The Greater Toronto Area “The Silicon Valley of the North?” Analyzing the Toronto Region’s...

The Greater Toronto AreaThe Greater Toronto Area

““The Silicon Valley of the North?”The Silicon Valley of the North?”Analyzing the Toronto Region’s growth as a Analyzing the Toronto Region’s growth as a

Knowledge Based economyKnowledge Based economy

UP 539 Regional Economic Development. Fall 2004.

Bankim Kalra

Road MapRoad Map Research QuestionResearch Question The ContextThe Context

GeographicalGeographical DemographicsDemographics EconomicEconomic

Moving from Region to Industries- Economic Moving from Region to Industries- Economic AnalysisAnalysis

Cluster DevelopmentCluster Development RecommendationsRecommendations ConclusionsConclusions

The Context

Source: Dropping Canadians: Greater Screening South of the Border Results in 40% Decline inNumbers of Canadian Immigrants Admitted South of the Border in 2003http://www.acs-aec.ca/Polls/18-10-2004-2.pdf

Canada’s economic and cultural capital

Supports a population of roughly 5 million people

Location: Proximity to the U.S. border

Largest immigrant receiving city-region in the world

Research Questions

Hypotheses: Toronto’s USP is a ‘global city’ based on the foundations of ethnic diversity and a knowledge based economy.

An attempt to conduct a preliminary study of the region’s potential to develop into the “Silicon Valley of the North” employing an empirical quantitative evaluation of the data on the role of information technology in the industry structure.

Does the marketing image match with reality? If yes, what strategies would Toronto want to implement in order to capitalize on the dynamic industry clusters? If no, what could be the potential industries the region could capitalize on for its growth?

Data and Methodology Labor market, employment and demographic

data obtained from Statistics Canada. Time: 1986, 1991, 1996, 1998, 2001, 2003 Comparison with the nation- Why? Two, Three and four digit level NAICS information qualitative analysis, this research is based on the

reports prepared by consultants and academia in the in-depth analysis of the region.

What is the GTA?

Greater Toronto Area- Includes the city of Toronto and 24 surrounding municipalities in the regions of Durham, York, Peel and Halton.

Geographically: Situated on the northern shore of Lake Ontario in the province of Ontario

•The GTA produces nearly one-fifth of the entire nation’s GDP•The GTA supports a population of 5 million residents•It consists approximately 40% of Canada’s business head offices

Demographics

Demographics: Immigrants

40% of the GTA’s population is foreign born (1996 Census)

47% of the city of Toronto’s population is foreign born

Demographics: Age & Education

•11.3% of the total population 65 years and above (2001)

•Median Age: 36.2 years

1991 2001Aging population

Education

The percentage of the population 25 years of age and over who have completed university, increased from 24.1 per cent in 1996 to 32.7 per cent in 2001. (Statistics Canada, Census 1996 and Census 2001)

Employment and Labor Force

Labor Force and Employment-GTA

0

500

1000

1500

2000

2500

3000

3500

1987 1991 1995 1999 2003

Year

Th

ou

sa

nd

s

Labour Force(in thousands)

Employment (in thousands)

Participation and Unemployment Rate

0

50

100

150

200

250

1987 1991 1995 1999 2003

60

65

70

75

Unemployment (in thousands)

Participation Rate(%)Employment Size: 2.7 million

Labor Force: 2.9 million

Unemployment Rate: 8%

Participation Rate: 70%

Industry Share of Employment by Industry

Services-71%

Manufacturing- 15%

Transportation-8%

Construction- 6%

Summary

High concentration of immigrant population- 40% foreign born

Aging population- in the next decade a labor shortage projected

Well-educated population Service Industry is the primary employer.

Manufacturing still a thriving industry Within services- Retail, Business and FIRE Manufacturing- Food, Beverage and Tobacco

followed by Computers and Electronics

Industry Analysis“Moving from the region to industries”

Road MapRoad Map

•Shift-Share Analysis

•Location Quotients

•Economic Base Analysis

Shift Share Analysis

Industry Mix Share (2001-2003)

Construction

FIRE

Educational Services

Business,building and other support services

Health care and social assistance

Accommodation and Food Services

Public Administration

-20000 -15000 -10000 -5000 0 5000 10000 15000

1


Other Services (except Public Administration)


Information, Culture and Recreation



Business,building and other support services

Professional, Scientific and Technical Services

FIRE

Transportation and warehousing

Retail trade

Wholesale Trade

Manufacturing

Construction

Utilities

Mining and Oil and Gas Extraction

Agriculture and other resource basedindustries

Construction, business services, health care and social services, FIRE and education are growing faster than the national average

The negative industrial mix component indicates that the local economy grew slower than the national average.

