Rethinking Economic Development Strategy For Eastern Ontario, Again

Over the last 50 years or so, there has been an ongoing effort on the part of the federal and provincial governments directed towards regional economic development in Eastern Ontario. For example, the Province of Ontario embarked on a decentralization approach to regional development during the mid-1960s, known as Design for Development, to deal with the negative consequences associated with the extremely rapid growth of the Toronto region and with the impacts of such concentrated growth may have in other regions of the province. The Ontario Development Corporation was established during this period to provide funding and financial incentives for manufacturing in slower growth areas like Eastern Ontario.

Today, there are several government agencies involved in encouraging economic development in Eastern Ontario. Launched in 2009, the Federal Economic Development Agency for Southern Ontario (FedDev) was established to help southern Ontario communities and businesses to diversify and strengthen their local economies. FedDev’s Community Economic Development programs such as the Eastern Ontario Development Program include initiatives to support local economic development with a particular focus aimed at economic diversification in small communities and rural areas. Funding is delivered through the 15 Community Futures Development Corporations (CFDCs) under the network umbrella of Community Futures Ontario East. The cities of Ottawa and Kingston are excluded from the program.

The Ontario Ministry of Agriculture, Food and Rural Affairs administers the Eastern Ontario Development Fund which provides funding to businesses, municipalities and nonprofit organizations for projects that support job creation, encourage innovation, collaboration and cluster development and, attract private investment. The Ministry also manages the Rural Economic Development to support rural communities throughout the Province to attract new investment and remove barriers to community economic development.

These more recent public initiatives mark a shift in strategic thinking by putting more emphasis on what the Canadian Regional Development labels as the “new regionalism”. This new regionalism approach is based on two components.

  1. ‘Place-Based’ Development

In contrast to the top-down approach during the Design for Development period in Ontario, place-based strategies are built on local assets and strengths emphasizing small businesses and entrepreneurship, local industry clusters and community driven initiatives.

  1. Territory and Collaboration

New regionalism also places emphasis on vertical and horizontal collaboration between public organizations rather than on competition between communities. Territory or region not individual firms or communities is the key strategic planning platform.

Building up and nurturing the potential of a selected territory like Eastern Ontario and its comparative advantages should be done by accessing local knowledge, skills, specializations and relations among community based entities. According to Strengthening Rural Canada,

At their core, place-based approaches assume that the community matters and that the residents are the key to understanding and addressing their issues. These approaches are based on the understanding that people who live in the community truly know their problems and they are also the ones who are the key to the solutions. Place-based approaches use collaborative means to address complex socioeconomic issues through interventions defined at a specific geographic scale. Place-based approaches are designed in a manner so that local stakeholders are engaged in a participatory process within a place – be it a neighborhood, city, or region.

The 2014 Economic Strategy prepared for the Eastern Ontario Wardens’ Caucus (EOWC) emphasized the following:

Private businesses and associations, municipalities, community stakeholders, government and government agencies will all have a role to play in the implementation of the Plan. Effective implementation will also require region-wide collaboration across business, industry, institutions, associations and networks and economic development professionals. These partners will need to work together over the long term if the Plan is to achieve the vision of economic growth in Eastern Ontario.

FedDev Ontario echoes the same theme in its 2015-16 Report on Plans and Priorities:

Moving forward, the region’s [Southern Ontario’s] economic success will benefit from its ability to innovate, embrace the latest technologies, and access fast-growing international markets and global value chains. A key element in achieving this success will be a coordinated, focused, whole-of-region approach where the unique assets and capabilities of governments, businesses, academia and communities are mobilized.

New Regionalism is not all that new

It was exactly 1adams00 years ago when Thomas Adams submitted his report entitled Rural Planning and Development: A Study of Rural Conditions and Problems in Canada to the Canadian Commission of Conservation. A central theme in Adams’ insightful report was that cooperation among farmers and rural industries was critical to stimulating rural economies and developing ideas of community. He called for the “organization of industrial centres” in rural areas. Adams saw opportunities in rural areas close to existing cities where cheap land and abundant labour supplies were competitive advantages for industrial growth. Adams wrote that “co-operation in rural areas, for productive and distributive purposes, tends to increase co-operation in public affairs.”

On the topic of the lack of cooperation between municipal authorities, Adams stated that the “urban authorities often refuse to give facilities for extending their public services into adjacent rural areas … the natural desire of the urban authority to conserve its population and prevent its overflow into rural territory is largely responsible for this attitude”. Adams further argued that “the general experience, as may be seen around Montreal, Toronto, Ottawa, Winnipeg, Vancouver and other large cities, is that this desire does not prevent the overflow, but that it injures both the migrating population and, indirectly, the city from which it comes.”

