Ottawa and Regional Economic Development in Eastern Ontario – A Missing Piece in Today’s Strategic Thinking?

Many decades ago when I was a grad student at McMaster University, my research was focused on regional development and growth poles.  Growth pole theory was a very popular topic in those days in both the academic world as well as in public sector regional development policy. The thinking behind growth pole strategies was, very simply, to deliberately channel growth and investment in a few selected centres, which would then have a positive economic impact on the surrounding lagging regions or hinterland through various “spread” or “spillover” or “trickle down” effects.  Growth pole theory was fundamental to the approach undertaken by, for example, the federal government Department of Regional Economic Expansion (DREE) created by the Trudeau government in 1969. Growth pole initiatives however, were abandoned in the 1970’s and deemed as failures in most countries, largely because they failed to generate the spillover effects predicted by the theory. DREE was disbanded in 1982.

At my first job with the Ontario Ministry of Treasury, Economics and Intergovernmental Affairs, I was with a team tasked with developing a strategic plan for Eastern Ontario with the objective of reducing “regional economic disparities” in Southern Ontario.  The project was short lived but I did get a chance to travel to individual communities to meet with local economic development agencies, which at that time consisted of one – person offices, typically a retired business person with the title of Industrial Commissioner. This was my first time visiting most of the communities in Eastern Ontario and what made an impression on me was the real economic issues faced by them in terms of employment opportunities and income levels despite having the Nation’s Capital located in the region.

Today, Eastern Ontario continues to experience low population growth in most communities with some showing population declines, as well as the steady out-migration of younger work force members in search of outside work leaving behind an aging population.

In terms of public policy, both senior levels of government have a long history of involvement in regional economic development programs. Ontario, for example, introduced the Design for Development program in the 1960s to address regional economic disparities in the Province. The overriding objective of the policy was to encourage each region of the province to realize its full potential. In addition to alleviating economic disparities, the new policy would also guide growth in the wealthier urban centres – an objective similar to the growth pole strategy framework.

The more recent work on the “Creative Economy” by Richard Florida and his colleagues at the University of Toronto’s Martin Prosperity Institute also built in growth pole principles. A 2009 report prepared for the Province of Ontario, recommended that public initiatives should be focussed on three mega regions – the Greater Toronto Area, Kitchener-Waterloo and the National Capital Region, in order to strengthen the geographical industry clustering which has been linked to the growth of the creative economy. In another 2009 report prepared by the Institute studying the creative economy in Eastern Ontario, the authors concluded that “Eastern Ontario’s quality of place, combined with its geographic position [within Canada’s Creative Corridor between Quebec City and London, Ontario] and creative economy base, positions it very well to grow and excel at building the creative economy”. The proximity of Eastern Ontario to both Toronto and Montreal plus the presence of the creative economic growth engines in the form of Ottawa and Kingston provides a unique opportunity to develop trading relationships and generate economic growth in both the Region’s urban and rural communities.

Today, there are several public agencies from all levels of government involved in regional economic development in Eastern Ontario. Funded by the federal government’s Community Futures Program administered through FedDev Ontario within Industry Canada, the program provides both capital and advisory services for community economic development and small business growth in rural Eastern and Western Ontario. Program activities are managed by Community Futures Development Corporations (CFDCs) of which there are 15 in Eastern Ontario corresponding roughly to the County administrative boundaries as well as the apex Eastern Ontario CFDC Network Inc., now called Community Futures Ontario East. With the priority being on rural communities, the program excludes the cities of Ottawa and Kingston but does include larger communities like Cornwall, Brockville and Peterborough. It is interesting to note that while Ottawa and Kingston are excluded from the CF Ontario East, its counterpart in Western Ontario (the Western Ontario Community Futures Development Corporation Association) serves both rural and urban communities including cities like Mississauga, Kitchener, Hamilton, and London.

Created in 2008, the Eastern Ontario Development Fund (EODF), which is funded under the Ontario Ministry of Economic Development, Trade and Employment, provides economic development investments to businesses, municipalities and not-for-profit organizations located in the region focusing on projects that create and retain jobs, encourage the introduction of new technologies, pursue growth in new markets, and contribute to the diversification of eastern Ontario’s economy. Applicants from the larger cities of Kingston and Ottawa are eligible under the Provincial program although Ottawa was included only in 2012 when it became a permanent funding program.

