Today's Innovation Tommorrow's Prosperity

8/3/2019 Today's Innovation Tommorrow's Prosperity

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Todays innovation,tomorrows prosperity

Task Force on Competitiveness, Productivity and Economic ProgressNINth ANNuAl RepoRt, NovemBeR 2010


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t task Frc n Ciinss, prdciiy and ecnic prgrss was

annncd in Ari 2001 Sc fr trn. Is anda is asr

and nir onaris ciinss, rdciiy, and cnic rgrss

card r rincs and uS sas. In 2004 Bdg, Grnn

askd task Frc incrra innain and crciaizain isss in is

anda. t task Frc rrs dircy bic.

I is asirain f task Frc a a significan infnc in incrasingonaris ciinss, rdciiy, and caaciy fr innain. tis, w

bi, wi nsr cnind sccss in crain f gd jbs, incrasd

rsriy, and a ig qaiy f if fr a onarians.

t Insi fr Ciinss & prsriy is an indndn n-fr-rfi

rganizain sabisd in 2001 sr as rsarc ar f task Frc.

Wrking pars bisd by Insi ar riariy inndd infr

wrk f task Frc. In addiin, y ar dsignd dn bic

ndrsanding f acr and icrcnic facrs bind onaris cnic

rgrss and sia dba n a rang f isss rad ciinss

and rsriy.

Cns n is Nin Anna Rr ar ncragd and sd b dircd

Insi fr Ciinss & prsriy. t task Frc and Insi

ar fndd by Grnn f onari rg minisry f ecnic

Dn.

Chairman

Roger L. Martin

Js l. Ran Sc f

managn

Members

John Armstrong

Heidrick & Struggles

Jim Balsillie

Rsarc in min ld.

Timothy Dattels

Nwbridg Caia

Lisa de Wilde

tvonari

David Folk

Jffrsn parnrs

Suzanne Fortier

Nara Scincs and enginring

Rsarc Cnci

Gordon Homer

Grdn J. hr Adisry Srics

Tom Jenkins

on tx Crrain

David Keddie

Naina Crssd Air

Jacques Lamarre o.C.hnan Baiki

Jacques Mnard o.C.

Bmo Nsbi Brns

Mark Mullins

vras Inc.

Tim Penner

prcer & Gab Inc.

Daniel Trefer

unirsiy f trn

Task Force on Competitiveness,Productivity and Economic Progress

Cyrig Nbr 2010

t Insi fr Ciinss & prsriy

ISBN 978-0-9809783-9-1


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Todays innovation,tomorrows prosperity

Tk Fce Cpettee, Pctt Ecc PeNiNth aNNual report, November 2010


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2 task force on competitiveness, productivity and economic progress

Exhibits

ex 1 on s dn s ss nnn gns 7

ex 2 on s s N acn s sgncny n GDp c 8

ex 3 ons sy g gw n 2009 9

ex 4 ons sy g s dcy g 10

ex 5 innn nd dcy csy nkd 11

ex 6 tsk Fc s s 2020 psy agnd cs sy g 13

ex 7 S ndd cs c sn nss 18

ex 8 t tsk Fc ss cnns sy 19

ex 9 t dcy g ccns s ons sy g 21

ex 10 ons dcy gs nnn s 28

ex 11 aimS ds sy; sy ds aimS 30

ex 12 Cndn snss xcs nnn s ns nnn s d 32

ex 13 in on, c nsn n dcn s c sndng 34

ex 14 unss gn ss n n nnn gd sdns 36

ex 15 on snsss g uS cns n iCt nsns 38

ex 16 on s s s n snss r&D 39

ex 17 bsnss r&D sndng s csy nkd n 40

ex 18 on snsss uS s sgncny n n 41

ex 19 lg-sc ncn ckgs csy nd s s nnncd gs 43

ex 20 ons x cngs w w s gn c x s 45

ex 21 S nd ss d nnn 49

ex 22 acss dd cns, ncng s dcnds s yn 58

ex 23 ms ncng ndss s js, 20022008; gwng ndss dg ddd nd cy-nd js 59

ex a Qcs n n s nd dcy s d cs s sy g w on 20

ex b inqy s nd y n cn ys; w nc ncdnc s

cngd w cnc cycs 23ex C lkd ng w liCo s g cn sk gs 24

ex D rn-nd ysc ccns s dycd dng cssns 25

ex e innn nd nnn: Ws dnc? 50

ex F on ngn s cns n uS ss,cy n ns ngn 56

ex G Cnd s 89 g ds n 2010 61

ex h innn ss nnn: W d on-sd g ds c ds n nc ndsy? 63


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todays innovation, tomorrows prosperity 3

Ctets

Fe & ckeeet 4

Tays iati, tmws pspeity 6innn s n ons sy 9ons dcy g s n nnn g 10innn s d psy agnd 12

Pctiity a iati 16

GDp sns ddd nd dcy n cny 16GDp nd ss nsgs n w ng 17Dsgggd GDp xns sy g 18ons sy cs w gy, g dcy s s 27

AIMS f iati 29

ATTITudES:EnCouragE innovaTion For onTario To win in an EvEr

morE ComPETiTivE global world 31o ds nd ncg s ds wd n

n cny 31innn nw s y 32

InvESTMEnTS:invEsT in ThE human CaPiTal and TEChnology

CriTiCal For innovaTion 33

rs nsn n dcn 33incs n nnn sdns nss 34Cnn nsng n ncg nnn 36bsnsss nd s nsns n nnn 38lg ncn ckgs c snsss n n ws nsns 41

MoTIvATIonS:EnsurE Tax ChangEs rEmain in PlaCE 44ons x cngs n g czn 44

t nzd ss x s n x g a cn x s s wy d w cn ssns nd

c n nn gn sc 45

STruCTurES:drivE innovaTion Through smarTEr PubliC PoliCEs

and morE inTErnaTional TradE 48pc cs sd gd wd nnn 48

ln ss nw nnn c 52mngn s 53 td ss nnn nd sy

Thgh iati t pspeity 65

refeece 68

Pe pct 72


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Few & ackwlegemets

On behalf Of ons tsk Fc n Cnss, pdcy nd ecncpgss, i sd sn Nn ann r on c. is cny s swy cng j dwnn w n xncng snc 2008. lk onns, w ws snd s. o cng n s s c s cy gss ck n ck. o ng cng s ncngd w c cnc n g dcy nd nnn nc. ts s

ssnc 2020 psy agnd on.

o cs n s ys s n ng nnn cs ndss. o sy g s dcy g, nd s dcy g s nnnn g. onns ng wd ds n wk s, s wk sn. b w ggds n cng cnc wkd. F y sns, w n dng wd n cng nndcs, scs, nd csss n snsss nd wkcs. Wcn nnn ss y y nsng n cngy ndsks. o gnns nnn cs n ndq, csng nncsng nw---wd nnns, n n sng n---knnns.

onns nd snss ds ndsnd nd nnn. ocng s n s ds n cn. W nd nssydnd d nn dcs, scs, nd csss.

W s nsns n nnn r&D nd nng dng xsng cngy snss; nsns n ysc c nsns n n sss. bsnsss swy n csng cngynsn g w uS cns s d s sngnd. Wncg cnn n s .

t nc gnn s n nsng n dcn n s ys nds s ssd dcns n s nsns ck dc. W ds snc. i w ss cng n c g, w nsn dng sks nd cs w g s dng w nd. t

gnn s nng sgy cng nnn sdns.G sccss y s scndy nsns n cng gy nw sngn dcn xncs n scs nd dw n wdss sks n wkc . o y c w wd-css nss n s wd ndc qy sys. odnn sccd nnny w s nnn nd n n s scndy sc.


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Ontarios prosperity gap is a productivity gapand this productivity gap is an innovation gap

on s d g gss n psy agnd y scng wyw x snss nsn. Cnng nc ss x dddx nd nzng w d gds nd scs x s n gs cy ws g ng d. Cd w dcns n c x s nd nn c x, on s ng n ws n s x gs n wd ncgng nwsnss nsn. ts w s nsns n nnn nd c g-yng js n nn s. W cnn g on cnsd cn x n d d w s nd ns cn ssns

o cnc scs cn d d nnn. o sy s n d, nd on nd Cnd nd k d n xndngnnn ngns. t ds on s swn n dngns w en unn s sgn. W nd s d xnsn ns w cns k Cn nd ind.

on s ny dng cks c sy, dcy,nd nnn n. o cng s ng g n ss nd gnns.

W gy cknwdg sc s ins Cnss & psy nd ndng s mnsy ecncDn nd td. W k wd sng nd dscssng wk ndndngs w onns. W wc y cns nd sggsns.

rg l. mn, Cntsk Fc n Cnss, pdcy nd ecnc pgssDn, Js l. rn Sc mngn, unsy tn


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Tays iati,tmws pspeity

Ds cnc ncny ds

cn dscs, w cnn cnd

onns k ng nd cs

ngs n cng psy agnd w

s . by nss s nnn

n dcs, scs, nd csss, w cn c

ssn sy nd w ng.


