presence or absence of key institutional assets in the local
environment may affect a city-region’s innovative capacity and its ability
to respond to external shocks—in other words, its resilience. As cities
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are buffeted by external shocks, ranging from macroeconomic factors to
technological and environmental changes, their response is shaped by a
combination of the existing structure of their economies; by the underlying institutional makeup of the urban region, particularly the capacity
to develop and exploit new forms of knowledge; and, critically, by the
strategic choices made by civic leaders in response to those shocks.
The key insight derived from the evolutionary approach is the understanding of how random events and the locational decisions of a small
number of firms can initiate new developmental paths or growth trajectories for specific city-regions. Much work has been devoted to explaining
the emergence and growth of dynamic regions based on new technologies, as well as to outlining the challenge that older, industrial regions
face in breaking free of their locked-in paths of development to capitalize
on new technological and industrial trajectories. However, considerably
less attention has been focused on the interplay between city size, the
relative degree of specialization or diversity in an urban economy, and
path-dependent sequences of development. The debate about specialization versus diversity sheds some light on this question. As we saw
in chapters 2 and 3, agglomeration economies play out differently at
various stages in the development of an industry, while differences in
city size affect the way in which knowledge is created and diffused.
Firms often develop new products in the diversified, creative environment found in larger urban centres, but as the technology and industry
life cycles mature, there is a strong incentive to relocate the firm to a
city more specialized in the mass production phase of the industry, in
order to exploit urban cost advantages. While larger cities are more
diversified and knowledge intensive, with a wider array of industrial
sectors, medium-sized and small cities tend to have a narrower range of
specializations.
Equally relevant is the state of the city-region’s industrial structure
and institutional underpinnings. The pattern of economic development
in regional economies involves the process by which new paths are
created and existing institutional ensembles begin to break down
and are reconfigured. Central to this question is how adaptable these
institutional ensembles are to changes in the principal industries and
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technologies at the core of the city-region’s industrial structure. New
path­ways for urban economic growth can emerge through the indigenous
creation of new products or processes; through the development of new
areas of competence or specialization in the context of a diverse urban
economy; through the progression along a value chain to higher valueadded activities for existing industries; and through the relocation of
existing firms and industries into an existing urban economy. However,
these emerging pathways are strongly influenced by the existing mix of
knowledge assets and labour force skills within the local economy. The
key issue is how firms, industries, and institutions in a particular cityregion recombine their existing knowledge base and localized capabilities
to generate new, commercially valuable sources of knowledge. “New paths
do not emerge in a vacuum, but always in the contexts of existing structures
and paths of technology, industry and institutional arrangements.”1
This monograph has examined this issue by exploring three dimensions of the way in which innovation and creativity contribute to the economic dynamism of city-regions: the nature of the innovation process
in city-regions; the growing importance of talent attraction and retention
to urban economic development; and the contribution of more inclusive
processes of civic engagement and strategic planning at the urban level. It
has shown how the intersection between the path-dependent trajectories
of urban development, the prevailing governance structures in cityregions, and the strategic choices made by developmental coalitions
to chart a new economic path affect city-regions’ capacity to respond
to the process of rapid economic and technological change. Among
the important factors are the ability of regional and local governments
to build on specialized regional assets, including public and private
research infrastructure, as well as unique concentrations of occupational
and labour market skills; the presence or absence of civic capital at the
regional and local level; and the ability of regional networks to work
within and across associational boundaries to support the formulation and
refinement of strategic management approaches in response to external
1
Ron Martin and James Simmie, “Path Dependence and Local Innovation Systems in CityRegions,” Innovation: Management, Policy & Practice 10, 2–3 (2008), pp. 188–189.
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shocks. Efforts to sustain the economic performance of regions through
periods of disruptive change need to first consider the institutional
capacity of those regions to manage their transition. The successful
adoption of a strategic approach at the regional and urban level requires
not just a new category of policy approach, but also a new style of
policy development.
As the global economy becomes more tightly integrated and new
locations emerge as dynamic sites of innovation in their own right, the
economic success of existing city-regions, especially in older industrial
areas, rests on how they respond to these changes. The ability of
existing industries to transform and shift into new areas of innovation
depends in part on how complementary the existing areas of technical
specialization are within the same urban region. This factor includes the
synergies between existing technological capabilities, among the skill
sets of the labour force, and among the existing social and institutional
dynamics of the urban economy. Without these synergies, the potential for the successful transfer of ideas across existing knowledge bases
and the ability to recombine existing skill sets into new sources of
economic activity will be severely limited. The state of civic governance—particularly the presence of strong civic leadership—the ability
to forge cohesive development coalitions, and the capacity to undertake
and revise focused strategic plans will all influence how these pathways
to future economic growth are shaped.
This process will play out differently in different cities across the
country. As we have seen throughout the monograph, Canada’s larger
cities are more likely to assume the role of “Schumpeterian hubs,” as
their research-intensive knowledge infrastructures create the conditions
where existing resources can be recombined to generate innovations,
new products, and new industries, although the pattern will vary across
the individual cities. Similarly, their high degree of concentration in
knowledge-intensive business services and in the creative and cultural
industries—including fashion, design, and advertising—provides a
solid grounding for the emergence of the cognitive-cultural economy.
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183
Vancouver is increasingly positioned as a gateway to the broader
economy of the Pacific Rim and has much in common with other cityregions along the west coast of North America. The industrial base of
the city-region will likely continue its transition away from its traditional role as a metropole for the staples industries toward an economy strong in digital media and related cultural industries, as well as a
number of emerging research-intensive areas, such as fuel cells, biomedical research, and wireless technologies.
The recent global recession has accentuated the vulnerability of
Southern Ontario’s industrial base in automotive manufacturing, while
underlining Toronto’s strength and stability as a global financial centre
and a dense network of creative and cultural industries. Business and
civic leaders, including the Toronto Financial Services Alliance, are
working on strategies to build on and enhance the city-region’s competitive advantages.2 The recent Greater Toronto Region Economic Summit
signifies the beginnings of a broader awareness of the importance of
the regional economy.
Montréal continues to benefit from its current strengths in advanced
manufacturing industries, as well as a wide range of sectors associated
with the creative and cultural economy.
All three cities will benefit from their selection as the primary location
for immigration, and their increasing concentration of highly educated
and creative talent. As a result, the disparities between Canada’s largest
cities and its medium-sized and smaller ones will continue to grow.
