Featured Research

Ontario in the Creative Age

Ontario is in the midst of a global economic transformation. While this transformation to a knowledge- or idea-driven creative economy has been underway for more than three decades, the current financial and economic maelstrom has accentuated its importance.

The combination of this transformation and the current economic uncertainty is leading to struggles and difficulties for many Ontarians. But it also opens great opportunities for our province. In crises like these, nations, regions, provinces, and states can rapidly change ground; they can improve or lose position, depending on the actions they take. Now is the time for Ontarians to take bold actions to ensure our future prosperity.

As in all times of economic crisis, there is considerable pressure on governments to protect the past and to undertake bailouts – to preserve what we have during this time of uncertainty. But this protective approach can only forestall the inevitable. There is a better way. That way is to invest in our people, our businesses, our institutions, and our infrastructure. Productive and future-oriented investment will generate prosperity for the long term.

There is no greater resource than the creativity, innovativeness, and productive talents of our people. Our goal must be to harness and use our full creative talents, to grow the businesses and industries of the future, to use our openness, tolerance, and diversity to gain economic advantage, and to invest in the infrastructure of the future in ways that enable more innovation and economic growth. Ontario can and must take a high-road strategy for economic prosperity in which all Ontarians can participate. We owe it to ourselves and future generations to build a vibrant economy for the creative age.

The current economic transformation is as big and as challenging as the transformation from agriculture to industry. Our economy is shifting away from jobs based largely on physical skills or repetitive tasks to ones that require analytical skills and judgment. This shift is also evident in the long-term trend away from employment in goods-producing to service industries, from occupations that depended on physical work to produce goods to ones that provide service and rely on creativity. The change is inexorable. We cannot turn away from it; nor can we slow it. The clock of history is always ticking. Competitive advantage and prosperity will go to those jurisdictions that can best prepare themselves and adapt to this long-run trend. We must embrace it and act in ways that create a distinctive advantage for the province and ensure our long-term prosperity.

In doing so, we must recognize that our current economic transformation – like others before it – not only generates considerable future opportunity, but also considerable inequality. Certain industries have expanded and certain occupations have seen their wages grow considerably, while others have languished, stagnated, or declined. Greater returns have gone to innovative industries, to more highly educated people, to those in creative occupations, and to urban areas.

Our world is becoming increasingly spiky, with peaks that help to drive economic growth and valleys that are languishing. Our aim is not to lop off the peaks, but to raise the valleys. Our forebears did that in the industrial age by ensuring that manufacturing work was productive, well-paid, safe, and secure and by developing an infrastructure that helped grow industries and brought everything from better transportation to better housing. We can do it again in this economic transformation, by developing a distinctive advantage in highly innovative creative industries, by bolstering the productivity of our competitive manufacturing industries, by transforming and improving productivity and wages in our growing service industries, by establishing a new social safety net system, and by developing a twenty-first century infrastructure that strengthens our urban centres and mega-regions while connecting older industrial centres and rural areas – giving us the scale and speed to compete globally.

Such a holistic approach to achieving sustainable prosperity shared broadly by Ontarians will mean higher wages, lower unemployment, greater resilience from economic shocks, and increased global leadership. It will enable Ontario to lead the current economic transformation and become a model for how jurisdictions can compete, thrive, and prosper in these times.

This must be more than a government effort. While governments can spearhead and mentor change, the transformation we are living through will require the collective action of all Ontarians. Indeed, the prosperity of a jurisdiction is the result of collective choices made by all of its economic actors over time. For governments, this means making the right investments – ones that provide general and specialized support for the foundation of creativity and innovation. Businesses need to develop and invest in strategies that build on a jurisdiction’s advantages and to invest in strengthening those advantages through training, capital investments, and other strategic initiatives. Businesses should make these choices for their own benefit, not in response to government directives. For individuals, it means investing in their own capabilities and skills. It also means investing their time and money in local businesses and in local arts, cultural, and charitable organizations.

Ontario has tremendous advantages to build on. We have a prosperous, socially cohesive society with globally competitive businesses and skilled workers. But we can do better – and we must. The evidence shows we rank well behind a set of peer regions in North America and slightly behind the best global peers in economic output per person – perhaps the single best measure of our overall economic prosperity. And in recent decades, we have seen our advantage erode from near parity with these global leaders.