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In Our annual repOrt last year, w nd w cssn wsnng n nd nd w ndd ng g cy gck n ck wd psy agnd. W cgnzd snsss nds w ng s sckd nd gnns nw d n nn ng sc sns. W ncgd skds nons sy gn ng n s ng- sy ndw ng. t n w ndd ds dnd z syn, nsns n n nd ysc c, ns gdngnd nsn g x syss, nd scs dd s ndss nnn.

a y , w s n s onns gs cssn.tcncy, ccdng Nn b ecnc rsc, undSs s n cssn snc Jn 2009. h n Cnd, w d n n c css cng nd cssn, s ky w n ncy snc scnd 2009. Y nd s nc n sds

d nd nd wd. unyn cnns cnns, snss nsn s sw n nng -cssn s, nd gn-n dcs s.

as n s ys, w n on s n s ss jsdcns n wd. on s s w s gns sd N ac. in 2008,w nkd dn gs, s c gns (Exhibit 1).

Hessen (GER)

Bayern (GER)

Baden-Wrttemberg (GER)

Lombardia (ITA)

Kanto (JP)

New South Wales (AUS)

Ontario

Catalua (SPA)Vlaams Gewest (BEL)

Nordrhein-Westfalen (GER)

South East (UK)

Rhne-Alpes (FRA)

Kinki (JP)

$52,000

$45,200 Median

$39,400

Note: Because of limited GDP data on Kanto & Kinki, Japans national GDP growth rate from 2007 to 2008 is used to estimate Kanto & Kinkis GDP in 2008.Currencies converted at C ANSIM PPPs, (Table 3800037).Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada; Australian Bureau of Statistics; National Bank of Belgium; Institut national de lastatistique et des tudes conomiques; Statistische mter Des Bundes Und Der Lnder; L'Istituto Nazionale di Statistica; Instituto Nacional de Estadstica; UK Office for NationalStatistics; SNA Statistics National Accounts of Japan; OECD; IMF; Eurostat.

GDP per capita, C$ (2008)Ontario and international peers

Exhibit 1 Ontario is at the median of the most prosperous international regions


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b, s w s nd n s s, on cnns nd dng N acn s. in 2009, GDp c $44,200 ws $6,900 w dn sxn gs ss nd ncsn N ac (Exhibit 2). (in nyss, nss ws sd, w scnsn 2009 ds cnd Cnd/uS csng w xcng 1.176.)

o ng , ons sy s dd w uS s. in y 1980s, on nkd n ds s sccss jsdcns n wd. b snc , gw s ggd nc uSs n ss w n 6 n , s n- ons n. W nd d Qc, N acn

jsdcn sz, g Qc s csng s g w on. F ss ys, ons nk s sd wn n nd n c sxn N acn jsdcns. in 2009, on nkd n, jsd mcgn. in 2008, ons GDp c ws $5,900 w dn s s. in 2009 g ncsd $6,900 (Exhibit 3).

as w dscssd n s s, cnsqncs n zng sy n y . Csng GDp c g w N

acn s wd s n n ncs $10,100 n -x dssnc g on sd 2.7 sns. and csng s syg wd gn $31 n n x ns s gnn non.

in s , ons nc n cssn s cd uSnc y csy n GDp gw s s, y s d s cnc , nc n on s n ckng undSs. Y, n s n, ks n n s d . o

GDP per capita, C$ (2009)

New York

Massachusetts

New Jersey

Virginia

Texas

California

Illinois

Pennsylvania

Median

North CarolinaOhio

Georgia

Florida

Indiana

Ontario

Michigan

Qubec

Note: State GDP results estimated using personal income, converted to Canadian dollars at 1.176 PPP.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada; US Department of Commerce, Bureau of Economic Analysis,National Income and Product Accounts.

Exhibit 2 Ontario trails its North American peers significantly in GDP per capita

$44,200

$51,100

$67,200


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cn nd nyn s dd n s s c s s n ss. o ys n n s qck wks g s uS snsssnd ng wks ck s c g n s ng s w nyd.

S, ons dcy s uS s nc nd s ndns sy n. m nnn w j cn sng dcy.

Iati is a impeatie f otais pspeity

in cn ys, w dcy s c n sc sy g nd ky cng. o $6,900 g ss N

acn s, $1,100 cn d ss wk nd $5,800 cn d w dcy (Exhibit 4). F c wkd n nc,w gn ss s n uS s. ts g s n d x ndss ndc y n, nsd s s

ny z n gd x ndss. t sn s s n s cs n s ss nsy dcn n cns n uS s, s ss nzd, nd snsss ns ss ncngy.

ons dcy s s w n n g dd gns sdN ac. o n cnc dng nnn s s onns xnd s n wk n c dgc, c cn s, nyn , nd swkd wk. in wds cc, w wkng d n ssd N ac, n s.

0

10

20

30

40

50

60

$80

70

GDP per capita, C$ (2009)19812009

YearOntario rankProsperity lead /(gap)

9012th

($900)

858th($0)

817th

$1,700

9514th

($4,500)

0014th

($5,700)

0515th

($5,200)

0814th

($5,900)

0914th($6,900)

000 C$

(2009)

Note: 1997 shows the break in the US method of calculating state-level GDP from SIC-based to NAICS-based. 2009 state GDP results are estimated using personal income andconverted to Canadian d ollars using 2009 PPP.Source: Institute for Competitiveness & Prosperity analysis based on data from Provincial Economic Accounts; US Department of Commerce, Bureau of Economics Analysis,National Income and Product Accounts.

Peer leader

Peer median

Ontario

Exhibit 3 Ontarios prosperity gap grew in 2009


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pdcy nd nnn dn y s cs. by dnn, dcyss w c w c n scs sd w scs n , s cn , , ny scc sc. t cd s snd y w c ny sdyw y ynd scs sd. pdcy ncssn n w wys g cncy n s ns, g ddd n n. Gnng cncy dng dcs nd scs cndg cs w scs d dcy (Exhibit 5).

W cnss y d n nc s cns dcy gw, s g n cs d ; x, skdwks, c ngs, scnc nd ngnng n, nd css. ts cs s ns d nnn. i s n sc cncd nnn nd dcy gw nxy nkd ssynnys.

otais pctiity gap is a iati gap

W s ny nsns s nnn g n snss nnn.

Our businesses under invest in technology

on snsss cnn uS cns n nsng n cny,qn, nd sw k wks dc. insn nnn nd cncns cngy (iCt) ccns 40 cn nsn n cny, qn, nd sw nd j nsng w s. insn n iCt, wc cnsss cs, swnd cncn qn, cs n ny n ny nn n snss csss g cn cngy n sks, s nd n n snss csss d .

Sources of Ontario's prosperity gap against median GDPC$ (2009)

0

2

-2

-10

-4

-6

-8

000 C$(2009)

Advantageover peers*

Disadvantageover peers*

Total prosperity gap

$4

* Versus median of 16 jurisdictions.Note: 1997 shows the break in US method of calculating state-level GDP from SIC-based to NAIC-based; 2009 US state GDP results estimated using Personal Incomeand converted to Canadian dollars using 2009 PPP.Source: Institute for Competitiveness & Prosperity, based on data from Statistics Canada; US Department of Commerce, Bureau of Economic Analysis;US Department of Labor, Bureau of Labor Statistics; US Census Bureau.

Exhibit 4 Ontarios prosperity gap is a productivity gap

1981 1985 1990 1995 2000 2005 2009

Contribution of labour effort

Contribution of productivity


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Business R&D lags in Canada and in Ontario

ons r&D nsn g w s uS s s gy n n snsssc. as cng GDp, ons snss r&D nsn sw dcds s nd cd y ss, nd s dngss k Cn nd msscss y g gn.

ecnss gd sgncn dnc s ns wnr&D nd dcy nd dcd ssn r&D nsn,cy snss snsd r&D, s ky d ng- sy. inddn, r&D nsn s n swn s ns wnng, s n sd s xy nn cy.

Ontario businesses produce fewer patents

W s n n n nn cy s cd y ns(.g., n ngn css ns n sw), ny cdcs wsdy nnn g nng s sd s nns gnsnn . Gn nk wn r&D nd ssqn nng, s n

ss on snsss ss ky dc ns n cns n uS ss.

Our management is among the best in the world, but still trails US peers

an n cn nnn s qy ngn. rscndcs kgs n ngn cnqs nd ccs sx sg,

js-n-, nd n, n w d dcy ns css cny. t xn ngs ngng s nw cnqs n cns ns, nnn nd dcy w ncs.

Source: Institute for Competitiveness & Prosperity.

Prosperity Productivity

Reducing costs and improving processesCreating unique products, services,and features

Sources ofproductivitygrowth

Drivers ofproductivityand innovation

Value added Efficiency

Skilledworkers

Capablemanagers

Scientific& engineeringtalent

Investments intechnology

Vigorouscompetitors

Clustersof people andbusinesses

Balancedregulatoryenvironment

Profile Utilization Intensity

Labour effort

Exhibit 5 Innovation and productivity are closely linked


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rsc y ins Cnss & psy swd n , ons ncng ngn s ng wds s. ongn s ds n nng scc cnqs n n ncng. ty sd s n cng gd ncngn, g w n. b gns n uS ss, on nd s, scy n ngn wngnss ngs k nd g s nd d yw s.