Canada’s medium-sized and smaller cities face a different set of
challenges in that they must shift their economic base out of declining
economic sectors into those in which their relative degree of specialization and local research infrastructure afford them a strong basis for
future economic growth. Some of the most innovative of these cities are
moving beyond their traditional areas of specializations to develop new
areas of competence at the intersection of a number of related sources of
local strength. Yet their respective trajectories of development will differ
2
184
Philip Preville, “The Good News About the Bad Times,” Toronto Life, February 2009.
21st Century Cities in Canada
significantly. The development of new knowledge-intensive services
in Calgary from prior areas of expertise in the oil and gas industry is
a good example of that, while the Waterloo region’s latest initiative
to meld its strength in digital media with the artistic and theatrical
strengths of the Stratford Institute is another such example. Halifax
is building on its role as a regional metropole for Atlantic Canada, as
well as the depth of its research-intensive institutions and its growing
cultural dimension. None of these cases provides a ready blueprint for
other city-regions in the country, however. The challenge for individual
city-regions is to determine the best way to use their existing strengths
to move into these new knowledge areas.
Urban Economic Transformation Through
Civic Engagement
While some of Canada’s larger city-regions enjoy inherent strengths
that are helping them weather the current recession and reposition their
economies for future growth, their success in so doing will depend on
how well they mobilize their existing assets in aid of a strategic plan
to sustain their development. Applying a socially organized learning
approach to questions of urban and regional development requires a
more integrated understanding of policy at the governance level—a level
that involves civic actors in decision-making processes and integrates
policy across existing programs, as well as levels of government. The
ability to create effective linkages among relevant institutions and actors
at the city-region level to forge a cohesive development coalition is a
key factor in the development of effective policy and a prerequisite for
regional resilience. However, recognizing the importance of collaboration and coordination is only part of the challenge: better coordination
also requires an understanding of the conditions that contribute to its
emergence and development.
Much depends on the ability of cities and regions to develop the
organizational capacity to formulate and implement new development
strategies. The critical task is to determine the most effective means to
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alter the conditions that influence the growth trajectory of a regional or
local economy. Successful regions are those able to engage in strategic
planning exercises and undertake collaborative processes to plan and
implement change. These circumstances place new demands on civic
leaders at the urban level and their ability to forge cohesive developmental coalitions. The extent to which they include a wide range of
social and cultural concerns, especially those related to the critical
issue of labour force training and adjustment, will expand the basis of
support for the coalition. The emphasis on the role of local leaders in
building civic capital and creating collaborative institutions underlines
the importance of local action in overcoming the problems of lock-in
and charting new developmental pathways for urban regions. However,
even the most dynamic regions with the highest levels of civic capital
must work within the constraints of their existing mix of industries and
technological capabilities.
As we saw in Chapter 5, examples abound of city-regions across the
country that have undertaken efforts to change their path of economic
development by improving their institutional assets—in other words,
through a process of civic engagement and strategic planning. They differ
in terms of the relative mix of industries on which their economy is
based, the research infrastructure that provides the source of new ideas
and highly qualified labour to local firms, and the degree of civic capital
that provides support for collective initiatives in the city-region, but
they all demonstrate a strong capacity for social learning. However, the
way in which this process occurs in different city-regions across the
country varies according to the dynamism of the local civic leadership
in place, the relative cohesiveness of the local development coalition,
and the focus and coherence of the strategic plans that have been
developed. There is no single blueprint for how this process should be
carried out in individual city-regions. In other words, “one size does
not fit all.”
And not all strategic planning exercises are guaranteed to succeed.
Ottawa, which has been marked by a high level of civic engagement for
the past two decades, has undertaken two strategic planning exercises
during the current decade that failed to achieve many of their objectives.
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While the city-region retains great strength in terms of its extensive
research infrastructure, the high levels of skill and talent in its workforce, and the continuing dense networks of civic governance, its ability to return to its pre-2000 growth trajectory will depend on how well
it mobilizes these assets in pursuit of that goal. The Waterloo region
is characterized by equally high levels of civic governance, but it has
carried out its strategic planning efforts in a more targeted and focused
way. It has been singularly effective in deepening and extending its
already impressive strengths by drawing on federal and provincial programs to get support for new research institutes, a new research park,
and the latest Centre of Excellence to deepen and extend its research
strengths. While its more traditional manufacturing sectors have
been weakened by the current recession, its information technology
firms have coped in better fashion and the new initiatives hold out
promise as the basis for future growth.
In the end, however, cities in Canada simply lack the fiscal resources
to effect the needed transition on their own, no matter how deep their
reserves of civic capital, how dynamic their civic leadership, or how well
organized and inclusive their developmental coalitions.3 To succeed in
these efforts, Canadian city-regions must be able to draw on the fiscal
resources of the senior levels of government and put them to work in
aid of the strategies they develop. As we saw in Chapter 4, the interdependent nature of governmental roles and responsibilities, as well as
those of social actors outside the formal political process, are increasingly important to achieving successful policy outcomes. Similarly, the
sharing of effective decision making among several levels of government promotes a process of interactive learning—not just within public
agencies, but also among firms, industry, community associations, and
other institutions—that is essential to economic success at the urban
level. However, these processes will not help city-regions develop and
3
Brender, Cappe, and Golden.
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187
implement new growth strategies if the policies of the federal and provincial governments are not aligned more effectively with the strategies
and goals of city-regions across the country.
The failure of senior levels of government and city-regions to align
their respective approaches to innovation and economic development
can best be described as a series of missed opportunities. The first arises
from the failure to align federal and provincial investments in research
initiatives, such as Centres of Excellence, with the local economic
development strategies of the city-regions in which these initiatives
are located. While decisions about the location of these programs are
rightly made on the basis of academic and research excellence, many of
the investments in Canada are allocated according to the strategic plans
formulated by universities and other research institutions. The failure
to align the strategic plans of the research institutions with the broader
economic development goals and plans of their city-regions is a clear
illustration of a missed opportunity. A second missed opportunity arises
from the lack of integration of investments in science and industrial
parks with sectoral initiatives at the city-region level, such as cluster
programs, which can help ensure that the firms based in these parks are
linked to sectoral initiatives underway in the city-region. The third missed
opportunity arises from the lack of coordination between programs
supporting regional economic development and programs promoting
science and technology within the ambit of the national system of
innovation.4 A coordinated approach to urban economic development
requires a more integrated approach to policy planning at the governance level that crosses existing program boundaries, as well as levels of
government, and leads to a more effective degree of policy alignment.