Shift Share (contd…)

Local Share (2001-2003)

Manufacturing

Retail trade


FIRE


Other Services (except Public Administration)



-25000 -20000 -15000 -10000 -5000 0 5000 10000 15000

1

Employment


Other Services (except PublicAdministration)Accommodation and Food Services

Information, Culture and Recreation



Business,building and other supportservicesProfessional, Scientific and TechnicalServicesFIRE


Retail trade

Wholesale Trade

Manufacturing

Construction

Utilities

Mining and Oil and Gas Extraction

Agriculture and other resource basedindustries

The region added a greater share of employment growth than the nation.

Location Quotients

Location Quotients 1986-2003(Based on Experienced Labor Force 15 years and over

Source: Statistics Canada and City of Toronto Labor Force Overview)

1.211.05

1.571.41

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Ag

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Min

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(exc

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Ad

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Industries

Lo

ca

tio

n Q

uo

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nts

1986

1991

1996

2001

2003

Manufacturing

Transportation & other utilities

FIRE

Business Services


Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

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Industry Sub-Sectors

Location Quotients-Manufacturing 1998-2000

1998

2000

0

100,000

200,000

300,000

400,000

500,000

600,000

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03

Industry Share of Manufacturing Employment (1987-2003)

Business Services

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Lo

cati

on

Qu

oti

ents

Em

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enci

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uppl

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Com

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Acc

ount

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and

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keep

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serv

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Adv

ertis

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Arc

h/en

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Man

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Industry subsectors

Business Services -1998-2000

1998

1999

2000

Industry Share of Services Employment 2001. Source: Statistics Canada, Labor Force Survey 2001; City of Toronto Economic Development Division, Labor Force Readiness Plan.

Legal services followed by advertising and related services (LQ= 1.83) were the largest exporter with the third position for computer systems design and specialized design services (LQ=1.55).

FIRE Location Quotients FIRE subsectors 1998-2000

0.00

0.50

1.00

1.50

2.00

2.50

Finance and insurance Deposit acceptingintermediaries

Insurance (excluding agencies) Real estate operator andinsurance agencies

Industry Sector

Lo

ca

tio

n Q

uo

tie

nts

1998

1999

2000

Trade- Retail and WholesaleTrade-Wholesale& Retail 1998-2000

General retail merchandising

Household furniture, appliances and

furnishing

Household goods

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Industry sub-sector

Loc

atio

n Q

uot

ient

1998

2000

Wholesale Retail

Economic Base

Non-Basic Industries

• Agriculture• Mining, Oil and Gas Extraction• Educational Services • Health Care and Social Assistance• Accommodation and Food Services• Public Administration • Other Services (except public administration)

Cluster DevelopmentKnowledge Based Economy- Information Technology: ICT Cluster

Manufacturing

Development

Services ICT Technology Markets in the Region. Source E&B Data

•In 2001, there were approximately 170,000 IT workers in the Toronto region. Roughly 7% of region’s total employment

•The majority of IT workers are employed outside the Information•and Communications Technology (ICT) industry. The financial services industry, in particular, is a major employer of IT workers.

Competitive Advantages Low Operating costs-

Canadian exchange rate & Lower salaries for skilled workers

Highly skilled and concentrated labor pool

Location and proximity to the U.S. border

Quality of Life

ICT Labor Force, 2000

Source: E&B Data, based on Statistics Canada 2001

…..the other side of the story

The Workforce for this Dynamic Knowledge Based Economy???

Aging Skilled Labor at Managerial Levels and Skills Shortage

Sources of labor supply: Immigrants, young population, career changers, internal migration

Immigrant PopulationIndustry perspective

•Lack of Canadian experience

•Language Barrier

•Accreditation and Professional Association recognition issues

•Emigration to the U.S of both Canadians and immigrants

Immigrant Perspective

•Underutilization of talent- Highly educated workforce in survival jobs

•Claim that they were not shown the true picture

Challenges

Source: Toronto Labor Force Readiness Plan, GHK International.

•Lack of A “Focal point for IT”- e.g. Xerox Research Park in Silicon Valley

•Universities of U.S standards that might attract more international students

•Aging transportation Infrastructure

•Under-representation of women in the industry

Economic Development StrategyRecommendations Build on the high skilled immigrant pool

On-job training and apprenticeships Ease the procedure for accreditation of

qualifications- maybe in the country of origin English language and business

communications training Utilize ethnic networks and possibilities for off-

shore networks- Self-employment Strengthen the local clustering in Toronto

Conclusions and Further Research Knowledge based economy in the Toronto region

is present but not matured Given the advantages and influx of high skilled

immigrants, the ICT sector should be the focus of economic development strategies while building relationships with other traditional sectors such as services and manufacturing (e-health, e-learning, digital media and films)

Increase the participation and training of women in IT sectors

Promote Universities- Industry partnerships

Research The next step is to qualitatively assess the

GTA’s business networks, professions and ethnic clusters- based on Anna Lee Saxenian’s model.

How to capitalize on the Immigrants labor pool and strategies to integrate off-shore networks and sources with the information technology sector?

The Greater Toronto Area “The Silicon Valley of the North?” Analyzing the Toronto Region’s...

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