Ssqn sc sng qy s- ngn n sc ndcd qy ngn n Cnd cd und Ss. r ngn n und Kngd ws sgncny nd. on s d ny s w s cns n uS ss,w n ns n ns ngn.

Public policies tend to focus on support and invention, not pressure

and innovation

pc cy ncs nnn s ncng c ng w dnsns. on ndnsn, c cy nds dn wninvention ndinnovation.

t dnsn qs dq nn ng d support ndpressure nnn. unny, c cy n on nd Cnd s ncd g nc n .

pcs n on nd Cnd n nd wd d scncs ndnnn. as w sn n s sc, c nnn cy dsn dqy cgnz nc snss nd ngn csss nnn. o cnss nd sy n sd s xcnc n scncs. and dng g cngy s ndd yscnc nd ngnng gds. b sccss nnn qs nc scnc nd sks, sc s sng, ngng, nd cncng

snss sns. ts sks n c sccss nsn s ng snsss. o gnns dcsns nd nsdcy n s snss dcn s xng nd dgng nnn ccy.

Iati mst peae Pspeity Agea

as w swy g cssn, w cnn g onns k cs n ng- psy agnd (Exhibit 6). as j cng csng sy g s nnn, w nd ns ds

agnd g aimS ns w s nyz sy ndns n: ads, insns, mns, nd Scs.

F s, s qsn cnx ccsncs. o aimS wk s nnc n. W ds wd nnn y s, kscs ncg ss q n sk kng nd nnn, w w ss sccss. i x sys ds n wk nsns, n snsss w ns ss n nn cny nd qn nd n r&D.

and w nsng ss cs s cs, w w ssc nd nn cny.


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AttitesEcage iati a cmpetiti t wi

i a ee me cmpetitie glbal wl

i s ng w onns sk s nd ccn nnn nd dcy n nd s wy snsss ndns nd nd c. b w cncd s ds n sd nscngs n ndn cc, cc DNa. S ds n dng s ck, wy d w nd n cnss, nnn, ndsy?

in w, w s w sd s s ds ng onns nd snss ds. W d ds c nd nn s c s cns n ss. o cng s w c cncssn s s ccsncs ns cncsys d n s sng.

IestmetsIest i the hma capital a techlgy citical f iati

insns d nnn nd sy. exnds n sc,cngy, nd dncd dcn gn sy dy yd sy. in s s, w cncdd onns cnsng cn sy xns sy. o d n ns dqy n wn dcn y dcng scs sccss n gwng knwdg cny. o snss ds d n nsdqy s dng dg cngy nd sc nd cnn c n ss nnn nd ddd. o gn-ns c sndng d dcn sndng n dcng c w.

Current Target 2020THE GOAL

Close the

prosperity gap14th in peer

group in 2009

At the median

8th by 2020

Attitudes

Investments

Motivations

Structures

Remaining complacent

Consuming today

Implementing smartbusiness taxation

Preserving status quo

Sharing determination

to close the gap

Investing for

tomorrows prosperity

Continuing smartbusiness taxation

Encouraging creativity

and growth

Exhibit 6 Task Force has set out a 2020 Prosperity Agendato close our prosperity gap


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W nd ns . i onns qd k n nsnd cngs c g, yng nd cq sscndy dcn. W on w cnn s cn s scndy dcn, n s cks dc. W s snsss w cnn s nsns n cngy nd nnn sd y sng Cndn d, w x s n snss nsn,nd nc cs ncsd nnn d.

MtiatisEse ace tax chages emai i place

t nc nd d gnns dn c k x sys s cn nnn. by nzng nc ss x w d gds nd scs x, dcng c x s, nd nng c

xs, gnn on s kn d sds s ns nw nsn y snsss. Cd w ngng dcns n dc nc xs, s cngs ng on n ws

jsdcns ng dd cns n s xn nw snss nsn n ns.

W cnn cnd on nd Cnd x ns cn x z nnn nd cnc ns.

o nx xn cng s d w g gn x s n w-nconns. Sc ns scd d ns , nd xs gss. an nnndd cnsqnc s sc s gncs w-nc ns cn q g s y wk nd y. F x, cnn n cwcks ndgss nc xs cn d sngs nd n ns nng $15,000 c gn c x s n 50 cn s nngs s.W cnn cnd cngs n Wkng inc tx bn dc g gn x s w nc onns.

Stctesdie iati thgh smate pblic plicies

a me iteatial tae

on s n nd n nnn, s dncd y w dcy,

d n , nd nsn n cngy, nd nd cn y csd ndss cng s n inss s wk.

o c nnn cy szs d scncs nd ds ncgnz nc nnn n snss nd ngn csss.o cnss nd sy n sd s xcnc n scncs. and dng g cngy s ndd y scnc nd ngnnggds. b sccss nnn qs nc scnc nd sks.

ts sks n c sccss nsn s ng snsss.


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a gnd sns ns nnn d cn sc wk nnn n on. onns wys zd nnn d s n n n cn sy.

W w dn gns nnn d nsks snsss nd ns c sc nd sczn;nd s cnss y nd w cs. b w cncd d s s n n ss nnn, cnc sccss, nd sy.

innn s dn y cnn support ndpressure, nd nnnd cns . S s cndns ndn sssnc s nd ndds s y d nd c. td ds g k ns nd ccss ss s, ,nd c cc sng cndns nnn. pss cs ggss nd c cs, w ccncy, nd sscd cnss, w dnd nn gds nd scs w

cs. innn d xss snsss nd ngs s ncsss c nnn.

W nd cnn wkng w uS ngs cnsnd d s. b s , w nd sngn s w ns xnd d en unn nd Cn sn gsns.

t cssn s css sdw cnc scs.

Y ny sns s s g ds. t

tsk Fc ss s sns . o j d n zng

cnc sy s nc cd n nnn nd

dcy. W nd d n s ds nd ns n

nn cs. o x sys s n ng

nsn; s cng g dng g

nsns nd nnn. t nc s nd ss

cn c w nnn d cn d sc

g nnn nd dcy. W dng cks; w

nd g.


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Pctiity a iatihg dcy dnds n nss s nnn

OntariO has a prOsperity gap s, w n zng syn dy wk w d n js, sgs w cy n snsss, nd c cs gnns n c. tssy g s dcy g; nd dcy g s n nnn g.

GdP epesets ale ae a pctiity i ecmy

in cyng s nd s nd n ons cnssnd sy, tsk Fc s csd n Gss Dsc pdc (GDp) c s sy s sccss. GDp sns ddd ndwd s n, ysc, nd n scs.

v ddd s wdy sd n cncs nd s ky ccngGDp nd dcy. a s s sc , s w kssgns dc sc w sdy s wng y; ddd s ncs n css, y n gnzn, s dc scs wd s n sg. m y, ddd s w sngns nd ns sd n css cd .


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1 ins Cnss & psy, Wkng p 14, Trade, innovation, and prosperity, S 2010.2 tsk Fc n Cnss, pdcy nd ecnc pgss, eg ann r, Navigating through the recovery,

N 2009, . 19-20.

3 Ibid.4 in ddn s w ss nsws, sndns cd cs y dsssd, dsssd, n ssd n dsssd.

as dcs nd scs cd,dn nd gnzns ng wy dd y s. asndwc g n sn gnsw swng nd snggn. t ddd s ysg s sng c gnns cs sds, z,nd cn w qd n gc css. t s wgsnd q ddd sg. eny, wn kyss d, s c d ns c d gnnd ns s ddd s sg. in cs sndwc,s css s n

dcn scd , cs, ndsd, x. incdd n ddd s cs s-n nd s w s. ty s s ddd cs n sndwc ns sny ns.

v ddd c sg s sdwn wk nd snsswn g ddd nsg wgs nd s. ts css ddng cnns n n

gd sc s dcd nddd n nd cns. t ddd g dcncn s s c nd-d csss.

v ddd s n n cnc ndsndng nnn nddcy sss. Cns wg ddd csss ky dc nn nd cx dcs nd g dcy. t dcs nd

csss s dnsn g k c, kng cny c.

t dn gzn s sn n w dddcsss w wg cns kCn nd ind.1 adncd cnsk on w n y ng ng n s w dddcs.

innn s ky d g ddd, w s n kng dc-n csss n w wngqy, n cng dcs scs w ncsng csss n cs.

t cnc ddd ss n nn ccns .essny cnys gns GDps s ddd n cny. psns nd c-ns nn nd dc g ddd dcs nd scs wncs GDp gn ndsy n g wgs nd s ss.