Adams also advocated for the development of home industries (local entrepreneurs) adding value to farm products and using artisanal skills to produce crafts and goods of local and regional value. He also believed that increased education and training opportunities would help farmers to develop more industrial skills.

Finally, Adams called for the establishment of an “efficient government organization and improved facilities for securing co-operation, rural credit, and development of rural industries.”

Thomas Adams’ account of rural challenges of a century ago when two-thirds of Canadians lived in rural areas, shows how certain issues and even ideas on how to deal with these issues still prevail today. Priorities around regional coordination and integration, innovation and small businesses and, workforce training and development continue to be key components of strategic thinking today in Eastern Ontario as articulated, for example, in the 2014 Economic Strategy.

wmarket-brockville-ont

Regional Cohesion vs. Regional Division

Regionalism can be described as community-led initiatives to reorganize a particular geographic space or territory based on collectively shared vision, interests and values. In terms of rational strategic thinking, the arguments for greater regional collaboration and integrated development seem to be convincing.

There are examples in Eastern Ontario where community partnerships have been created in recent years to promote local and regional interests in a competitive economic world. The Eastern Ontario Wardens’ Caucus, for example, functions as the de facto regional political body and economic development agency, acting on behalf of the Region on selected development priorities. Members of EOWC represent 13 upper-tier municipalities or counties including the City of Kawartha Lakes.

The Caucus was formed in 2003 in response to the political uncertainty generated from the Harris provincial government’s local government restructuring and downloading during the latter half of the 1990s. EOWC also spearheaded the Eastern Ontario Regional Network in 2010 to manage the development of regional broadband access and now is focused on leveraging the asset to support economic growth.

The Eastern Ontario Mayors’ Committee (EOMC) is a group of 11 mayors in Eastern Ontario but excludes the City of Ottawa. EOMC works to advance municipal priorities important to Eastern Ontario. Originally established in 1988, the Ontario East Economic Development Commission’s main purpose is to facilitate cooperation and partnership between municipalities and their corresponding economic development offices to market the Region to businesses. All the above three organizations were involved in the creation of the Eastern Ontario Leadership Council in 2015. The purpose of this Council is to co-ordinate region wide efforts to implement the 2014 Eastern Ontario Economic Strategy, a joint initiative between EOWC and EOMC.

There also exists a third level of coordination, the Rural Mayors’ Forum of Eastern Ontario which was formed in December 2015 and is comprised of members from 13 small, rural communities (under the County level) to work together to address common issues and identify opportunities for cost reductions.

Notwithstanding the above initiatives to strengthen cooperation in Eastern Ontario, there is evidence of a continuing sense of attachment to individual local communities and identities. For example, most municipalities in Eastern Ontario continue to maintain their own economic development strategies that have been developed or updated around the same time period or after the preparation of EOWC’s 2014 Economic Strategy. Many of these municipalities also have a dedicated Economic Development Office to manage their economic development programs.

2017-04-18_20-12-27

The recent experience of Leeds & Grenville United Counties in establishing a ‘region’ wide economic development agency illustrates the strong association to local community even at the county level. In 2013, a report prepared by the Brockville and District Chamber of Commerce recommended that a County level Regional Economic Development Organization be established to be more proactive in supporting economic development in an “increasingly competitive global economy”.  The initiative met resistance from individual communities because it was felt that the approach was too Brockville-centric and the County was too large and diverse to be able to represent all localities effectively (Brockville Recorder). An alternative economic development model, the St. Lawrence Corridor Economic Development Commission, is currently being reviewed involving 5 townships plus Brockville and Prescott along the Highway 401 corridor between roughly Cardinal and Gananoque.

The delivery of FedDev Ontario’s economic development programs through its 15 CFDCs in Eastern Ontario may also be indirectly reinforcing this local as opposed to regional focus. Several predominantly ruralcfdcs communities in Eastern Ontario rely on their representative CFDCs as their primary economic development promotion mechanism. CFDCs require budget and staffing resources to sustain their operations which in turn may result in fiscal pressures placed on these smaller municipalities if federal support is cut back. For example, Frontenac County Council approved a $35,000 grant in their 2017 to help in covering the federal government’s shortfall in funding the administrative costs for the Frontenac CFDC. This is consistent with Hall and Stern’s description of the ‘reluctant rural regionalists’. Using Cobalt, Ontario as their case study, the authors observed that the “historical and continuing direct connections to federal and provincial funders have proved beneficial…these arguments suggest important strategic reasons why a poorer community within a region, such as Cobalt, may resist regionalism” [Peter V Hall and Pamela Stern, (2009). Reluctant Rural Regionalists. Journal of Rural Studies. Issue 25 p.67-76].