Effective policy alignment is necessary for the success of urban
economic development strategies. Strategies at the city-region level
cannot rely on the adoption of new spending programs by senior levels
of government in the context of the current budgetary situation at both
the federal and provincial level. Most initiatives developed through
4
188
OECD, Competitive Regional Clusters: National Policy Approaches, OECD Reviews of Regional
Innovation (Paris: OECD, 2007), p. 122.
21st Century Cities in Canada
strategic planning exercises at the city-region level can succeed only by
tapping into existing government programs and budgetary envelopes
to gain access to the needed resources, and by aligning their objectives
at the local level with the stated objectives of existing federal and provincial programs. There is no simple or comprehensive recipe for doing
so, but the results of the case studies provide concrete examples of
how this can be achieved. As we saw in Chapter 5, there are a number
of examples of successful efforts across the country—the Urban
Development Agreements in Western Canada, including the Vancouver
Agreement; the substantial level of financial support provided to the
Communauté métropolitaine de Montréal as part of its reorganization
in the early 2000s; the success of the business-led strategy in the
Waterloo region in drawing on existing federal programs to provide
the core funding for the new Corridor for Advancing Canadian Digital
Media; and the support of senior levels of government for the seaport
redevelopment project in Halifax.
As noteworthy as these recent initiatives are, they do not represent
a broad enough or deep enough pattern of change to indicate that
Canadian cities are viewed as central actors in the country’s innovation
strategies. Nor do they signify that policy development is strategically
aligned across all three levels of government to ensure that Canada
meets the challenges that lie ahead. Recent developments in federal
and provincial policy have paid far greater attention to the economy’s
existing strengths in resource and commodity industries or have focused
the government’s fiscal efforts on shoring up existing areas of manufacturing strength, such as the automotive industry. While these efforts
are undeniably needed, the harsh reality is that these manufacturing
industries are unlikely to play the same role in the economy as they did
before the recession, and the commodities-based, staples-producing
industries are likely to face increasing economic challenges as environmental limits on their future development are recognized and constraints
enforced on their future growth. The underlying reality is that cityregions across the country are already undergoing a shift to more
research-intensive and knowledge-based activities. While some of them
are closely linked to upgraded manufacturing activities, others are more
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189
closely tied to an expanding range of economic activities in the cultural,
creative, and design sectors of the economy. The key question is how to
ensure that government support for innovation and economic development
is aligned more closely with these emerging trends.
Conclusion
This monograph has explored the way in which innovation and
creativity are affecting the economic development of Canada’s
cities. The challenge of shifting our urban economies to a more innovative growth path has been accentuated by the major external economic
shocks since 2000. The degree of resilience exhibited by individual
city-regions in responding to these shocks is a product of their underlying industrial structures, which have been shaped by a path-dependent
process of economic development, as well as by the strategic responses
framed by key civic leaders working through local civic institutions.
No city-regions are completely captive to the past trajectories of economic development, but neither do they get to wipe the slate clean
and launch an entirely new strategy for future development. The most
effective strategies for growth rely on acquired levels of civic capital
and the cohesiveness of local development coalitions to chart new paths
forward, but they do not always do so in an equally effective manner.
Among the factors that determine their success are the ability to build
on specialized regional assets, including public and private research
infrastructure, as well as unique concentrations of occupational and
labour market skills; the presence or absence of civic capital at the
regional and local levels; and the ability of local firms and entrepreneurs to adjust their business strategies in response to changing economic circumstances. Path dependence may play a role in determining
the outcomes, but that role is always contingent, not pre-determined. It
is framed by the choices made by local civic actors, and the extent to
which local institutions and associations rally around those choices to
support or constrain the achievement of their goals.
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From the Lecture
ANNE GOLDEN’S SIRP LECTURE COMMENTS
These remarks were delivered at the Scholar-in-Residence lecture
on May 19, 2009, in response to a presentation by David A. Wolfe
of his research for this monograph.
Note: Anne Golden presented on behalf of panelist Judith Wolfson, who was unable to attend the
lecture. Ms. Wolfson is the University of Toronto’s Vice-President of University Relations. She
joined the university in July 2006 after eight years as President and CEO of Interac Association/
Acxsys Corporation. She previously served as a lawyer, social worker, and deputy minister for the
provincial government.
D
avid’s work really resonates with me because it aligns so
much with what I learned about 15 years ago when I was
doing the study on the GTA; that is, that the whole dynamic
of innovation depends on proximity—the buzz factor. One of the most
important articles I read then was called “Reinventing New York.”
Remember, at that particular time, there were a lot of people predicting
that because of technology, distance wouldn’t matter. That article tried
to set the record straight. So I find the notion that innovation must be
grounded locally compelling.
My second point is that this innovation dynamic is quite complicated and it’s different in every locale. I remember meeting with a
political leader, and spending some time explaining that one-size-fits-all
urban policies were not effective. It was a two-hour discussion, and at
the end of it, he thanked me profusely for coming. Then he said, “But
Anne, you must remember that we cannot do for Toronto what we can’t
do for Wawa.”
Third, innovation depends upon local capacity—in terms of authority,
in terms of money, and in terms of leadership. And what David stressed
is, it’s not just political leadership: it’s leadership from all sectors—
many actors. This is very empowering. That’s because the lesson is
that if we can get our act together in the various cities, we don’t have
to sit back and let events happen to us. Clearly, we are in the middle of
a global recession and that’s something we couldn’t have stopped here
in Toronto.
But we’re not without power to create our own future, and the
engagement of all of us matters. It’s something I have always believed,
and I learned early on that you cannot bequeath a sense of community
from one generation to another. Nor can you bequeath a vibrant economy from one generation to another. So I think there are lots of very
exciting messages in David’s work.
From the Lecture: Anne Golden’s SIRP Lecture Comments
193
In Judith’s comments—and unfortunately she is unable to make it in
person tonight—there are some very interesting counterpoints. Judith
makes the point that, while she agrees with David on many of the fundamentals, not all innovation is geography-based.
Judith points out that the key factors that enable global innovation models to thrive are those based on platforms with a significant
technology base, and with common connectors and knowledge that
allow for innovation across the sector. Judith provides three powerful
examples that I would like to cite.
You may not know that Judith was the former CEO of Interac, following her previous career in the provincial government. Interac is a
good example for our sponsor, CIBC, I would think. And it’s a great
example for the rest of us. As Judith says, “I doubt there are many
people in this audience who don’t feel grateful at least weekly that we
have the Interac system in place.”
But this innovation—now a product and service that is ubiquitous in
this country, serving every region—was put together by a consortium
of Canada’s financial institutions. They had to cooperate to build the
infrastructure and to develop the common platform technology. Judith
makes the point that this could not have occurred using simply a cityregional model.