GdP a the meases ffe

isights it well beig

GDp s n c s. i dsn s qy nss.i css scy n ngs cn d cd .

and ds n c n s. pcy ks nd cdcs n sdyng sss d sng sc gss ngcnc nd sc dnsns.

in 2008, Fnc psdn NcsSkzy qsd Js Sgz,

ay Sn, nd Jn-p Fssc cssn n ndnyz dcs w sng GDp s s cnc ncnd sc gss. t s ws nxns sk d-nng cn ns w ng, cs ny cs nnc s w wyssd y xsng ss.2

o w ny ss w ng ndcs cs ss cny cs ny g qy g , ng xc-ncy, nd wdsd cy, GDp c ns s nd ngs w ng.3

hg GDp c cs ww ss k und Nnshn Dn indx, Cn Sdy lng Sndds indx ecnc W bng, Nn

accns W bng dd y nw cncs ndn sdn d en ScSy, nd G-hwys Wbng indx css und Ss.

as ng s w nn sc cs s n cnssnd sy wc y ncnc cncs w cncd GDp c s snd s cnc ss.

t dn ndsndng ssscng sscn, inscd w Cn Sdy lng Sndds (CSlS) nyz ss CndnCny h Sy 2007nd 2008. ts sy, dnsdy Sscs Cnd, skd 83,000 sndns css cny sscn. Sscnyss sndns d sscn nd ccscs

ydd nsgs n ds sjc w ng. t sysd ndd ccscs,sc s g, nc, dcn, ndcd n , s w scny s k sz cy gn, cng c -n n n Cnd nd d, nd cng c nw dncd dcn nn.

t gd nws sy s s jy Cndns

d g s sscn.Wn skd qsn, hw ss-d y w y n gn?91.2 cn Cndns ndcdy ssd ssd.4 o s,y 38.4 cn sd y w yssd. in on, 90.2 cnsndd y ssd ss-d, w 36.5 cn ndcng yssd. by ss, s ss


20/76


d n s nss Cndns nd onns. hw,Cnd s scs n ng sys sscn, scs G Wd p.

a s gnc, ng n s,ss d sngs d. on g, sndns non nd bs C dsgy w s nss, ws n ncs nswd sy n nn g.p n g cs k tn nd

vnc w ss ky n nn g ng y.

b s s c-sd d-ncs dsd w dssc nyss. CSlS d sssc cnqs dny -n s ndd nss.S cs cnssny cdndds nss (Exhibit 7).

o ccscs sscd wndd nss, cw ssc sgncncw: dcn nn (gs cs zd g nc

nd ), n ysc cy,nd dsy. Sdns n ds, y sn sn n.

t ss d n dy sggs c cs w nd ncsnss, n s nsgn. hg qy c scny ky cn sns w ng; cng s cxcn cs s sscs. W nd cnn scn css nd cs n .

on g g snc g sss

dcs nss, c csd ncsng c s-s g cn-dc. ty , ny csc ndds sss s, nd wcnn cn ss cnn dy--dy s w ncs nss. i s s gcnc sccss y nc cny ncss y dg qy n nd ysc c w y n cs nss.

t ss ndc gcnc sccss, s dnd ysn nc, s cnssn wg d nss Cndn Cny h Sy 2007 nd 2008. W dy knw cn gns c sw cnc ngn; s ssdn ng sss w nd ddss.

disaggegate GdP explais

pspeity gap

on snds n sxn jsdcns n GDp c nd g ss dn s n

wdnng. in cn ys, s-y d ss 16 c Qcs n nwng. (S Qubec isnarrowing its prosperity gap with Ontario.)

t ndsnd sns s-y g w jsdcns, wdw n s wk w sd n s s. ts -wk dsgggs GDp c n s ns (Exhibit 8):

Exhibit 7 Some individual factors affect personal happiness

Source: Centre for the Study of Living Standards, Explaining Geographical Variation in Happiness in Canada, November 2010.

Perceived mental health

Perceived physical health

Stress level

Sense of belonging tolocal community

Household income

Marital status

Immigration status

Individualattribute

Poor mental health

Poor physical health

Extremely stressed

Very weak sense ofbelonging

Lowest income decile

Separated, divorced,or widowed

Recent immigrant

Low

life satisfactionassociated with

Excellent mental health

Excellent physical health

Not at all stressed

Very strong sense ofbelonging

Highest income decile

Married or common-law

Non-immigrant

Highlife satisfaction

associated with

Proportionately more Ontarians report poor state ofmental health a negative factor for overall happinessin Ontario

Proportionately more Ontarians report poor state ofphysical health a negative factor for overallhappiness in Ontario

Proportionately more Ontarians are more likely toexperience high levels of stress a negative factor for

overall happiness in Ontario

Proportionately more Ontarians are more likely to feela sense of belonging to their local community a positive factor for overall happiness in Ontario

Ontario has proportionately more individuals who arein higher income deciles a positive factor for overallhappiness in Ontario

Ontario has proportionately more individuals who aremarried or in common-law relationship a positivefactor for overall happiness in Ontario

Proportionately more Ontarians are recent immigrants their lower happiness means lower overall happinessin Ontario

Ontario results(relative to the national average)


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Pfe. o n jsdcn, w cng wkng g nd cn cn dcsnd scs dd cnc nd sy?

utzt. F s wkngg, w cng s cywkng dd cnc nd sy? t gn nsgn s n, w xn w cns zn:partici-pation, cng s wkng g w scng wk, w y sccss n; nd employment, wc

s cng n j k yd.

itet. F s w yd, w ny s d ysnd n j n y? tsn ss wks ds wk w s nd cnys y c dnd wk s.

Pctt. F c wkdn jsdcn, w c cnc

s cd y jsdcnswks? Wn dcy sx s-ns nd dcysd:

Industry mix w x nds-s n csd ndss, dssdndss, nd n scscs dcy n

Cluster mix dcy n csd ndss dnn dcy nd nnn

Cluster eectiveness w w csd ndss c

Urbanization n n s n n s,wc ycy ncss jsdcnsdcy

Education dcn nn n nd s c ndcy

Capital investment dg wc ysc c ss wks dcy

Productivity residual sd s dcy nsnxnd.

t s cs , z-n, nd nnsy dd , s wkd c. t cs n onns xndng ccnc . t c dcy ss w c-y s dd scs, y cng cnc nd sy.

ons dgnc sync ss ccd

dng cssn y 1990s.Dng ky c dng cnc wknss ws w , scy zn nds w s-ns, cn ndyn. Snc 1995, w nsccssy cng 1990 -nc s. b, s , gwng dcy g s gdw ss. in cncnc swdwn, uS ny-n s ncsd, w GDp gws nd. in on, nyn

Source: Adapted from J. Baldwin, J. P. Maynard and S. Wells, Productivity Growth in Canada and the United States, Isuma Vol. 1 No. 1, Spring 2000,Ottawa Policy Research Institute.

GDP per capitaPopulation

Potential labour force

Potential labour force

Employed persons

Employed persons

Hours worked

Hours worked

GDP

effectiveness

investment

residual

Prosperity Profile Productivity

Exhibit 8 The Task Force measures four components of prosperity


22/76


Qubec is narrowing its prosperity gap

with Ontario

20092003 2004 2005 2006 2007 200820021999 2001200019981997

000 C$(2009)

Per capita

GDP

Sources of Ontario's prosperity lead against QubecC$ (2009)

Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada.

0

6

8

4

2

$10

Exhibit A Qubecs improvement in its labour effort and productivity has helped it closeits prosperity gap with Ontario

Contribution of labour effort

Contribution of productivity

Prosperity lead

$4,600

$3,600

$8,200$8,100

$3,900

$4,200

$7,100

$3,800

$3,300

$5,400

$2,800

$2,600

In our assessment of Ontarios fifteen peers, we havefocused on the fourteen US peers because Qubec, theonly Canadian peer, has trailed Ontarios performance

significantly. Yet, in the past few years, Qubec has been

quietly closing its gap with Ontario (Exhibit A).

A significant weakness for Qubec has been its lacklustre

labour effort it traditionally trails North American peersin participation, unemployment, and hours worked.

However, in the 2009 downturn, unemployment didnot increase as much in Qubec as in Ontario and the

US peer states. Although Qubecs participation rates

have remained lower than Ontarios, hours worked perworker dipped much less in Qubec falling 1.1 percent

since 2007, compared to a 3.5 percent decline in

Ontario. Paradoxically, Qubecs traditional labour

effort advantage, its demographic profile, has now fallen

behind Ontarios, because of its low birth rate. It now hasrelatively more seniors and fewer people of working age.

Qubecs productivity performance has improved slightlyrelative to Ontarios with no one factor accounting

for this. And, like Ontario, it trails our North American

peers significantly in productivity. As University of Qubec

economist Pierre Fortin has observed, Qubecs economic

challenge is not much different from Ontarios andCanadas the need to improve productivity.a

p Fn, a Cndn , n Qc n, Inroads: The Canadian Journal o Opinion, iss N. 27, S/F 2010, . 23 27.


23/76


5 Ccd s 1 ns [67.3 (ps)/ 69.4 (on)] = 3.0 cn.6 tsk Fc n Cnss, pdcy nd ecnc pgss, F ann r, Rebalancing priorities or Ontarios prosperity,

N 2005, . 29.

7 ts csn s wn ons GDp c n 2005 nd s n n 2025; n dnc wn on nd s g.8 ins Cnss & psy, Wkng p 9, Time on the job, S 2006, . 21.

s n ncsd s dcy, wGDp gw s n gy s.Cnsqny, dcy gwsnd n 2008 nd 2009.

Ontario has mixed labour effort

performance

on cnns d-gc dng ss ss nd Qc, n dngn zn, sgncn nnsyg (Exhibit 9).