Based on Canadian rural case studies including Eastern Ontario, Markey et al also concluded that “people and organizations are very committed to their place––and are seeking to pursue development activities that both capitalize on and protect the assets of those places…this defined ‘place’ is, in most instances, the local community” [as opposed to a wider spatial entity] [Markey, Sean, Breen, Sarah-Patricia, Vodden, Kelly, and Daniels, Jen. (2015). Evidence of Place: Becoming a Region in Rural Canada. International Journal of Urban and Regional Research. Issue 39(5) p.874-891]. Localized or community-centric interests, therefore, seem to act as the primary drivers of economic development within the region.

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Kingston

The city-rural divide that Thomas Adams observed 100 years ago also still prevails today in the context of Ottawa and the rest of Eastern Ontario. The City of Ottawa petitioned the Province in 2014 to initiate a growth management plan known as Places to Grow for Eastern Ontario, similar to the planning being done in the Toronto-Golden Horseshoe Region. The aim was to place growth limitations on communities just outside of its political boundaries such as Rockland, Russell, Kemptville, Carleton Place and Arnprior because of their large population growth attracting families and seniors who could not afford to live in the City. The argument was that people from just outside city limits were using their infrastructure and services without contributing to their upkeep through taxes or development charges. The City’s efforts were strongly opposed by nearby municipalities who expressed no interest in being involved in dealing with Ottawa’s problems and being ‘steamrolled’ by big city planning demands.

During the Canada Parliament debate in 2009 over the high speed rail in Canada and in particular, between Toronto and Montreal, the then Mayor of Kingston and founder of EOMC stated that the City of Ottawa was invited to join EOMC but the invitation was turned down. In 2013, the City of Ottawa was included in the list of communities eligible for funding under the Eastern Ontario Development Fund. The Fund was originally established in 2008 to support business growth in rural Eastern Ontario which did include the rural part of the City. However, the City successfully lobbied for the entire City to be included claiming that it had lost companies to other Eastern Ontario communities because of their access to financial incentives.

A critical missing piece in all of the community partnerships referenced earlier is the City of Ottawa’s participation. Indeed, an outside prospective company or business investor would not even realize that the Capital of Canada was located in Eastern Ontario after reading EOWC’s 2014 Economic Strategy.  One of the key recommendations contained in Strategy was also to map and profile Eastern Ontario’s innovation ecosystem to better understand the breadth of innovation services available in the region. This mapping and profiling study was completed in 2016 but the report excluded the City of Ottawa even though the city has an important influence on Eastern Ontario’s innovation ecosystem as acknowledged by the authors.

The Difficulty in Defining Eastern Ontario as an Economic Region

The economic challenges faced be communities and rural areas can be very different between sub-regions in Eastern Ontario – for example, communities along the Highway 401 corridor compared to communities along the more northern and rugged Highway 7 route or Highway 17 / Trans-Canada Highway heading towards Northern Ontario. Peterborough and the City of Kawartha Lakes are more closely linked economically to Toronto than Eastern Ontario. Highway 115 was constructed during the 1950s, about 40 years before Highway 416 was built to link the Nation’s Capital to Highway 401, with the purpose of creating a faster route between Toronto and Peterborough and the surrounding cottage / recreational areas. As Toronto home prices continue to soar, commuters are increasingly searching out distant places like Cobourg in Northumberland County for affordable housing. In fact, the counties of Northumberland and Peterborough plus the cities of Kawartha Lakes and Peterborough are included in the Province of Ontario’s proposed 2016 Greater Golden Horseshoe Growth Plan Area. Ontario’s Ministry of Finance also includes Northumberland, Peterborough and Kawartha Lakes Central Ontario for the purpose of projecting population growth.

The geographic area covered by FedDev Ontario’s Eastern Ontario Development Program also includes the South Lake Futures CFDC (Town of East Gwillimbury, Town of Georgina and the Township of Brock) which is located in Durham Region which in turn is within the Greater Toronto Area.