The second example she gives is in the health field—the Structural
Genomics Project that brings together scientists from the University of
Toronto, Oxford University, and the Karolinska Institute in Sweden.
The catalyst for this powerful cluster is the high-performance compu­
ting platform in these three institutions—again, a hugely expensive
infrastructure.
The Structural Genomics Project does not need to be located in one
region or in one centre, and it takes advantage of a global talent pool.
The project is headquartered in Toronto, it has facilities in Oxford, and
it has facilities in Sweden. As well, it has funding from public sector
partners and from private sector partners across three jurisdictions, with
multiple teams of researchers working in an open source model.
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21st Century Cities in Canada
So this is a network that spans the world, and the benefits in advancing biopharmaceutical medicine accrue, of course, to industry and to
all jurisdictions. So Judith’s point, again, is it couldn’t be built within
just a single region.
The final example she gives of a global cluster with a platform
technology is the Citizen Lab, headquartered at the U of T’s Munk
Centre. The platform technology was developed by a cluster network of
researchers from Oxford, Cambridge, Harvard, and the U of T.
It’s a cluster linked by technology, Judith would stress, not
geographically-based. So I think she’s given three very interesting
examples of the fact that a lot of what’s going to happen to drive innovation today must, by definition, be global. In her view, “perhaps the most
common theme in all these examples is that certain sectors have both
development and ongoing costs that are too high for any one region to
invest the resources necessary to create the innovation. Furthermore,
the type of innovation and the model for innovation would be at the
local, regional, or national level, depending on the sectors.” So it will
vary by sector, it will vary by all the different players. “The bottom
line is the need to put the right people in the right place with the right
resources to answer the big questions.”
I think what Judith is saying is that we’ve had a yin and she wants to
present the yang. Her argument is important because it says innovation
is not all about local activity. I think David—who has acknowledged
the importance of integration—would agree that these global projects
need to have cities somewhere and ultimately need to be headquartered
somewhere; and I would say, why not here?
From the Lecture: Anne Golden’s SIRP Lecture Comments
195
From the Lecture
CARL ZEHR’S SIRP LECTURE COMMENTS
These comments were delivered at the Scholar-in-Residence lecture
on May 19, 2009, in response to a presentation by David A. Wolfe
of his research for this monograph.
I
n terms of the history of the region of Waterloo [Kitchener–
Waterloo, Cambridge, and four rural townships] the characteristics
are about 200 years old, and they haven’t changed all that much.
David’s named a few of them. One thing that he didn’t mention was a
work ethic that is instilled in people who live in the region, and it’s even
in the immigrants who come here who may not have had the same kind
of work ethic from their home country.
David mentioned entrepreneurial spirit, innovation, and the adaption
to change. I want to add a couple of items in terms of the caring side of
the community, and they speak to the quality of life that exists in our
community.
In terms of characteristics, there is a generous spirit, and I don’t
mean just the giving of money—large sums of money. In some cases—
the founders of Research In Motion Ltd. had been very generous—not
just locally, but abroad. And it is those individuals, who give significantly to the community, who want to become and continue to be a
part of those organizations to which they are actually contributing. That
feeds on itself and they become generators of a new organization.
All of these things clearly are not transferable as a package from one
community to another. Hopefully, some people just pick up—just as
we’ve picked up—on things from other communities. One of the other
points, in terms of quality of life, is that in the City of Kitchener, we
have 11 community centres that are very deliberately placed in those
communities with a specific need—whether it is recreational, social,
or even perhaps political—where we encourage neighborhoods to band
together. We provide the facilities so that they can organize their own
neighborhood.
As well, within the region of Waterloo, we’ve been one of the leaders
in affordable housing, and I think that is part of that support system:
the caring part that is carried on directly through the local government.
But that has come through support agencies—and we support those
agencies, themselves agents of change.
From the Lecture: Carl Zehr’s SIRP Lecture Comments
199
I speak of a multicultural centre. A little-known statistic is that our
community ranks either fourth or fifth in this country in terms of immigration intake if you take the metro areas of Toronto, Montréal, and
Vancouver out of the mix.
So it is significant, and we encourage that diversity. Actually, a
new organization called the Waterloo Region Immigrant Employment
Network is specifically targeting the professionals who are coming in
from outside, so that they can become more integrated into the community. With the growing change in the economy—I’m going to speak
about employment in just a moment—we also created something called
the Manufacturing Innovation Network, or MIN. This came out of a
spinoff of the Centre for International Governance and Innovation.
IGLOO is the technology company—a network of manufacturers.
In terms of doing something I would call “daring to be different,”
the City of Kitchener undertook an employment land study in 2003. We
quickly recognized the change coming in the economy, and we started
to do something about it. We created the Economic Development
Investment Fund, which was $110 million over and above our regular
operating and capital fund. The money was to be raised over a period
of ten years. The Economic Development Investment Fund became
a very controversial item in the next election. What we said was that
we wanted to create an education and knowledge creation cluster that
addressed the coming economic change.
David Wolfe has already mentioned a couple of the things that came
out of the Fund. For example, the City of Kitchener made contributions of
cash and land to Wilfrid Laurier University. We also picked up the School
of Social Work—lock, stock, and barrel—for the Waterloo campus,
relocating it to an old high school that had been vacant for some
15 years. We dreamed that we would get the School of Pharmacy, and
we did.
We dreamed, as well, that before 10 or 15 years were up, there might
be a medical school attached to this. It is now under construction as we
speak. And there is a second cohort of students in the community, in
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21st Century Cities in Canada
partnership with McMaster University. There are many other private
institutions and education institutions in the community, as well in the
core of our cities.
Our intention is for our health sciences campus to become an integrated and interdisciplinary training school as much as possible. Some
very ground-breaking changes are being made there.
That $30 million the City of Kitchener gave to the health sciences
campus has been leveraged to over $130 million—primarily from
the private sector—in development that is occurring around the area.
Also, we are getting spinoffs from the School of Pharmacy. One of the
scientists who is teaching there, has opened up the North American office
of the HPR pain research clinic. Not very pleasant, but it’s business.
Reference is also made to the Digital Media Convergence Centre
that is in partnership with the University of Waterloo and the City of
Stanford. The Centre was given $5.35 million: a total of $10.7 million
has been given to both of those communities. Since change is so fastpaced, cities really need to be nimble to take advantage of the opportunities that come along.