There are also several important stakeholders involved at the regional / community levels. The Ontario East Economic Development Commission (OEEDC) was formed in 1988 as a cooperative marketing initiative for the region representing local municipalities, economic development professionals and business leaders.  Ontario East focuses on developing and implementing cooperative marketing strategies that increase the exposure of Eastern Ontario’s strengths in industry, research, innovation and technology. The Eastern Ontario Warden’s Council (EOWC) has been very influential in creating a regional voice and realizing the importance of collaboration in supporting regional economic development. The EOWC created the “Eastern Ontario Regional Network” to provide higher speeds and bandwidth to homes and businesses in Eastern Ontario. The organization also released a comprehensive economic strategy for Eastern Ontario which, again, placed a strong emphasis on region wide collaboration and partnerships.

My aim here is not to assess the purpose and effectiveness of existing regional development initiatives for Eastern Ontario. Nevertheless, there are a number of observations that are relevant in terms of supporting regional development in Eastern Ontario. First, economic disparities is as much an urban-rural issue as it is a regional one. Indeed, the federal and provincial regional programs in Eastern Ontario are focussed on smaller towns and rural communities. For example, Ottawa and Kingston are excluded from FedDev Ontario’s funding. However, larger and economically successful cities in Western Ontario such as Mississauga and Kitchener-Waterloo (which is viewed by many as Ontario’s new technology growth centre pushing Ottawa from the top spot) are eligible. From a regional development perspective, this situation appears to put the few urban centres located in Eastern Ontario at a distinct disadvantage compared to other large cities in Southern Ontario which also is contrary to the long standing strategic objective of reducing economic disparities.

Second, the emphasis placed on smaller communities and rural areas in Eastern Ontario regional strategies fails to recognize, I believe, the impact and role of the region’s only metropolitan centre, Ottawa, in economic development for the region. The same can be said, to a lesser degree, about Kingston. EOWC’s economic development strategy announced in 2014, for example, has a strong rural / small community focus. Indeed, to someone who is not familiar with Eastern Ontario would not realize that the Nation’s Capital is in fact located in Eastern Ontario after reading EOWC’s 2014 Economic Strategy.

While the strategy does contain an excellent framework for economic development initiatives at the aggregate, regional level, it does not differentiate between larger cities, smaller towns and rural areas in terms of assets, advantages, needs and opportunities. Communities located along the Highway 401 / “Main Street” corridor are different compared to communities located in the more northern recreational/cottage areas which in turn are different compared to communities located in proximity to the City of Ottawa.

Recent discourses in urban/regional economic development have been dominated by the emergence of city regions and global cities. As globalization forces continue to advance, these city regions are seen as the focal points for knowledge creation and innovation, wealth creation, new structures for social and political mobilization and the spatial organization and interaction of economic activities. Toronto, for example, is widely considered to be Canada’s prime global city. Toronto’s geographic influence now extends well beyond its metropolitan administrative boundaries and even the Greater Toronto Area (GTA) pulling in cities like Kitchener, Hamilton and Niagara Falls into a polycentric mega city region. In fact, communities like Peterborough and Belleville likely are more impacted by Toronto than their place in the Eastern Ontario economic and planning region.

This emergent emphasis on city regions and global cities has overtones to the growth pole strategies of the 1970s. More important, this strategic thinking appears to be in direct contrast to the regional development / “one size fits all” approach incorporated into, for example, EOWC’s economic strategy or FedDev Ontario’s Community Futures program. Ottawa interacts with the rest of Eastern Ontario in diverse and sometimes complex ways – socially, economically and politically. Theses impacts can be found in a myriad of processes, transmission channels and sectors such as housing, tourism, retailing, knowledge spillovers, innovation, education and training, healthcare, supply chains including regional food networks etc.

EOWC’s 2014 economic strategy stated that a new approach to economic development was needed for Eastern Ontario in order to address the challenges the region faces. While the strategy provides an important strategic framework for shaping the economic future, I believe the strategy falls short of realizing the region’s full potential because it does not consider how the City of Ottawa interacts with the region and what the implications of this relationship are. This shortfall is not just limited to EOWC but also applies to regional development programs administered by both the federal and provincial governments. The inverse is also true – the City of Ottawa’s economic strategy does not examine how strengthening linkages with Eastern Ontario can support the achievement of its objectives.

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