Understanding our Terminology

3 Ts of Economic Development

The 3 Ts (Technology, Tolerance and Talent) are part of a theory of economic growth that improves upon traditional models which emphasize companies or jobs or technology. The 3 Ts are a useful analytical tool and it is argued that each is a necessary but not sufficient condition to drive regional economic growth.

The 3 Ts of regional economic development consist of: Technology, Tolerance and Talent, leading indicators that reflect the potential for economic growth in a region. They are a useful analytical tool for regions to judge and benchmark themselves against peers. Past research has shown that regions that have long term success are those that have the right mix of technology, tolerance and talent. It is not sufficient to focus on one T; success in the new economy requires that regions pay attention to all three as there is a strong co-dependence between them. The rational for the 3Ts lies in what Richard Florida calls creative capital theory, the view that “regional economic growth is powered by creative people, who prefer places that are diverse, tolerant and open to new ideas”.

Analytical Skills Index

The Analytical Skills Index is composed of mental skills such as information processing, reasoning and creative thinking. They include a wide variety of mental processes used to analyze sounds and images, recall information from memory, make associations between different pieces of information, and maintain concentration on particular tasks.

Bohemian Index

The Bohemian Index measures the proportion of people employed in arts- and culture–related occupations.

Daniel Bell argues that this bohemian ethic, so long in opposition to mainstream capitalism, has become its dominant value (Bell, 1976). As a result the bohemian “counterculture” has been placed at the core of what drives modern markets to prosper. It is an ethic found in people that seek to create new innovative forms, and when these new forms are commercialized, they generate value. The great success has been the integration of the seemingly irreconcilable positions of the ‘hip’ and the ‘square’ into what David Brooks calls the Bobos – bourgeois bohemians (Brooks, 2000). The bobos are able to maintain their individuality and creativity while taking on roles in business, science and technology, traditionally “square” occupations.

Creativity

Creativity is an act of self-expression resulting in new forms, new techniques and/or new concepts.

Creativity encompasses any act of expressing oneself artistically or inventing new forms and techniques. It is a fundamental component in nearly every area of human improvement.

  • Creativity is a renewable resource nested in the human mind. It is improved by continued use, not diminished.
  • Creativity is inherent in most people to varying degrees and not just in “creative geniuses” (Florida, 2002:32) or the Creative Class
  • Creativity is process-driven. It relies on preparation (studying a problem/task), incubation (mulling a problem/task over), illumination (creating a new synthesis for a task) and verification or revision. Different forms of creativity (artistic, technological, and economic) are interrelated – they rely on this same process.
  • Creativity requires real work – usually long periods of intense concentration and creative work that poses huge demands on time and energy.

Creative Class (Creativity-oriented occupations)

Creativity-oriented occupations are high autonomy jobs where workers are paid to think (e.g., artists, doctors, nurses, senior managers, architects).

Creativity-oriented occupations add economic value through the generation of new ideas and forms. The creativity-oriented occupations are defined by two broad characteristics. First and foremost they are a group of workers paid to think – some formulate new solutions and ideas, others solve problems but all have specialized competencies. The definition of the creativity-oriented occupations is not fixed. Richard Florida explains that what defines creativity-oriented occupations will change over time as the complexity of work increases or decreases. He states that:

“As the creative content of other lines of work increases – as the relevant body of knowledge becomes more complex, and people are more valued for their ingenuity in applying it – some now in the Working Class or Service Class may move into the Creative Class and even the Super Creative Core”. (Florida, Rise of the Creative Class , 2002)

The Creative Class is also distinguished by the high level of workplace autonomy that workers have. Autonomy is the ability to translate ideas or knowledge into actions without impediment or the supervision of others. This autonomy extends beyond the work life of the creative workers into their social lives. The extension of the work life highlights the inseparability of economic functions from society and warrants the use of class as an adjective that describes this special group of high value producing workers. Class refers to the hierarchical distinction between individuals or groups in society. People in the creative class are not only paid to think, but also share very specific social preferences and characteristics. Similar class situations mean that members have relatively the same life chance of procuring goods, obtaining life position and obtaining inner satisfaction. Over time there has been a convergence of the bohemian ethic that values individuality, creativity and self expression with the traditional role of an economic agent. Creativity-oriented occupations are composed of two sub-groups: 1) The Super Creative Core and 2) Creative Professionals.

Industry

Industry is a categorical term that groups businesses and institutions under like names for statistical and comparative purposes. Industry classification can be seen as being very similar to taxonomy.

Whereas occupation is used to describe the type of work an individual engages in, industry describes the type of business they work for. An industry can be a broad category such as construction or finance, but also can be used to refer to more specific businesses such as electrical contractors or drywall contractors. Industries can be used to define certain fields of importance. Technology is classified by selecting the appropriate industries. This allows us to benchmark and measure the specific characteristics of certain industry areas and groups.

Light-Based Regional Product (LRP)

LRP is an indicator of economic and social activity based on light emissions as viewed from space calibrated with GDP to produce a nominal dollar value.

LRP is an indicator of economic and social activity in a region expressed in the same nominal dollars as GDP. LRP is based on light emission data from around the world to estimate economic activity and to define global mega regions (see Mega Region, below). The light data is combined with population and GDP data from the World Bank to estimate the productivity of a region. It is different enough both in derivation and concept to warrant identifying it as a unique measure of economic activity distinct from GDP.