Ontario is relatively prosperous; but our assessment is that we have settled for a level of prosperity that sells our province short. While it is not comforting to admit, we have in fact lost ground against the very best economies over the past twenty years – a period which has seen all three political parties in government. Although we house many world class industries, not enough of our businesses and industries compete on the basis of the unique and superior goods and services that are required to ensure lasting global competitiveness. And our economy does not place the same kind of premium on the core creative skills that drive economic growth as do our peers. As a result, our citizens’ creative skills are less developed than those of the world’s leading jurisdictions.

This creates a self-reinforcing downward cycle. When businesses fail to compete on unique, world-beating strategies, they lack the resources to invest in and reward the best creative skills in their workers. Workers in turn fail to develop their creative capabilities to the highest level through advanced education and training. The end result is lower levels of technological innovation and lagging competitiveness globally. All of this dampens our prosperity and hamstrings us in global competition.

This cycle follows through in our public spending patterns, where governments under invest in post secondary education and make it unduly costly through tax policies for businesses to invest in machinery, equipment, and technology. The resulting danger is that the policy focus would shift toward hanging on to what has worked in the past and avoiding the new realities – thereby missing out on the new opportunities.

We can do better. We must seize the opportunity to retune the Ontario economy to higher and better performance levels. We need to aspire to remake Ontario so it will thrive in the emerging creative economy and be truly exemplary in global terms.

To achieve this advantage for shared prosperity, we recommend four sets of actions for Ontario over the coming two decades.

1. Harness the creative potential of Ontarians

Ontario operates in the creative age from a position of strength. We have a solid base of important creative skills and industries that compete on the basis of their distinctiveness. Yet we are not realizing the full creative potential of our people and industries. Ontario needs to deepen our skills, with a focus on analytical and social intelligence skills. We need to challenge our workers and our businesses to compete more on the basis of creativity and distinctiveness. We need to draw in the immense capabilities of our immigrants to our province’s future success.

2. Broaden our talent base

Ontario needs to raise its talent attainment – the percentage of our work force that has post secondary education. We must aspire to be the education province – known readily throughout the world as the jurisdiction with a highly educated population and world renowned centres of learning and research.

Exhibit 1: Agenda for Ontario's Creative Age

3. Establish new social safety nets

The rise of the creative age is a double-edged sword. It generates tremendous wealth creation opportunities for some. Yet it can leave many behind, especially those in jobs that are disproportionately routinized, and those who do not have the skills and opportunities to participate fully in the creative economy. Ontario is a diverse and open place. It out performs its peers on measures of diversity and tolerance, but this advantage is not translating into economic success. We need to design a social safety net system for the creative age – one that partners with those who have the determination to participate fully in the creative economy. Not to do so is a terrible waste of human potential.

4. Build province-wide geographic advantage

Ontario is a big province that built its prosperity on many inherent geographical advantages. We have rich natural resource areas and a thriving economic corridor. We have prosperous cities, and the non-metro parts of Ontario are more prosperous than their counterparts elsewhere. Our future advantage in the creative age will be based on facilitating and encouraging the geographic clustering and concentration of industries and skills. The increasing spikiness of economic development puts a premium on density within our urban centres and on the velocity of connections across a mega-region and with outlying areas. Ontario’s challenge is to build the infrastructure that gains us the scale and the connectivity to ensure all regions of the province can achieve prosperity.

Ontarians have built a prosperous economy and achieved a high level of social cohesion and diversity. These strengths create the possibility for emerging stronger from the current downturn and accelerating the longer term economic transformation. This will require us to build a creative economy that is more technologically advanced, inclusive, and sustainable. We are excited about the challenges facing us all, and we see this report as a first step in an ongoing dialogue and process for achieving this distinctive advantage for Ontario.

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Our Team

Authors:
Roger Martin, Dean, Rotman School of Management
Richard Florida, Director, Martin Prosperity Institute

Project Direction:
James Milway, Executive Director
David Smith, Project Leader
Kevin Stolarick, Research Director

Project Team:
Patrick Adler, Tamer Azer, Fan Bai, Lance Bialas, Katherine Chan, Marisol D’Andrea, Yousuf Haque, Anam Kidwai, Aaron Meyer, Joshua Murphy, Sana Nisar, Scott Pennington, Paulo Raposo, Adrienne Ross, Kim Ryan, Ronnie Sanders, Daniela Scur, Kim Silk, Ying (Sunny) Sun, Ian Swain, Michael Wolfe

 

ASSESSING ONTARIO WITH THE 3 Ts OF ECONOMIC DEVELOPMENT

RELEVANT MPI INSIGHTS

ONTARIO WORKING PAPER SERIES – FEBRUARY 2009

ONTARIO WORKING PAPER SERIES – MARCH 2009

ONTARIO WORKING PAPER SERIES – APRIL 2009