Pfe e te f

ot. t s c n jsdc-ns sy cn n s sdgcs. t cng

n s wkng g gd15 64 s ss sy.W n g ng, g cng ncn wk nd c cnc . inon, s s n s s n nd s d n cc n cngs n sy gss ss. Nss, ds c n ngng sng dn-g n ons sy.

in 2009, 69.4 cn onns wgd 15 64. ang js-dcns, on nd Qc g cng wkng g -n n n ss. un2009, Qc d s dn-gs dgc ng sxn jsdcns. hw,w s w , s dngs n dng w yng ds cng s w 64.Qcs dgc 69.5 cn n 2008 69.3 cn n2009, s on nw s sdngd n dgc . by2025, cnss jcns ndc Qcs dgc w

61.5 cn, s dsdn-gd cd undSs, on, nd Cnd, xcdngQc.

r 67.3 cn dn sxn jsdcns, ons 3.0 cn n dng.5 hdng cscnsn, w cc s dn-g w $1,300 n cGDp. in wds, w

dng cs w gn n dd sy.

as w dscssd n F annr n 2005, dgc jc-ns ndc , s n Qc, n onns wkngg w dcn cngdcds s y s nd n cd y q nsn ssqn gnns. S, jcns ndc on wnn s dng ss s s.6

Nss, on w wwks c sy n cng ys. W s y 2025

s cng wkng gonns w dc GDp cn y $2,300.7 as w dscssdn 2006 Wkng p n swkd, w w nd c nsns ddss s dcn n sy n.8

ot e tzt t te

pee tte. as w dscssd n F ann r, on sccss-y sd dcn n zn

Median GDPper capita

Profi le Participation Employment Intensity Industrymix

Clustermix

Clustereffectiveness

Urbanization Education Capitalinvestment

Productivityresidual

Ontario'scurrent GDPper capita

(86.5%of median)

Profile Utilization Intensity Productivity

$1,100

Labour effort gap

$5,800

Productivity gap

Elements of GDP per capita C$ (2009)

Note: Median of the 16 juri sdictions; 2009 state GDP results estimated using personal income and c onverted to Canadian dollars using 2009 PPP.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada; US Department of Commerce, Bureau of Economic Analysis;US Department of Labor, Bureau of Labor Statistics; US Census Bureau.

Prosperity Gap$6,900 or 13.5% of

median GDP per capita

$44,200

$100$800$1,200$1,500

$5,500

$1,900 $1,400

$4,600

$1,600 $600$1,300$51,100

Exhibit 9 The productivity gap accounts for most of Ontarios prosperity gap


24/76


9 tsk Fc n Cnss, pdcy nd ecnc pgss, F ann r,Agenda or our prosperity, N 2006.l sscs s cn, nyn, nd s wkd ss n wks, ncdng s w 65 nd ; w w scnnn zn nd nnsy.

10 Sscs Cnd s ons cn 67.3 cn; uS dnns w qs ncsn n c, nd sncdd n cn , d Cnds dnns. W s uS dnns ccns dncs wn on nd s uS s.

11 ts nyn s sd n uS dnns; c Cndn nyn s w 9.0 cn n 2009, 6.5 cn n 2008.12 N s ss c uS d, n c Cndn gs. oc on ss w 9.5 cn n my 2009.13 ins Cnss & psy, Wkng p 9, Time on the job, S 2006.14 Ibid., . 34.

s wkng g n dng 1990s.9 in 1990,on d s s xc txsnparticipation. onns w g wk n n ny s nc n s g. ascnc cndns d wng cssn 1990s, donns jnd c,cnng cnc n-. in 2009, 65.6 cn onnsn ys g nd d wkd sg wk (sng d c uS ds ccn).10

W nk s ng js-dcns n c cn.

t dn cn ws63.2 cn. t uS cssn cn s, s ny wksg kng yn nc y w n cnd n cn . ons cns n n s wk, nd s dng d n 2008nd 2009. in 2009, s dng on nsd n $1,600 n GDp c.

in cnn zn,

employment, on s dnyd s s, g ss dn ccnd ny s sy g. in 2009,cs sggs s -nc, yn ws sydng on.

in 2009, nn nyn ncsd 8.3 cn, 5.9 cn n 2008.11 ts (djsd uS dnn) s wn dn css js-

dcns 9.7 cn. in wds,n g g 2009, 91.7 cn s onns cng n wk c d - -wk, wc ws g n dn

nc jsdc-ns, 90.3. ts 1.4 cng ndng d GDp c nc y $600 n 2009.

and, n n s n, nynyn s n on n ndng dwn snc k 8.9 cn n my 2009 gs w xncd snc my1994.12

in sy, n 2009, on yd60.1 cn s wkng gn ( cnd c 65.6 cn cn ndn 8.3 cn nyn ),nkng scnd ng sxn

jsdcns nd dn 57.0 cn. ts snc nss n $2,200zn dng ( cndc $1,600 cndng nd $600 yndng) n GDp c.

ot epee k fee

t te us ctept t

tet p e fct pt

f ppet p. W on s ss n

nd zn, w sgncnnnsy g wks n

j w s n y n cns n ss. in 2009, g on wk wkd1,652 s, w dn ss, g ywkd 1,806 s. ts g 154s, 4.1 wks nny, nwdsgy 2008, wn on d dn y 165 s wky 4.4 wks. Cnsqny, -nc nnsy n ons sy

g dcsd sgy 2008, nds s n n s-y g. ts sg nwng nnsy g s ndc wk-nd uS k n cncnc dwnn.

in 2006, ins cndcd sgn-cn sc n dncs n nnsywn on wks nd cns n ss.13 Wnd nnsy g wsd on wks kng wks cn nd ws d wkng w s wn yw n j. Wn s s wkwk, w nd gs c-nn, , ws s onns wkng . mc s g, n n, ws d n ny - ys nd - wk. Fy 32 cn -wks, gd 2564, n on 19972004 d ndcd

y wkd cs ycd n nd - wk. acss ss, s n ws ny16 cn. ms nnsy gcs ds onns k cn, wc s nc,n wknss.14 b, n 2006sc, w nd ny q g s cs cnyds n c dq ns - wk. ts g s sy s dsdngd gs ww dnd n s wk (S

Poverty lowers our prosperity potential, dd ss).

ecnc wknss n 2009 ncsd cng on -sgd 2564, w d n ny nd - wk 40 cn. acss uS ss, cng dgwn 32 cn. as s, snny - g snk 16 8 cng ns.

as w sn, n

cs, ons dng n cng n wkng g s sngnd, ndw d k gss n cng onns w


25/76


The task force has been urging Ontarians to adopt aprosperity enhancing agenda to achieve our economicpotential. But many are concerned that, while our agenda

would increase prosperity, this benefit would primarily

accrue to upper income Ontarians and reduce the

economic prospects of lower income households and theworking poor.

In its 2007 Working Paper, Prosperity, poverty, and inequality,

the Institute explored the relationship between prosperityand poverty. This past year it updated these findings.

Though the Institutes research found that rising income

inequality has been the norm in recent decades acrossdeveloped economies, including Ontarios, it is incorrect

to say that greater prosperity is driving greater inequality

as the two trends are not related. The more important

consideration is the incidence of poverty, which is not the

same as increased inequality.

In fact, we found that broad-based inequality, as measured

by the Gini coefficient has not been closely related to

poverty rates, as measured by the percentage of the popu-lation whose income falls below after-tax Low Income

Cut-Off (LICO).Gini measures income inequality across

a group of people. A Gini of 0 means that all people earnexactly the same income, while a measure of 1 means that

one person receives all the income. These are extremes

that are never found in a country or province; actual

measures are typically between 0.3 and 0.5. The higherthe Gini, the greater the inequality.a LICO is a measure of

poverty in Canada, defined as the income levels at which

Poverty lowers our prosperity potential

F nn s ins Cnss & psy, Wkng p 10, Prosperity, inequality, and poverty, S 2007, . 18-19.

200820001980 1990

Moreinequality

Lessinequality

Gini

Percent of

persons belowLow IncomeCut-Off

Inequality and incidence of poverty in Ontario(19802008)

Note: Gini coefficients are based on family incomes and are not adjusted for family size; LICO results for families are unavailable after 2007;but LICO results for persons and families follow similar trends.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada.

0.30

0.40

0.55

0.35

0.45

0.50

4

8

10

12

14

16%

6

Exhibit B Inequality has remained fairly flat in recent years; low income incidence has changed

with economic cycles

% of personsbelow LICO, after-tax

(right scale)

Recession

Recession

Recession

Recession

Gini, after-tax income(left scale)

Gini, market income(left scale)


26/76


persons or families spend 20 percentage points or more of

their total income on food, shelter, and clothing than the

average family of similar size.b

Inequality gradually trended upward from the 1980s, and

has remained relatively flat since around the mid 1990s. By

contrast, poverty rates appear to be much more cyclical,increasing in periods of recession and falling during better

economic times, especially from the mid-1990s to recent

years (Exhibit B).