Commuters are also buying homes in nearer communities outside the City of Ottawa boundaries such as Rockland, Russell, Kemptville, Carleton Place and Arnprior. Meanwhile, Prince Edward County is attracting higher income retired seniors from Toronto as are Haliburton and Kawartha Lakes. Greater Madawaska is a popular destination for retirees from Ottawa looking for a more rural quality of life on waterfront properties.

 Core-Periphery Dynamics and the Impact on Eastern Ontario’s Economy

There is no doubt that market globalization, an aging population, increasing energy costs and technological change will impact on Eastern Ontario’s communities as described in the 2014 Economic Strategy. However, the Region’s strongest economic competition is not global but regional, one that has been around even before the Design for Development era of the 1960s – the dominant presence of Toronto in Southern Ontario and its emerging role as a global mega-region.

Although Eastern Ontario is located in what has been described as ‘Main Street Canada” 2017-04-18_20-37-47[Maurice Yeates (1975), Main Street: Windsor to Quebec City] and the Canadian economic heartland that extends from Quebec City to Windsor, in reality this economic region is not contiguous but instead is dominated by two metropolitan cores – Toronto and Montreal. Moreover, Toronto now has passed Montreal as Canada’s primary and dominant city region while its economic influence has today captured other larger centres beyond the Greater Toronto Area like Hamilton, Kitchener-Waterloo and Niagara.

Economic development in the rest of Southern Ontario has been uneven. Southwest Ontario where many US controlled branch plants and auto industries have been concentrated has been struggling recently with the effects of trade liberalization, globalization and general decline in manufacturing. Eastern Ontario, with the exception of Ottawa, has lagged behind in the economic shadow of Toronto. At the eastern end of Ontario, Montreal’s zone of economic influence has been more restricted geographically when compared to Toronto, remaining largely within Province of Quebec’s borders.

The core-periphery dynamics leading to uneven economic growth in Southern Ontario are likely to continue and even intensify as a result of agglomeration and polarization forces. The Toronto region represents one-quarter of the national economy and two-thirds of the provincial economy. For example, much of the debate about regional development, planning and governance around the Toronto-Golden Horseshoe megaregion revolves around strengthening Toronto as a competitive global city (Julie-Anne Boudreau, Roger Keil & Douglas Young, Changing Toronto: Governing Urban Neoliberalism 2009).

Also, the uncertainty and instability resulting from the recent economic and financial crises combined with the current wave of rising populism and protectionism could further make the Toronto megaregion more attractive to capital, labour, innovation and entrepreneurship which could lead to an attenuation of regional disparities and uneven growth in Southern Ontario. In addition, the slew of federal and provincial programs to help particular sectors and institutions, promote small business growth and entrepreneurship, support R&D, assist in job training will end up favouring Toronto and its surrounding region.

Ottawa’s economic development trajectory has, of course, taken a completely different path to the rest of Eastern Ontario only because of its absolute ownership to being the Nation’s Capital. More recently, Ottawa has also become an important centre for advanced technology which survived the collapse of Nortel and the dot-com bubble at the turn of the century. Ottawa’s strength as a technology centre can be attributed to the city’s entrepreneurial culture and ecosystem supported by the federal government sector.

Perhaps because of its dominant and unique functional role as Canada’s Capital, Ottawa seems to have received little attention from researchers and strategic economic development planners when it comes to looking at the core-periphery relationships or thinking about the future of Eastern Ontario’s economy – points that were raised earlier. As noted before, Ottawa’s growth has resulted in population increases in communities within easy commuting distance. During the 1990s decade of rapid expansion in the advanced technology sector, several companies did invest in new manufacturing and engineering facilities in places like Renfrew, Arnprior and Rockland.

Implications for Economic Development in Eastern Ontario

The essence of any economic development co-operative effort, whether at the county, metropolitan or regional level, is that such collaboration creates greater opportunities for growth or increased competitiveness by bundling individual assets and interests around a shared agenda compared to going at it alone. Another question relates to geographic scale – which and how many communities should be included in the collaboration. Are communities more competitive if they are part of a larger Eastern Ontario Region compared to, for example, the St. Lawrence Corridor? It should be noted also that opportunities do not just include employment growth, company investments in new factories, or new business formations and innovation but also involve education and training, new infrastructure (e.g. transportation, broadband) and tourism as well as engaging in more effective lobbying with senior government levels.

In today’s global economy, it is the city-regions or what the Conference Board of Canada calls hub cities that are the drivers of economic prosperity in countries. In Canada, only a handful of cities have the economic stature to compete in the international arena with Toronto, Montreal and Vancouver and increasingly also Calgary as internationally recognized metropolitan areas. Ottawa, because it is the Nation’s Capital, also has an international role at least politically.