I was telling someone just before this meeting started that, for the
first time (in history, I believe), there was a group of mayors—about
10 or 12 of us—invited back to 24 Sussex to actually sit around and
chat. We literally sat around the dining room table, gathered the chairs
ourselves, and had this informal meeting with the prime minister. This
took place just before the Paul Martin government failed; it was right
after the Speech from the Throne. That get-together, I believe, was very
significant. We need to have more of that as we go forward in the relationships with governments.
Professor Wolfe also spoke of the governance issue. While the
region of Waterloo is combined with the multiple municipalities I
previously mentioned, we are a reasonably successful—perhaps in
spite of ourselves, or in spite of the fact that governance tends to
be truly regional—city region. I think it’s critical that we not make
comparisons within a CMA [census metropolitan area] that could be
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201
self-destructive and counter-productive, while there is a great deal
of collaboration and “co-opetition.” John Jung, who is the President
of Canada’s Technology Triangle in our area, uses that term—coopetition—quite a bit.
So in the region of Waterloo, we are so integrated that we work,
we play, we live across these artificial municipal boundaries, yet we
have seven local governments—and that is perhaps an argument for
another day.
I’d like to close with Mahatma Gandhi’s “Seven Blunders of
the World”:
Wealth without work, pleasure without conscience,
knowledge without character, commerce without
mo­rality, science without humanity, worship without
sacrifice, and politics without principle.
I think that we have the ability and the will to ensure that our 21st
century cities do not make any of those same blunders.
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From the Lecture
DAVID PECAUT’S SIRP LECTURE COMMENTS
These comments were delivered at the Scholar-in-Residence lecture
on May 19, 2009, in response to a presentation by David A. Wolfe
of his research for this monograph.
T
here are four messages from the lecture that really stand out
for me. The first is that David’s research clearly indicates that
local knowledge and specialization matter. And in a globalizing world, it’s easy to lose sight of the fact that in this region—the
Greater Golden Horseshoe—we have an extraordinary collection of
hundreds, if not thousands, of very specific sets of local knowledge and
specialization that are really the ground source for innovation of our
economic success.
David thankfully drew attention to what I would say is the other
big lesson we’ve seen in the last 20 years—which is that diversity
matters. And diversity in our economic situation in the Toronto region
is actually one of our greatest strengths.
Nortel was one of the five largest employers in the Toronto region
12 years ago, and now Nortel, as a company, has been totally decimated
and has lost most of its employees in this region. Any other city in
North America—maybe with the exception of New York or Chicago—
that had a Nortel, and saw Nortel implode the way it did over the past
decade, would have suffered significantly from an economic point
of view, and certainly from an innovation point of view. I’d argue
that as much as Nortel’s demise has been extremely painful for the
Nortel people and many of their suppliers, I think the average person
in Toronto hasn’t really even seen it as a personal economic effect.
And that’s testimony to the incredible diversity of the region; not
only do we have a large automotive manufacturing sector—although
it’s under a lot of stress now—we have one of the largest financial service sectors in the world, with 20,000 or 30,000 jobs in Toronto alone.
We also have a huge food processing centre. Not many people realize
that the region within 100 kilometers of Toronto, as an agricultural
region, has greater output than all of the Maritimes and Newfoundland
put together. On top of that, we have one of the three largest food processing centres in North America.
We have the science and technology sectors we’ve been talking
about, plus business services, which is one of our greatest export sectors and one which I get to be a part of in the consulting industry from
time to time. So diversity is important. David’s third lesson, I think,
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205
is that the region is the economic unit of analysis here. As the other
speakers have said, we do ourselves a huge disservice when we start to
talk about municipal boundaries as if those are logical economic units.
They are important for the provision of services and infrastructure—
but the economic unit is the whole region.
Corporations don’t think in terms of municipal boundaries; they are
locating across the region. Even Research In Motion—as important as
it is to Kitchener–Waterloo—now has a huge employment centre in
Mississauga with thousands of people there now and more being added
for the future.
So we are a single economic unit that presents some real challenges
for how we actually harness this growth and direct it. Then finally, and
perhaps most subtly, we can factor Schumpeterian economics into this,
which I think is very important. Schumpeter—for those of you who
have read economics and those of you who haven’t—has many claims
to fame. But one of my favorites is what he called “creative destruction,” which is the power of capitalism to destroy existing industries
and redeploy those resources very aggressively to new growth areas
where demand is being generated. We’re seeing incredible creative
destruction going on in our economy right now.
What we’re having trouble focusing on is the amazing creative
resilience that’s coming out of all corners of the economy. It’s going to
lead to the next new wave of growth and things like green and environmental industries and many other areas. But David, you gave a wonderful nugget example of Electrohome and Christie Digital.
Nokia is a company I had a chance to visit in the mid-1980s when
Nokia was one of the main manufacturers of television sets in the world.
I remember sitting with Nokia executives who told me “we have to get
out of television.” It’s a dead end, they said, the Koreans are making
them very cheap now; the Chinese will be making them soon; we can’t
innovate in television enough; we’re going to move into something
new—mobile phones.
I remember one of my colleagues said to me, “fat chance the Finns
are going to make mobile phones.” But, in fact they re-purposed the
entire industrial enterprise and were completely out of the colour
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television business by the mid-1990s. So it is possible to take enormous
creativity and energy and re-purpose it into new businesses. It doesn’t
happen very often in the same company; it more often happens when
people leave that company and start new companies—even within the
same region.
So I think David provided incredible insights. I guess what I’d challenge us to think about then is: What do we take from that in terms
of what we might do differently next Monday morning in our jobs—
whether we work for economic agencies of the government, or universities or colleges, or in the private sector? I’d like to focus on a few
things that jumped out for me.
First, David, I think you’ve given an incredibly important supporting argument for why we need to focus investment—public investment, but private as well—on anchor centres of excellence—places
where we can really go deep and have global leadership. I think it’s
been very exciting to see those emerge in the last couple of decades.
And we’ve seen how quickly that properly applied resources can lead
to a position of global leadership.
Carl, if I look down the road to Kitchener–Waterloo, Mike Lazaridis
said ten years ago—maybe even seven years ago—“I want to create one
of the great physics institutes in the world and I also think we should
develop the science for the next generation of computing after Moore’s
Law runs out.” In both areas, Quantum Computing and the Perimeter
Institute, we have gone from a standing start to arguably having one of
the five most advanced centres in the world in both fields, which I think
is just absolutely incredible.