Our research has also revealed that poverty is not distrib-

uted randomly throughout society. It falls mainly on six

specific high risk groups high school dropouts, recent

immigrants, lone parents, unattached individuals between

the ages of 45 and 64, the disabled, and Aboriginals.The likelihood of after-tax income falling below LICO

increases significantly for individuals who are in these

risk groups. And much of the challenge they face is inachieving greater attachment to the labour force, where

the probability of earning income below LICO increases

dramatically for each risk group when these individuals

are unemployed. The probability also increases when

other risk group members are also high school dropouts

(Exhibit C).

Most of these poverty groups fall into working and service

occupations jobs that are disproportionately in routine-

oriented, rather than in creativity-oriented, occupations.

And given that the incidence of poverty has been shown tobe driven greatly by business cycles, we must acknowledge

that the current transformation of our economy one

that is shifting away from jobs based largely on physical

skills and repetitive tasks, to jobs that require analyticaland social intelligence skills can exacerbate the poor

economic outcomes of these poverty groups. This is

indicative of the fact that in times of recessions, those in

physical occupations are most susceptible to becoming

unemployed (Exhibit D). Thus, education is a key elementto lifting those who do not have the skills and opportuni-

ties to participate fully in the creative economy.

In addition, as recommended in Ontario in the CreativeAgepublished by the Martin Prosperity Institute in

2008, Ontario would benefit greatly if we could develop

strategies for enhancing creativity and autonomy in

Ibid.

0High school

dropoutsRecent

immigrants*Lone parents Unattached,

4564Aboriginals Not in any

risk groupAll Ontarians

5

15

25

45%

35

Probability of after-tax income below Low Income Cut-OffOntario, 2005

*Ten years or less.Note: Probabilities based on regression for working age 2564, controlling for age, age-squared, marital status, education, and membership in other risk groups."All" refers to the members of the specified risk group controlling for membership in other risk groups. Data for disabled not available.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada, 2006 Census microdata.

All

Unemployed

High schooldropout

Probability

Risk groups

Exhibit C Likelihood of being below LICO is higher for certain risk groups


27/76


routine-oriented service occupations, so that workers

earnings would increase and employers would have

stronger business models.c

We need prosperity strategies that make real inroads into

reducing poverty and increasing prosperity for as manyOntarians as possible. We think that it is more important

to focus on public policy that reduces poverty among

these high risk groups than to strive for greater equality by

holding back opportunities for other Ontarians. And since

each of these groups is excluded from Ontarios prosperityfor its own reasons, each requires its own tailored solution.

Thus, innovative and highly focused public policies and

programs must be established, with education being

an important if not, the most important solutionto reducing poverty. Innovative programs such as the

Working Income Tax Benefit and wage insurance can

provide encouragement for individuals in high risk groupsto find work; and in this case, potentially foster greater job

creation conditions.d We should continue to strive for the

best policy initiatives for helping people escape poverty.

If we are not successful in helping individuals in these

groups move out of poverty, we are hurting our future

prosperity potential. We need the skills and capabilities ofall Ontarians to create economic success, and we cannot

afford to ignore people in these high risk groups. If

Ontario succeeds in realizing its full economic potential by

following our Prosperity Agenda and by pursuing focusedand innovative solutions for addressing poverty, more

Ontarians will contribute to and participate in the rewards

of enhanced prosperity.

20101995 2005200019901987

Percentage

unemployed

Unemployment rate by occupation groups, Ontario19872010

Note: The Labour Force Survey produces information of number of unemployed, the unemployment rate and the labour force by industry and occupation. The basis forthese categories is industry or occupation of last job for those currently unemployed who have held a job in the previous year. The data are for April of each year and areadjusted for seasonality.Source: Martin Prosperity Institute and Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada, Labour Force Survey microdata.

0

6

4

2

16%

8

10

12

14

Exhibit D Routine-oriented physical occupations are the most deeply affected during recessions

Routine-oriented physical occupations

Routine-oriented service occupations

Creativity-oriented occupations

c mn psy ins, Ontario in the Creative Age, Fy 2008, . 31-32.d ins Cnss & psy nd on pcy on, Time or a Made in Ontario Working Income Tax Beneft, S 2009.


28/76


15 ins Cnss & psy, Wkng p 1,A View o Ontario: Ontarios Clusters o Innovation, a 2002, nd Wkng p 5,Strengthening structures: Upgrading specialized support and competitive pressure, Jy 2004.

16 i s n n s css n x ndss ny. i ccs dcy nc w cd xc n Cnd ccs w s dc s s uS cn. i ds n s cnss ndss n Cnd.

17 tsk Fc n Cnss, pdcy nd ecnc pgss, td ann r, Realizing our prosperity potential, N 2004, . 4048.18 Idem. eg ann r, Navigating through the recovery, N 2009, . 27-29.19 W nd cs ons w nzn, nd nsn n c, nd w dcn nn n s ccn.20 W d d ccng c cs cnss n 2010. in s ys, w sd dn wg dd c

ndss n on ss ss. o nw d s dc csn wn wgs n dd css nd s n.

wkng. S, dncs n n s wkd cnn jcn sy g. enw gns n , sy g sss.

Higher productivity is needed to

close Ontarios prosperity gap

o s dcd, ggng dc-y s ccnd gss sy g w s, nd n 2009 s dcy gwdnd . W ssss sx s-ns dcy dn c s ky d s-y g.

o t ctte p-

te t pctt. onns x ndss s y wgd wd cs-d ndss, nd wn scsd ndss, w x dcy ndsy n ss.15 assc y mc p hd-sd ins Sgynd Cnss s swn, ggc csng s n s nd d ndss ncss

dcy nd nnn. tscsd ndss, dd cs-s s p cs , ycy s ks ynd c gn.in ddn, snc csdndss n gn s sc, n y ycy gnns ncsd sccss c cny.

t j ndsy y sdssd ndss, c ndss.

ts ndss, sc s s nd

sns, nd ny s cks nd s d n z cn-s sc nd ss cngd nn. as cnsqnc, y w s dcy, nn-n, nd wgs.

p s dns d ndsyy, n ndwn ndss,ws cn s dn y s-nc n scs. ts ncdsy, nng, nd gc. ts y s ndss ccnng ss n 2 cn yn non n 2006.

Dwng n ps dgy, ins s dnd y36.4 cn yn n ons n csd ndss ss dn 29.2 cn n

jsdcns. W s n- dcy n sg cng csd ndss

n ndsy x w $1,900 c. ts n s dd g n wd ky ons x w s s ss.16

wt ctee te, ot

eefc . W csdndss s cns dcy nd nnn, s g n n s. ons yn sng n nncscs, , nc-

ng, sng nd nng, nds s cd n c x dd ndss. o nyss ons cs x ndcs $1,400 c dng s.

Cte e pefce

fct pt f ot pctt

p. W on s n xcnndsy nd cs x, cscnss s c w n n ss. t s sy, n s css, wgs n on

s w n s cns css ss.acss dd css gwg n on s 14.7 cn wn g n dn s. ts w wg cs w

dcy nd nnn n ddcss, wc n n dcs cnc nc ndss.

p s sd sczdsupport xcn c cnd-ns, c ss, nd dndss ss nnn g ndd css. a s , cpressure sscdcss nd gs s dsnnn. as w dscssd n 2004 ann r,17 scs sczd s nd css ndq xnc n css dd nds-s n ss. in sc w

cndcd n 2008 n cn w mn psy ins, w nd ons csd ndss dwss n wks n cy-ndccns n cns n ss.18

i on css w s c suS css, wgs wd $13,200 wk g. as dd cssccn 36.4 cn onyn nd gn n-s wn wgs nd dcy,

dcy wd s y13.4 cn.19 F s, w s dcy ss wcnss css $5,500 c.20

addng g cs ndsyx (+$1,900), cs x (+$1,400),nd cnss (-$5,500) onscss d n ss $2,200 nGDp c ss ss.

rete zt

fct ctt t pctt ppet p. in wk, w ssd g s nzn d g dcy. ts s s ncsd sc nd cnc


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21 S psy nd dcy g n on cs sd n Sx ann r, Path to the 2020 Prosperity Agenda, . 24-25.22 F x, s an W. F nd W. Cg rdd, t r Cdns n Cndn l mk, Canadian Journal o Economics, 2002,

v. 35, N. 4; Sscs Cnd, edcn nd nngs, Perspectives on Labour and Income, 2006, v. 38, N. 3; nd an v, lw Wg ScWks: a p, Wkng p Ss: Ontario in the Creative Age, mn psy ins, mc 2009.

23 S ex D n Wy dcy s n sy, Path to the 2020 Prosperity Agenda, . 28-30.24 C nsn ss n s . o nyss ss uS ss s s nsns nd cs s on.

25 F ann r,Agenda or our prosperity, . 34-35. S s andw S, W exns Cnd-uS iCt insn innsy G? Cn Sdy lng Sndds, Dc 2005.

c. ts s s sd n sn on GDp wd cd wc uS sc nsd n cny,qn, nd sw. F s-, w ssd g gw ns nsn wd ns dcyn g gw n GDp. t ysc s c nsn gs n nn nd cncnscngy (iCt). ons snsssns 18 cn ss d GDp n iCt nd sgy n nn-iCt cny, qn, ndsw.25 o nyss ndcs on snsss nd ns n cny nd qn y 5 cn

d GDp.