The economic prospects smaller cities, towns and rural areas depend on how firmly connected they are with the leading city-regions. Communities located in less urbanized parts or more distant from the metropolitan core face more difficult economic challenges. The Toronto-Golden Horseshoe region, with a population of over 9 million generating two-thirds of the Province’s one-quarter of Canada’s GDP, has the economic and political clout to influence its future economic direction. Other cities that are part of the metropolitan agglomeration are able to also benefit. For example, Hamilton’s economy was hit hard with the closure of Stelco Steel but has experienced an economic and social revitalization in recent years. Its main attraction is that it is near Toronto without the Toronto costs. Kitchener-Waterloo’s dynamic technology cluster centred on the University of Waterloo is also being integrated into the global technology supercluster of the Toronto-Waterloo Innovation Corridor (Globe & Mail 2017).So, what does this all mean for Eastern Ontario? The central conclusion is that, if Eastern Ontario is going to experience any kind of sustained economic recovery, Ottawa has to be a critical part of the regional alliance(s). Strategies are needed to strengthen the economic linkages between Ottawa and the rest of the region. Ottawa’s influence goes beyond simply expanding its housing and labour force market zones to surrounding communities. Examples of possible strategic initiatives include: tourism (agritourism, festivals), food clusters, and Regional Innovation Systems (RIS) / technology ecosystem. A prosperous Eastern Ontario also makes Ottawa economically stronger.

Kingston can also perform an important role even though its population is much smaller than Ottawa’s and has recently experienced modest growth. Today, Kingston has a relatively dynamic advanced technology sector and is the home of Queen’s University where Innovation Park is also located. The City’s location on Canada’s Main Street midway between Toronto and Montreal, the two largest metropolitan areas in Canada, stills provides a strategic advantage which should increase in importance in the future as the Toronto mega-region continues to expand. Kingston recently attracted, for example, two international companies – Portuguese fruit manufacturer Frulact and Chinese baby formula manufacturer Feihe.

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Other Issues / Topics Related to Eastern Ontario’s Economy

  • High Speed Rail
    • Construction of a high speed rail between Quebec City and Windsor has been subject of numerous feasibility studies and considerable debate since the 1960s. VIA Rail also recently proposed $4 billion high frequency service between Montreal-Ottawa-Toronto.
    • Any future high speed / high frequency services will likely further focus economic development on Ottawa which in turn reinforces the importance of strengthening economic linkages between Ottawa and other Eastern Ontario communities (K. Stolarick et al, Making High-Speed Rail Work For Ottawa 2010).
    • The inclusion of Kingston as a station stop in any future high speed rail connection would be beneficial to Eastern Ontario and contribute to making the city an important economic hub between Montreal-Ottawa and Toronto.
    • Province of Ontario is committed to building a high-speed rail connecting Windsor, London-Kitchener, Waterloo and Toronto which will further weaken the economic competitiveness of Eastern Ontario without comparable new transportation infrastructure.
  • Ottawa-Montreal Corridor
    • Notwithstanding the dominance of Toronto in the Canadian economy, Montreal is still an important multicultural, international metropolitan centre with strong aerospace and health sciences sectors. The economic impact of Montreal on Eastern Ontario has not been considered in urban studies or strategic economic planning.
    • Improving connectivity between Ottawa and Montreal could have positive economic impacts for both cities (Montreal’s economy has also been struggling recently – Montreal Gazette 2015).
    • Calgary-Edmonton has been recognized as an emerging key urban corridor in Alberta and has also been the target for future investment in high speed rail which would result in the two metropolitan areas becoming economic powerhouses (Calgary Herald 2014). The 2016 populations of Calgary and Edmonton metropolitan areas totaled 2.7 million (Statistics Canada 2016 Census). In comparison, the total population of Montreal and Ottawa-Gatineau in 2016 was 5.4 million. The distance between Calgary and Edmonton is 299 km or a 2 hour 55-minute drive according to Google Maps. The distance between Montreal and Ottawa is 199 km using Highway 417 taking 2 hours and 13 minutes by automobile.
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One thought on “Rethinking Economic Development Strategy For Eastern Ontario, Again

  1. Pingback: Not Being #1 Is Not That Bad: Ottawa’s Technology Ecosystem, Toronto-Waterloo, and Connectedness | urbanomicsblog

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