Some of these opportunities aren’t in obvious areas. In Toronto
right now, we have arguably the greatest concentration of pension
fund leadership in the world. Between Teachers and OMERS [Ontario
Municipal Employees Retirement System] and the CPP [Canada
Pension Plan], you have three outstanding public pension funds that
have governance models that other countries are copying. The U of T’s
Rotman School of Management has a pension management development centre. We could set the aspiration of being one of the better,
maybe the leading, centres of excellence in pension fund management,
From the Lecture: David Pecaut’s SIRP Lecture Comments
207
and that would be quite realistic to build on what we have today. It goes
on and on in the number of places we can do that. So, I would argue
strongly, we need to think about doubling down and re-investing in
many of these sectors.
Second, we need to partner with our strongest firms. The companies
who are already here, and have capacity, are going to be the ones most
likely to build out and create innovation and growth. Now we’re doing
that pretty well in some of the slow-growth areas, like automotive
assembly where we’re putting lots of money against General Motors
and Chrysler. And I think many of us feel uncomfortable about how
much in the way of resources had to be dedicated there, although I
think many people accept that it’s necessary in the short run. But that
should cause us to re-commit to looking at some of our industrial
champions. Look at the financial services sector: our five major banks,
headquartered in Toronto, are in the top 20 in the world right now—not
so much because they grew, but because the others shrunk. But the fact
is we have an incredible set of businesses there, as we do in the life
insurance sector as well.
Not many people know that Xerox has the most productive R&D
centre in the world and it’s right down here on the QEW [Freeway].
IBM has over 2,500 software engineers in Markham and one of the top
centres in the world. We should be asking these firms, what they need
in order to expand and what we can do to attract more of their corporation’s resources to build out new and complimentary businesses.
The third area is when we go out to recruit new firms. Let’s be
strategic about it. Gone are the days when we could go out and tell a
40,000-foot story about the great quality of life, lots of graduates, and
the wonderful climate. I am just kidding; climate isn’t a big plus for us
in most parts of the world.
We’ve got to be more targeted, and we’re already seeing that when
the jurisdictions work together. Again, I look to Kitchener–Waterloo
over the last nine months where Agfa, one of the top medical imaging
companies in the world, had suggested that they might actually
close their Kitchener–Waterloo research facility in a global consolidation move.
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The Toronto Region Research Alliance, working with the province, mobilized to say, Wait a minute, Agfa, you are making a huge
mistake. Look at all the technologies we have in the universities in the
Toronto region that are exactly what you need to draw on for graduates, for employees, and for basic research. And in the space of six
months, Agfa flipped its decision and is now closing other facilities.
Employment in Kitchener–Waterloo will go into the several hundreds
right in the heart of the recession as Agfa expands its facility. So it can
be done, but it’s focusing on those companies that can leverage our
research skills.
Fourth, I think we’ve ignored, to a large degree, the systemic qualities David was pointing to; and one area where we clearly have underleveraged potential is procurement. We have large companies who
are major buyers of goods and services. How do we make them more
effective buyers of emerging products and services?
Last week, we saw the Toronto Region Research Alliance, working
with the City Summit and the Centres of Excellence in Ontario, host
a green marketplace. There were 20 Ontario companies who presented
their latest and greatest green energy-efficient technologies—$50 billion of procurement power in the room. It was a huge success—very
small, very focused, but it actually leveraged the procurement power of
governments and the private sector.
Last, a couple of areas that I think maybe you didn’t touch on as
much, but that fit your argument well, David. One is immigration. We
are a country of immigrants in terms of our make-up: 44 per cent of
the GTA’s population is foreign-born, but we have not leveraged that
as strategically as we could. And I think the next generation of leverage has two parts to it. The first is that we should be using it as a
competitive weapon. The United States is becoming more and more
anti-immigrant.
The [U.S.] H1B skilled immigrant visas run out in April. It’s called
the “April Fool’s Day Surprise” because Microsoft and major banks
go in and apply for all these H1B visas and they’re all gone by April.
We should be targeting those companies to say basically, we will give
you the opportunity to bring your foreign workers here. Vancouver
From the Lecture: David Pecaut’s SIRP Lecture Comments
209
has done something like this, and Microsoft has now opened a major
research laboratory in Vancouver, expressly to get access to global talent
they can’t get into the U.S.
It applies to financial services. I visited Goldman Sachs Canada
in Toronto last week, and the CEO told me that they are becoming a
“hotel” for Goldman in New York, who can’t get their skilled people in.
So Goldman Canada basically flies people up from New York to meet
with their Goldman employees from around the world who they can’t
get into the U.S. on visas to work on projects.
We should turn that into a kind of red carpet service and say to companies, Come here, we’ll help bring your skilled people here. We have
an open environment; we can do that very effectively. Then the second
part of that is we’ve got to bring our diverse populations more into the
leadership of the city region. We don’t see the diversity in the leadership of our corporations or non-profits or government boards anywhere
near the degree that they’re represented in the population.
So DiverseCity—an initiative of the City Summit Alliance and
Maytree—and other initiatives that can bring that leadership in and
create a sense that the Toronto region—the Greater Golden Horseshoe—
is the most open region in the world for visible minorities and immigrants, would be fantastic. But finally, I’d like to conclude by “hitting
the nail on the head” on two things implied by David.
The first is aspiration. I think we suffer from a deficit of aspiration
in this country, but particularly in this region. Now what do I mean by
that? I mean that what David has just laid out is a vision that says, go
out in the world and invest behind your greatest strengths.
We have the opportunity to attract more resources and we will find
that economic innovation flourishes. We know what the formula is. So
where is that level of aspiration, where is the leadership standing up
in the country saying, Toronto should be the world centre for pension
fund management excellence or systemic risk? Right now, Canadian
banks are being seen the world over. The front page of the Wall Street
Journal said that Canadian banks have survived with no government
assistance—the only G8 country that that’s happened in.
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We have a better regulatory regime. Ireland just announced they are
copying the Canadian regime, and we’re going to see other countries
do it as well. Why don’t we build on that right now? Why don’t we say
that our mission for the G8 next year is to have the centre for systemic
risk monitoring for the world in Toronto. Let’s put it here, let’s put our
resources behind it; we have great depth at U of T and Waterloo for
that. The list goes on and on, and it also applies to our cultural sectors.
What is the Toronto International Film Festival’s new project on
Queen Street other than an aspiration to be the centre of the world for
anybody who cares and appreciates film? The Luminato Festival of
Arts and Creativity, other great arts festivals, great cultural festivals—
these are all part of that aspiration we need to have.
And then the last part—and David, I think this was the most profound thing you’ve pointed us toward—is that leadership in regions
like this will come from civil society convening to tackle this together.