Te e ete t pctt.W n ccn c , zn, nd nnsyn sy. W s ccnd cs s ns dcy. t $100 c g ns s d dcy n ss k--k ndsy x ndsng, nzn, dcn, ndc nnsy.

Productivity weakness isgetting worse

as w sn, g s 1980s, ons sy ws cs dn ss. Dng d, w d dcy ndnnsy dsdng ss s zn dng cn-sd s. o sy ggn d s 199092 cssn. i ws dn syy nc,csd y wsnng cn nd

nyn s dng cs-sn. ts zn gn dss nd 1997, nd y 2001 ws n dng gn. hw, dcy dsdng gn gw n 1995, nd y 2005 d n dd.

ncn n s nn s, cs dngs g sc ks, nd dsd skd . tny s cs snnn nd gw n n cny.

Snc w n ns n on n n ss, dcy nd syn dcd.21 o nyss sy ndcs w $1,500 c dsdng gns dn s d w nzn.

le ect ttet eke

pctt. ecnss g dcd wkcw dc. edcnncss wks s knwdg ncssy d

j nc. i ncss wksxy s y gnnw sks g .mny sds sw ncsdwgs cc gy dcdndds.22 and g wgs s g dcy.23 onsn s, n g, w

dcn nn cd s ng n ss,cy nsy gds.

adjsng x dcnnn n on c uSx nd dng wgs cnsn cnn , ons dcywd g y $1,200 c.

ue etet cpt e

pctt. on snsss nd nsd n cny, q-n, nd sw

cns n und Ss, s c s sswks n on s n s dn s cns n ss.24 as s, on wks n s dc. W s snd nsn n c qnws ons dcy y $800

in cn cnc dwnn, s n c n ss n n on, w dcy s gwn s nons. i s dc jc cnxnc n s ns dwnn s q ky c d w sd dwn d. b dc-y wknss s nd gng ws(s Exhibit 4).

in sy, gns N acns, on s wd nd gwngsy g; sggs dcygw s cc sn w nzng sy n. as wdn sc ynd N

ac, w s on s gs ndcy.

otais pspeity cmpaes

well glbally, thgh

pctiity still tails

ons sy csy w n nnn gns sng s cn dnyng N acn s.Fw gns k Cndn -ncs nd uS ss n y

d s nd wn cnc cy s, ncdng wd ng x ws nd sndngsnss. ass ss ndGnys nd ny ns csy s N acnncs nd ss. mny cnsw dd cns sc s und Kngd, Jn, nd Fnc ny ss w gns cnc cn. in s cn-s, w k sc (x, Fnc nd dns, iy

nd gns) s s nyss. inJn, w d n gnn Jns ecnc nd Sc rscinss dsns, wc cndcs, s s s w cysd, n gns. hw, w ny ncdd w gs, Kn,wc ncds tky, nd Knk, wc


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ncds osk. ts w k n 50 cn Jns -n. in ddn, s nd Jn ny nn . Jns ssc gn-cs d n gn GDp d cn ys. as s, w d nJns nn GDp gw 2007 2008 x Kn ndKnks GDp 2008.

W s d jsdcns wssny n s. o ws xcd jsdcns gnsws dnsy xcdd n

tn Cnss mn a w n cys n n

ccnd n 65 cn s n gs ng N acn ss(bsn nd msscss). tss xcdd d Fnc (ps),G lndn, rndsd (asd,rd, hg, nd uc),nd Cndd d mdd.

ang s n nn-n gns, on sd sn nGDp c n 2008 (s Exhibit 1).i s sy w n

s gy c jsdc-ns n on. hw, js sw nd n csns wN acn s, ons ncng s s dc-y. W c nnn sg , w dn nnn s ndcy.

W cd ons scs sy w s nnn ssng s w c w dd N acn csns. lck d nss dng s d, w cn c ons

wk csng dgc, zn ds n wkc, nd nnsy s wkd wk, nd dcy cd n g wk (Exhibit 10).

a cs k w gnsns dcy cngs.

t s c gn sdN ac s hssn n Gny.in 2008, ons GDp cws $6,800 nd hssns. W d

$16,500 c dng g d-gcs, g zn, nd s wkd wk. b wd $23,300 c dcydsdng. lss dc ws xnc ss Nw S Ws,ws GDp c xcdd non y $100 n 2008. on d $1,600 c dn-g Nw S Ws, cdy $1,700 dcy dsdng.

ts nnn csnsgn ndc ggng dcyns ons cng w wk n s sd N ac,

w ss sccss ddngcnc n s w wk.

o cee t ece f

te ece t f

ppet ptet f te eeft f

ot. he pctt

ctc t cce. a p

pctt e p

t pefce.

Prosperitylead*

Prosperitygap*

Decomposition of prosperity gap, C$ (2008)19982008

* Versus median of 13 world peer jurisdictions.Note: Currency converted at PPP.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada; Australian Bureau of Statistics; National Bank of Belgium; Institut national de lastatistique et des tudes conomiques; Statistische mter Des Bundes Und Der Lnder; L'Istituto Nazionale di Statistica; Instituto Nacional de Estadstica; UK Office for NationalStatistics; SNA Statistics National Accounts of Japan; OECD; IMF; Eurostat.

000 C$(2008)

-8

-4

-6

-2

2

4

$6

02007 20081999 2005 20061998 2000 2001 2002 2003 2004

Exhibit 10 Ontarios productivity lags international peers

Profile gap / lead

Prosperity lead

Utilization lead

Intensity lead

Productivity gap


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AIMS f iatiinnn gs ncn ads, insns,mns, nd Scs

Our agenda fOr prOsperity ds aimS wk gds wk. aimS s n n ngd s cs ndn sy c-sys:

attte wd cnss, gw, nd g xcnc. o w s

n cnys ccy cnss s gndd n ds s sk-ds. t xn c nd snss ds n nc nnn nd gw, y ky k cns ncssy dcnss nd sy.

ietet n dcn, cny, sc nd dn, nd cc-zn. as snsss, ndds, nd gnns ns sy yw nnc dcy.


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cy wd c w nds sczd s nd ss nnss c cs wd s n c ss.

we te aims eeet e k

e e, e e ccee

tt f e t e te cet

cee f cpcet

ttte, e etet,

eqte ket tcte, e

e te t t c cce. we

t t te ee e

t ec te t

cce tck.

mtt ng, wkng,nd gdng s s xcs nd gnn csnd gs. txs dscgnsn w dc ns nsng ndgdng.

stcte ks nd nsns ncg nd sss gdngnd nnn. Scs, n cncw ns, nnnn wc ds cnd cns nd nsns.

ts cs c n ngngncng dync. Wn aimS ds

sy gns, c n cs wd ncd. in ncny ncsng sy, -ds ng snss nd gnnds nd c wd sc nd wcng gcnss, nnn, nd skkng. Gn s s dsnd w g ccy ns-n gnd y sy, onnswd ns n cny, q-n, nd sw nd n dcn.

mns xn wd s, s gnns wdn s nd sng x s.

and g cnc sy wd scs s -ns sczd s wcd. tn ncsd cnccy wd d cnnsy. ts dns wdd n g sy, wcwd sngn c aimSn, nd s n n s cc(Exhibit 11).

b s aimS-sy dynccd s c cs cc.unzd sy n cd

c sss nd cncns cnss nd nnn n nnss . tsss s ds wd sscndc nsns, nd dcdsy wd s d wnsn ns nywy.unzd cnc n nsx ns wd n scnds, dng gnns sx dns, y d-ngnsns. and dcd cnc

VIRTUOUSORVICIOUSCIR

CLE

Prosperity

Source: Institute for Competitiveness & Prosperity.

Attitudes

Structures Investments

Motivations

Capacity for innovation and upgrading

Exhibit 11 AIMS drives prosperity; prosperity drives AIMS


33/76


26 Cn pcy rw pn, Compete to Win, Fn r, 2008.

attitudes n n ndn

gns nnn nc.o wk nd wk s nd-c y d ds n cs nnn ndnc. o snss dss s k n nnnw cns nd wd.o cng s n s dsn cn.

o leaes ee t ecage

me psitie attites

twa a pe ecmy

ads d g sns,s-cndnc, ds sccd,n nn s, nd cy n ds cncsccss. and n Fs ann r,Closing the prosperity gap, w y-szd onns g n ssss sns sccd w-ngnss c. t s s, ins cndcd dn scng c nd snss c-ns. in Wkng p 4, Striking

similarities: Attitudes and Ontariosprosperity gap, w cncdd -dn dncs wn cnd snsss n on nd ss w n sgncn dcks csng sy g. in cns cny d cns, w ddy uS cns nw w w snss nd snssds, sk nd sccss, nd c-n nd cnss.

Attites:encg nnn on wn n n c g wd

W nd n dnd cs sy g g ggss dswd kng nnn n

t sy skd ny sny dn

qsns s ndsnd -ds onns nd cnsn ss. on s qsns,w swd s ds wd sknd sccss; nd n s qsns,onns snss ndcd s ds wd c-nss nd nnn n snsws. m gny, w nd ndncs n ds wd sk-kng, nnn, nd ncnd css sn sccss.

o, sy ss sggsd, css ns dnsns,ds ng gn snssn nd s s-nss cny n on nd und Ss y s. in c, wnd sgncn ss n ky s nnn nd gdngnd cnss:

onns w snss nd snssds n c s wy s c n g ss

onns s ds wdsk nd sccss s uS s

onns ds wd c-n nd cs cnss s s n uS ss

onns wngnss k cn c g sndd ngds n y uS snss.