Local Cluster (Dispersed Industries)

Dispersed industries provide goods and services almost exclusively for the area in which they are located, which explains why they must spread all across the country. Indeed, dispersed industries show employment in every region, regardless of the natural or competitive advantages of a particular location. As a result, their regional employment are typically roughly proportional to regional population, so that the most highly populated states like California, New York, Texas, and Florida will figure as the top local employment states.

Mega-region

Mega-regions are geographic areas characterized by large human settlements and significant economic activity.

A Mega-region is a unit of economic analysis that is not defined by political boundaries, but by the interconnectedness and concentration of consumers and innovations. These regions can be described as polycentric, having large populations, large markets and significant economic capacity, innovative activity and talent. These characteristics are captured by Light-Based Regional Product, which is used to geographically define mega-regions like Bos-Wash (the Northeast corridor of the United States, stretching from Boston, MA to Washington, DC) and Tor-Buff-Chester (Rochester to Buffalo and the whole corridor from Windsor to Quebec City).

In describing a mega-region it is incomplete to view it as simply the sum of individual cities. Just as a society cannot be understood by simply analyzing individual persons, mega-regions require an analysis of the relationships that form between cities to gain an understanding of the activities and function of the region.

Peer US States:

Peer states are US jurisdictions with similar demographic profiles to Ontario. The MPI uses these as benchmarks for Ontario’s economic performance. The peer states are:

New York, California, Pennsylvania, Texas, Florida, Massachusetts, Illinois, Michigan, Ohio, Georgia, North Carolina, Virginia, Indiana, New Jersey, Washington, Arizona and Tennessee

Physical Skills Index

The Physical Skills Index is composed of non-cognitive skills that include motor skills, dexterity and physical strength.

Service Class (Routine-Oriented Service Occupations)

The service class (routine-oriented service occupations) is comprised of occupations in the service sector (e.g., food service workers, janitors, grounds keepers, secretaries, clerks) where workers enjoy lower levels of autonomy than in the creative class.

It is important to differentiate between the meaning of “routine-oriented service occupations” in Creative Class literature and in wider economic and sociological discussions over the last 30 years. The service (tertiary) sector of the economy describes industries that do not produce goods. It is a nonmaterial, non-tangible sector dependent on the interaction of ‘employee’ and customer. The two former characteristics of the service sector make it difficult to quantify. The services that are provided are nondurable and are available for direct consumption. For example, business services such as finance and advertising do not actually produce material goods but rather bring about a change in the way that the consumer views and understands material objects. Service workers provide a helping hand to close information asymmetries between buyer and seller so as to facilitate exchange of goods. This facilitation can take many shapes but essentially all service work can be understood as reducing information costs and the promotion of more efficient market activity.

Service worker is an un-descriptive term that includes a range of employees from the cashier at McDonalds to the lawyer that runs their own private practice. While both provide services, they differ substantially in that the latter is paid to offer solutions, while the former is paid to implement protocol. A lawyer receives a wage substantially above that of the cashier not because their service is of a better quality but because they possess knowledge that is costly to obtain and is therefore heavily valued by consumers. This distinction explains why the creativity-oriented occupations such as lawyers are differentiated from the routine-oriented service occupations.

The service sector’s two occupational groups (creative and service class) share in common the fact that to perform their work they must directly interact with the consumer to create value. In routine-oriented service occupations there is a continuous drive towards greater and greater routine. For service class workers this routinization is to be dominated by forms of standardization and control which prevent the expression of individual creativity.

Social Intelligence Skills Index

The Social Intelligence Skills Index is composed of interpersonal, communicative and reasoning skills.

Spikiness

Spikiness is an adjective that Richard Florida has adopted to describe the concentration of economic activity during globalization. It counters Thomas L. Friedman’s notion that the world has become “flat”. Illustration of spiky economic activity

The flat world argument suggests globalization has led to an increasingly level economic playing field worldwide. Florida sees an economic landscape that is concentrated in a discrete number of metro areas and mega-regions. While India and China have become very competitive with the West in recent years, a considerable amount of their growth has been concentrated in places like Hyderabad, Shanghai and Mumbai. These places are home to large numbers of talented, creative people who collaborate, network and produce in a way that does not occur outside the city. They draw migrants from other towns and cities in their countries, and from the rest of the world, because they offer these advantages.

Traded Cluster (Clustered Industries)

Clustered industries sell products and services across economic areas, so they are concentrated in the specific regions where they choose to locate production due to the competitive advantages afforded by these locations. Employment levels in traded industries thus vary greatly by region, and have no clear link to regional population levels.

Working Class (Routine-Oriented Physical Occupations)

The working class is comprised of occupations that depend on physical skills and repetitive tasks. (e.g., construction trades, mechanics, crane operators, and assembly line workers).

Routine-oriented physical occupations are wage earners who produce material commodities. They engage in labour that depends highly on physical skills and repetitive tasks. Typically this group works in manufacturing and physical labour occupations requiring little in the way of formal education.

In their leisure time routine-oriented physical workers prefer activities that are relaxing compared to people in creativity-oriented occupations who look for physical activity due to the sedentary nature of their occupations.

The importance of manufacturing jobs has decreased in industrialized nations as they transition into the creative economy. Routine-oriented physical occupations have been declining steadily in the United States and Canada over the last one hundred years, while the service and creative occupations have increased. The working class does and will continue to have an important function in the creative economy.