I think we’ve seen that in the Toronto region—Carl, you’ve seen it in
Kitchener–Waterloo—that when the business leadership, the non-profit
leadership, and government leadership sit down together to articulate
visions, put together fact-based comments, and come to specific action
plans, enormous things can be accomplished.
What I think we have to do in Canada, and in the region, is start
to see that process itself as our single greatest secret success formula.
That is our Coke formula, our McDonald’s Big Mac formula. Our
main basis of competitive advantage is that we are better at working
across civil society to tackle problems, but also tackle opportunities.
We should take the successes out there—whether they be the Quantum
Computing Institutes of the world or the Toronto International Film
Festival—and say what made us great, and then ask how we replicate
that in all these other areas of opportunity.
From the Lecture: David Pecaut’s SIRP Lecture Comments
211
From the Lecture
PANEL DISCUSSION AND Q & A
At the CIBC Scholar-in-Residence Lecture held at The Fairmont Royal York
hotel in Toronto on May 19, 2009, some 500 people gathered to hear
moderator John Honderich, David Wolfe, and three panelists debate
the role of cities and innovation. The following pages present
excerpts from the Q&A session with the audience.
Bernie Wolfe:
I was wondering if we could address how we speed up the processes
of what you are talking about. It seems to me that we are really a fairly
slow city in getting things done. We tend to talk a lot and sometimes do
very little. In that context, if you were to re-write things as a political scientist, how you would change the jurisdictional areas in terms of powers?
Politically, that doesn’t sound like it’s very feasible, but what are some
marginal steps that could be taken?
David Wolfe:
It’s a big question, Bernie. In fairness, we had an opportunity 12 years
ago to change the jurisdictional boundaries in a significant way for the
region. And, for better or for worse, we chose to change them in one way
and not the other way that would have encompassed the kind of larger
economic unit that actually exists, as David suggested. But I think the
example from Kitchener–Waterloo, Cambridge, and Guelph is also
instructive because they were another key region in Ontario that didn’t
amalgamate at the same time either.
Everyone—business leaders, political leaders, civic leaders—will say
that the lack of agglutination, the lack of integration, is a problem. At
the end of the day, they will also then go on and say, “. . . but we can’t
let that get in the way of doing the things we need to do in this region.”
Toronto has the same dilemma, only magnified about ten times in terms
of scale. We need to start building institutions at the civic level that reach
out and stretch across the region and incorporate the larger economic
region as it actually exists. I used the term “civic capital” when I was
talking and I said an essential component of that is a shared sense of
identity within a regional community and in a regional economy.
If we can begin to build some organizations and some institutions that
stretch across the jurisdictional boundaries that actually exist—that are
drawn on paper but don’t define where the economy begins or ends—
then we can begin to create the shared sense of identity that eventually
leads to us acting more like a regional economy in the way that David
was suggesting we need to—and I firmly agree with him on this.
From the Lecture: Panel Discussion and Q & A
215
But I don’t think we can—if we go back to starting to redraw
boundaries, we will lose an incredible number of opportunities that
we have before us now. We need to be more pragmatic. A lot of the
organizations that have come out of the City Summit Alliance are good
examples of that: we need to give them more credit. I am a firm backer
and supporter of the Toronto Region Research Alliance—it was a
great initiative.
It’s done a number of good things for the region, but I think it
could do a lot more. If it had more support from all levels of govern­
ment, it could be even more successful. But it’s by building those
kinds of regional institutions that we can effectively create a common
regional identity and a sense of raising our aspirations in the way that
David suggested.
Carl Zehr:
Well, it depends on the day. David has just commented that we do
have an attitude; that at least some of us don’t like the current multi­
plicity of municipalities. However, I keep saying to people in my community that we have what it is, what we have right now. I have to present
the Kitchener position as mayor of the City of Kitchener, but I also sit on
the regional council. In terms of economic development, where we have
individual economic development offices in each of your cities through
Canada’s Technology Triangle, there is that collaboration. When we are
speaking to the outside world, we are essentially speaking as one voice.
So there is that collaboration and I’ve used that word a number of
times. Collaboration is more than just a word—it happens, and I think
it goes all the way back to some of the characteristics I spoke of. There
has to be a political will and willingness in the civic population to participate and be collaborative.
David Wolfe:
There is one other difference between this region—the Toronto
region—and other parts of the province. We have an overwhelming tendency to put our own institutions first and the region second—whether
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it would be a municipal government, whether it would be a university, whether it would be an individual firm, or whether it would be an
industrial sector organization.
Things won’t start to change seriously until we think of what is
good for the region as a whole—how our institution and organization fit into that and what is the strongest and most supportive role we
can play for the region as a whole. That’s what’s really missing in the
Toronto region and that’s what differentiates us from a lot of the other
successful regions I have studied in Canada and around North America.
David Pecaut:
I don’t think it’s been without some progress because I remember,
Anne, when you were doing your study back in the ‘90s: the whole
idea of 401 and 905—representing the City of Toronto and the regions
respectively, was like a massive divide. So I think people are seeing
things more regionally. I agree with David—I don’t think we want to
try to redraw the map—but I do think governments need to deal with
things and encourage regional institutions and regional buildings. But
I am not sure that’s always the case. I also think that, from municipalities, there is this sense that somehow it’s more of a zero sum game
than it is. To me, if somebody locates in Markham or Mississauga—or
even in Kitchener–Waterloo—that’s hugely advantageous for the City
of Toronto in every way. So I think people need to take a larger perspective. But I think to achieve meaningful progress, these innovations
need to take place in regional institutions. So I agree with David that
the Toronto Region Research Alliance—which obviously I have been
very involved in—should be beefing up those things. When we tackled
immigration, we set it up as a regional Immigrant Employment Council
for the whole GTA, and that’s worked quite well. So I think those kinds
of mechanisms can be effective.
Leadership across our major institutions has to buy in. But, unfortunately, it’s very easy to slip back to that old game of: well, it’s a zero
sum game and if money goes to Waterloo, it won’t come to Toronto, or
it won’t go to Hamilton, or whatever. When in reality, when you look
at most of those games as a region, we lose out to the rest of Canada.
From the Lecture: Panel Discussion and Q & A
217
A small example that John would remember. There are 34 National
Research Council facilities [NRC facilities] in Canada. The federal
government spends about $800 million a year on the NRC, but how
many facilities are in the Greater Golden Horseshoe? Zero. And to get
one of those facilities in this environment, we would need a cooperative approach.
So I think there are many examples where the regional approach
would seem to be successful and there are examples where we haven’t
had it—where you can see that we have lost out.
