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Cities and Innovation: What Matters

Anne Golden, President and CEO
The Conference Board of Canada
December 21, 2009

Since the early 1990s, economists have been predicting that the world will move to a global economy—one that is based on the exchange of information. Industries built around the production and distribution of knowledge will become key drivers of our economy. Shifting to knowledge-based economies from traditional industrial platforms is difficult enough, but the current economic recession and restructuring are accelerating the transformation. That is especially true in the manufacturing industries that have been a mainstay of cities in Ontario and Quebec’s industrial corridor.

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. New research by The Conference Board of Canada’s CIBC Scholar-in-Residence, Professor David Wolfe, sheds light on the role of 21st-century cities in Canada.

Both specialized and diversified industrial structures stimulate economic growth.

There are still questions to resolve about what really drives the economic performance of a city-region. For instance, should reliance be placed on urban specialization—as Harvard professor Michael Porter claims? Do knowledge spillovers among geographic clusters 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?

Dr. Wolfe, a University of Toronto professor, suggests that clusters versus diversity is a false dichotomy. He has found evidence to show that both specialized and diversified industrial structures stimulate economic growth. Dr. Wolfe is leading a five-year national study of urban industrial clusters, involving an extensive research network of people across the country. He has found that while concentration and diversity can still be crucial, additional factors also account for the economic performance of cities. For each city, we must consider its relative size, its active economic sectors, the way it fits into the evolving global hierarchy of urban centres, the evolution of its industrial structure toward high-end businesses, and the availability of services relevant to the new knowledge economy.

Size does matter, Professor Wolfe has 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 smaller cities can also 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 progressive educational institutions, the city can move forward as a centre of innovation and creativity.

In Professor Wolfe’s monograph, published by The Conference Board of Canada this month, 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.

Canada's largest cities are adapting to the new global economy, while smaller cities struggle with new challenges.

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 across all three levels of government. The second factor is whether the city can engage 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 both the administrative and the political structures governing the urban region must be open to, and accept, a new level of civic engagement.

The case studies that document how these new models of urban governance and civic engagement are taking hold in Canada’s cities are most compelling. The stories of efforts in Vancouver, Montréal, and Toronto—as well as a number of mid-sized cities, including 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 am personally involved, underscores a view that I have long held. Much depends on the leadership of civic 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.

David Wolfe concludes by warning us not to be lulled into a false sense of security by global demand for our commodities. However, 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 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.

Anne Golden Anne Golden
President and CEO
The Conference Board of Canada
Related Publication
21st-Century Cities in Canada: The Geography of Innovation