Jeremy Mesiano-Crookston

Over a two-course lunch in a meeting hall overlooking Toronto’s financial district, Ontario Minister of Economic Development, Trade and Employment Eric Hoskins spoke at length about the direction our province’s economic development should take. The audience was a small crowd of maybe a hundred members and invitees hosted by the Toronto Board of Trade. The Board of Trade is a cooperative body that represents the interests of about 10,000 businesses in the Toronto area, which collectively account for “20% of the GDP of the country as a whole,” as the Minister pointed out.

The Minister’s overall theme was summed up in a single word: “linkages.” He began his address by mentioning the role a restructured transit system would play in the economic growth of the region, noting that estimates put the dollar-value loss of gridlock in the GTA and surrounding cities at approximately $6 billion per year. The physical infrastructure that links our cities to our suburbs, and our people to their workplaces is a critical part of the economy as a whole. The Toronto Board of Trade has been on the front line of advocating for its rejuvenation.

But Minister Hoskins’ vision is a little grander than that.

Following in the ideological footsteps laid out by Advantage Ontario, the Ontario Jobs and Prosperity report from 2012, and Emerging Stronger, the parallel publication created in partnership with the University of Toronto’s Mowat Center, Hoskins’ vision is of “linkages between government, businesses, and not-for-profit organizations, and more.” These links are based on the existing model of “clusters of economic activity that make our region and our province more competitive.” Clusters like the financial services industry which was recently celebrated by… the World Economic Forum”.

A cluster is an essentially regional construction, as shown by the activities of the Ontario Network for Entrepreneurs (ONE), a body that has been funding regional cluster activity successfully for a number of years. The ONE model was designed to increase accessibility and linkages between companies in order to more quickly and successfully bring new products to market. For example, the links between RIM, the University of Waterloo, and the Kitchener-Waterloo region form a strong telecommunication cluster. Similarly, the links between the University of Toronto and the research and health institutions in the city compose a cluster.

The Minister also argued that by encouraging the same kinds of linkages between companies, small and medium-sized companies could be linked with larger companies who have experience trading internationally, or on a larger level. Acting as a cluster could also solve the problem of “skills mismatch” between educational institutions and employers in different regions of Canada, by prompting the training to more closely match with the rapidly-shifting industry standards of various sectors.

On a recent trade mission to Germany, Minister Hoskins noted the excellent outcomes of their cluster model, which connects training to employment with great results. “The youth unemployment rate, which is 16% in this province, is 3% in Germany,” he noted. Hoskins also pointed out that Ontario in particular has an exceptionally low rate of industrial taxation, “far below that of the United States, far below the G20 nations, and right in line with the OECD average.” We are also blessed with a highly educated workforce, according to the Advantage Ontario report. Our basic capabilities are there; all that’s necessary is to unlock them.

This discussion was in preface to the Minister’s key argument: that we should prepare Ontario to be increasingly linked to the rest of the world and to Asia-Pacific markets in particular. Despite having created 450,000 jobs since the global economic recession ended, growth here in Ontario and in the ‘traditional markets’ where we sell our products and services are slower than what we’re accustomed to, said the Minister. The expansion of Asian economies, however, is predicted to be explosive over the next 15 years, with “fast-growing economies projected to grow from 28% today to over 50%, middle-class spending forecasted to more than double from $21 trillion in 2009 to $56 trillion by 2030… with the Asia-Pacific region accounting for 59% of that spending”. Amid all this optimism for the region, the Ontario Provincial Government is committed to developing new trade missions and new agreements, and creating more two-way investments.

When pressed about the ideal form the Minister’s “linkage” projects would take, Minister Hoskins referred back to the transit authority. “A perfect opportunity that we have is with the Eglington/Scarborough LRT. As it is being constructed it will go through many of the priority neighbourhoods here in Toronto. And so Metrolinks is very interested – along with many others, I know Glen Murray the Minister of Transportation is looking into this – in providing as a component of that investment, job opportunities specifically for at-risk youth… who ideally live in close proximity to those locations. So it seems like common sense,” he said.

At the time of this event, Minister Hoskins couldn’t have predicted the vast turnaround in transport policy caused by the confluence of the recent provincial by-elections and the upcoming Toronto Mayoral race. He could not have known, for example, that the Scarborough subway extension that was ostensibly killed by the City Council would rise from the dead like an unholy Caesar to supplant the already-approved Scarborough LRT. Councillors who previously were instrumental in destroying the plan gave their support to the extension, while the provincial government decided to throw their support behind securing Scarborough ridings. Suddenly, Minister Hoskins’ elegant and simple plan to piggyback local job creation and skills training on the economical LRT construction—a plan that was backed by Minister Glen Murray and just seemed, to Hoskins, “like common sense”—is vapourized.

The essential problem with linkages is that they represent the joining of multiple bodies and organizations, each one with its own purposes and intents. Theoretically it is feasible to extend each small cluster system to its neighbour and weld them together to form a structure that benefits everyone, but there is always a weakness at the seams. Simply enabling companies and structures to work together cannot guarantee successful implementation of economic growth initiatives. With linkages, even the simplest and most elegant plan can get derailed by other interests exercising their veto power. Without a strong regulatory backing, and government assistance to these projects to guarantee that organizations work together over a long term, it is unclear what these links will accomplish, especially considering the vast distances between us and our prospective markets. A linkage is a partnership that works both ways, for the benefit of both parties. We need intervening and regulatory bodies that can preserve these attachments beyond their infancy, and create stability for the relationship – just as any venture capital investment needs to be designed for more than five years to promote substantial growth. And even when bodies that advocate strongly for these linkage projects exist – like Metrolinx, like the Toronto Board of Trade, and like our provincial trade representatives in the Asia-pacific region – we still need firm, longer-term government backing in the sector to enable their strategies to succeed.

Some Additional Material:

“Ontario’s Innovation Agenda” from the Ministry of Economic Development
http://www.ontario.ca/business-and-economy/ontario-innovation-agenda

“Trade, Innovation and Prosperity” from the Institute for Competitiveness and Prosperity
http://www.competeprosper.ca/index.php/media/press_releases/institute_releases_fourteenth_working_paper/

“Advantage Ontario” report from the Jobs and Prosperity Council
http://www.ontario.ca/business-and-economy/advantage-ontario

Jeremy Mesiano-Crookston is a Master’s of Public Policy candidate for 2014. He has been published in the Ottawa XPress, Ottawa Citizen and Globe and Mail newspapers, and The Awl website.  He previously achieved a Bachelor of Humanities and M.A. in Literature from Carleton University.