Anne Golden:
Well, obviously, I didn’t agree with the structural political solution as
it is now. The key point is that you need to have a policy capacity that
matches the economic reality. That’s where the challenge comes in, and
the political issues are real for the politicians. Their constituency does not
cross boundaries. So, when you get into serious decisions around how to
integrate land use and transportation planning, that is fundamental.
Our transportation infrastructure is so poor: Toronto has one-twelfth
of the subways of Madrid, for instance—a city actually smaller than
our CMA. We are seriously under-infrastructured. Yet, as I always
say, because I am short, I see the glass half-full. I do feel that we have
made progress. As a member of the Toronto City Summit Alliance, and
the Toronto Research Region Alliance, I can see the creation of these
organizations as positive steps, and I believe it when David says that we
have an opportunity now that we really must build on.
I think it takes constant effort. One of the most important learning
experiences for me was going to see the U.K. cities to understand their
core city strategies. The U.K. has cities that have had to remake themselves—Leeds, Manchester, and Glasgow—and they are doing so by
sheer dint of collaborative effort.
David Crombie once said, “We make haste slowly in Toronto.” I
agree, but it happens by huge effort and it’s ongoing and must engage
all the players. I believe the message of collaboration among all the
actors will be empowering for us. Change happens when the climate
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of opinion changes. The whole concept of the tipping point is about
when the climate of opinion changes. I think if we continue to make
this effort, that climate of opinion will change.
Mohammed Dinani:
In the last 40 years in the City of Toronto, we’ve actually seen the
population that’s in the middle-income category decrease by 50 per cent,
and that group has slipped into the lower-income category. They haven’t
moved up. How do we make prosperity more equitable so that everyone’s boat rises, which is unlike what’s happened over the last 40 years?
David Pecaut:
I do think economic progress and social progress have to go hand-inhand. You can’t have a winning economy and have a losing society, or
the winning economy will lose eventually. So I think it’s very important.
Three things come to mind. The first is that we have to invest in education because education is a ticket to this knowledge economy, and many
people don’t have at least a high school education. But having more and
more college or universities, as David was saying, is critical.
But even with that, I do believe that there are going to be jobs that
are necessary in society that are not going to necessarily justify high
wages. We have to have income redistributive mechanisms to try to
support those people that are going to have those kinds of jobs.
So I think it’s very important that we think about the working poor
and ensure that we have income security supports that lift them out of
poverty. But I think there has been progress in that area. Just look at
regional successes: that task force on modernizing income security—
which many of you were involved in—and certainly was a Toronto-led
effort that led to the working income tax benefit federally and the child
benefit in Ontario. When we started that project, people in Ottawa said,
“Why would a city-based group tackle income security? That’s not
your kind of thing.” We said, “Because Toronto won’t be successful if
this doesn’t get fixed.” So I think that’s the second thing.
From the Lecture: Panel Discussion and Q & A
219
And then the third issue is: Do we need neighborhood strategies? As
many of you in the audience know, poverty is getting regionalized in
Toronto and other regions. So even if we are able to tackle the income
security issues at a broader level, I think we’ve got to focus on neighborhood strategies as well.
David Wolfe:
To that I would add, minimum wage policies. We know that minimum wage is one of the fastest and easiest ways to put a floor underneath low-income earners. We know that it also has positive side effects
for other income security policies: the more you raise minimum wage,
the less emphasis you have to put on income security.
Any time we have made a major innovation in the area of labour
force training, we haven’t stayed with it long enough to let it gain
traction. Employers in Canada tend to systematically under-invest in
training. The community colleges, for years, played a major role in providing supplementary training with federal dollars. Those dollars were
almost totally eliminated in the 1990s, forcing the colleges to scramble
for other sources of funds. There is an awful lot that we could be doing
better in the area of training that would help increase people’s job prospects and improve their income possibilities.
Audience Member:
In April 2011, baby boomers will start retiring in droves, and we’ll
be relying on immigrants. It’s a brain drain from their country to our
country. I’m finding that there is the issue of under-employment even
there. I’m wondering, what mechanisms are there to implement this
geography of innovation from Mr. Wolfe?
David Wolfe:
I think we need better systems for credentialing people with training and skills from other countries who come to Canada. Again, it’s
another issue that we have studied long and hard in this country. I have
looked at some of these issues a lot in the past. One of the great underappreciated assets in our province, in our country, is our very strong
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network of community colleges. I am a little biased because I come
from the university, but I also tend to think that there are a lot of things
that community colleges can probably do better. But assisting with
skills upgrading and credentialing is one of the things that community
colleges have tried to do effectively and haven’t always been given the
tools to do properly. It’s one of the areas that could make a substantial
difference.
Anne Golden:
This is an area in which the Conference Board has done work through
our studies on brain drain, brain gain, and billions of dollars that we
stand to gain in terms of wealth potential if we improve credentialing. I
believe we are starting to make improvements in this area, finally, after
about 40 years. And, we are starting to improve the immigration system
with the two tracks, etc. It’s very slow, but we are making progress.
From the Lecture: Panel Discussion and Q & A
221
21st Century Cities in Canada: The Geography of Innovation summarizes
the key insights and findings of a multi-year national study on urban industrial
clusters, led by internationally renowned urban expert David Wolfe, Professor
of Political Science at the University of Toronto. Professor Wolfe’s monograph
delineates the innovation dynamic, based on in-depth analysis of the experiences
of 15 Canadian cities. 21st Century Cities in Canada explores the ways in which
the economic shock of the past year has dramatized the changing nature of
Canada's economy, and it looks at the challenges that lie ahead. The monograph
also sheds new light on the role of cities as the dominant sites of economic
activity—the places where leading-edge innovation generates new ideas, new
products, and new industries.
The AUTHOR
David A. Wolfe, 2009 CIBC Scholar-in-Residence
The COMMENTATORS
Anne Golden, President and CEO, The Conference Board of Canada
David K. Pecaut, Senior Partner and Director, The Boston Consulting
Group; and Chair, Toronto City Alliance Summit
Judith Wolfson, Vice-President, University Relations, University
of Toronto
Carl Zehr, Mayor, City of Kitchener
About the CIBC Scholar-in-Residence Program
The CIBC Scholar-in-Residence Program is bringing renowned
scholars to The Conference Board of Canada over a 10-year
period to examine issues of national importance for improving
Canada’s economic and social prosperity.
Canada $ 19.95
ISBN 0-88763-946-1
9 780887 639463
www.conferenceboard.ca