Ny, sy dd dny sgn-

cn dncs n ds wd sscndy dcn c nnc nd n c nsnso, w, d ss nng. b cn s qd.

in 2008, n s Fn r, Cn pcy rw pn cdn Cndns cc c-ng gzn dnc nc ncs cnss.26 ts pn c-ngd gnns, snsss, nd

c s, s sgs, nd k cn dsny ddss sss sd ygzn. t pn d nscc cndns z sn y s Cndns. ms s cnssn w tskFcs 2020 psy agnd.

in 2009, ex pn n bsnssinnn snd s ,Innovation and Business Strategy:

Why Canada Falls Short, d

gnn. ld y r bwn,Ceo g d Cae inc., n csd ds n snss,cd, nd . t pnsnd ws ssss nnnnc Cndn snss nd dny cs cnng snc.


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27 ex pn n bsnss innn, Innovation and Business Strategy: Why Canada Falls Short, Cnc Cndn acds, 2009.28 Ibid.29 2010 bCG/bg bsnssWk innn Sy.

t pn ssd n y dnc sw Cndsdcy cng s d dcy wk nnn nc, cncsn w wc w g. in sw s cs nd wk nnn nc, pnddssd ss snss -n ds ny dcd sy n-n n, sk, g gw nd nsy nn.27 i sd s wdsd cncn n Cndnsnss cny s d-cncy snss n n Cnd.

Y cd nd n d, qn

dnc sd w Cndn snss d nd-ny dn ks n snss s n cns.

t pn cncdd , w n ng Cndns w ncssy ggssnss, sk k,nd wd sc cn g ks, s s n d ny ck nn ccs s-nss s n n DNa s sk. r, dn ds

snss n sd y ng y cccsncs Cnds cny.28

ts ccsncs ncd syccss g uS k, ddsc cn, s sz dsc k, nd n dn sccss. a ky cng s n on s c ccncy ss nydngs w .

Iati w has tp piity

m cny, bsn CnsngG sd ss s nng sy sn snss xc-

s n nnn cc.29o, sy d xc-s nd nnn y s dncn n 2009. Cndn xc-s w ncdd n sy nd snss ndcd snss ds s nnn sn, n n n cns n und Ssnd nd wd. Fy 30 cn Cndn sndns ndcdnnn y ss

18 cn n und Ss nd30 cn xcs n s wd (Exhibit 12). in Cnd, n qs sndns dnnn s ng xy -n n cnyssgy w d sndns n und Ss nd nd wd.

if ttte e pte,

te e e pef

t? i t ept

te k, e e cce

tt pefce

te et f ctet pc

pc. i te e f ctet, e

ece tt ete pee e

t t e f te tet te e

ptect f ptt

te. o pce ee t fc

e p t, te

t et, e ee t et

eep pp e

k, t t et tc ppt

f te cece.

* Excluding the United States, but including Canada.Source: 2010 BCG/Bloomberg BusinessWeek Innovation Survey.

Where does innovation rank amongyour company's priorities?

How important is innovation to yourcompany's strategy to benefit from theeconomic recovery?

Extremelyimportant

Important

Somewhatimportant

Notimportant

Top

Top 3

Top 10

Not onthe list

United States Rest of World*Canada

10%

20%

40%

30%

9%

30%

43%

18%

4%

19%

47%

30%

3%

21%

28%

48%

7%

20%

42%

31%

2%

10%

49%

39%

United States Rest of World*Canada

Exhibit 12 Canadian business executives rate innovation as important as their international peers do


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Iestmets:ins n n c ndcngy cc nnn

insns, d nnn ndsy, nd cs snss ndgnn sndng

prOsperity is driven y dcy,

nd dcy s dn y nnn.a ky ngdn nnn s s nsns n n nd yscc c dn nw ds, nw csss, nw d-cs, nd nw scs. ts n nc sy, wc n scc gns nds ns-ns. as gnns, snsss,nd ndds c cs-sn, sc sn s n dn d. pdnc w q sndng scd s-

y ncssy cn xnds,snc y cnn dd. W wcgnz s cc y, w g sndng n s sngn n nd ysc scsnds g y.

raise iestmet i ecati

a c x s s cnsn n dcn. as w c cn c sndng nsn Cnd nd on w s n

s dcd nd n undSs, w nd nsn n dc-n s ng nd.

Cns Cnds sns 199093 cnc dwnn w und Ss, wc ddynd cssn n scs n Cnd. uS gnnsdd n nd ngg n dcdc gng sn n Cnd. Ssyss, sc s dcn,

dd n xnc knd sck

Cndn dcn xncd.S, s d, sndng ygnns n und Ss gw s s cnd dcn.

in 1992 n on, s gn-n sn $2,400 c ndcn (n 2009 ds) 6.8 cn n w sn n c(Exhibit 13). b c s s cng cs c ns-n ns. ongng dcs dy

nd n ny ncs snc 1971 dcsd ccd d dnd nc gnns gw $665 n, 96 cn GDp.D ng gncs nd c cncncd gnns n n sndng.

o sc ys 1995-96 1997-98, d gnn nd $30 n dc $3 nss g ncsd nsnd sndng cs. a j sc sndng cs ws ck n

nss ncs ny sd nd dcn nd c, w ggs nc xnds.ow cd s $8 n, 24 cn, s dg n dng d, wn ncsw dng w wn sccngs.

on d s n cd d dcs cd dng cs-sn n 1995, nd nw nc

gnn d k sndng cs

g s sc s n d.

in sns d cnc s, cns sndd y cngdcn. ts ws n kng w gnns d s wdcnsn.

bdy skng, c xndscn kn n w ndncks: nsn n dng sy, nd cnsn cnsy. as gnns

s ckd dcs, y c c sndng n dcn, nnsn, c s n n c sndng, wc scnsn. by 1998, gnnsn on w sndng n c n n dcn. ts gwdnd cnsdy s csndng c ncsd nnn nd n 4.7 cnwn 1998 nd 2009, w dc-n sndng ncsd ny 2.4 cnnny. ls y, c c

sndng n c cdsndng n dcn y 29 cn, sgncn s dcd g.

i s ncgng n csndng n dcn n on snd n cn ys, d y nsns on gnnn s scndy dcn. Wcnsn d c c ns-ns n dcn ncsd sgy, 0.8 cn nny wn


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30 on ac m innn Sdns, nn: ://nws.n.c//n/2010/11/n--c--nnn-sdns.31 ins Cnss & psy nyss d Sscs Cnd nd uNeSCo.32 oeCD, Education at a Glance 2009, t C2.1.

1997 nd 2003, s nn gw ncsd 3.6 cn wn2003 nd 2009. in und Ss, nn gw n cnsn dc xnd n dcn ws1.7 cn wn 2003 nd 2008.

S, c ns dn, s g csd n dcn sndngns cnsd $800 c n 2009. as d nd ncgnns n nn ss dcs y gnd n s w ys, y nd ns sndng cs d -y w nnn n nd.

Icease the mbe fiteatial stets

at iesities

in 2010 dg, on gn-n nnncd g sngons s scndy nn 60 cn cny 70 cn,nsng w c yqd onn w wns g cg nsy. a s, gnn w s ncsnnn sdn nn y

50 cn w gnng scs qd on sdns.

m cny, nc gnnnnncd nw scs nd nnn dc sdns. tnd ds sny- scss,w $40,000 c y ys, nnn sdns s sds cng onnss.30

incsd nn y nnnsdns s sng ny on. Fs, ws on c s sdns nd wd s c n scs

nd on dy. Scnd, y c nnn sdnss gd ndc qy scs n n nnn cnx. i sn ng ss scs wd css; cng sccssyn g sng sdns s ndc. td, s n- ncs nnc ssny s scndy nsns snnn sdns ycy y n css, w sc-ss nd d nsn.

t inss sc ndcs Cnd s w dwn s cn-s cng nnn sdns.

a 68,000 sdns nny, Cnds und Ss, wc cs585,000. on c dsc sdn ss, w gy s. b Cnd nd undSs und Kngd, Fnc,nd as n c ss.31

Cnd cs oeCD ndgdxnc, w nd 7 cnw nnn sdns. ag cng gdsdns nnn 21 cnn Cnd ss 16 cn css

oeCD cns. in und Ss,ny 3 cn ndgdsdns nnn n cns 24 cn gd sdns. tund Kngd nd Swznd gs cng sdns d nd 15 cn ndgds nd 45 cn gdsdns.32

t y dscn csn ynnn sdns ds n yc css Cnd, und

2008 2009200620041996 20022000199819941992

Expenditureper capita

000 C$

(2009)

Public health and education expenditureOntario and US, 19922009

Notes: US health spending includes workers' compensation, medical benefit outlays and excludes administrative and other costs; Ontario health spending includes all workers'compensation. Values deflated using GDP deflators. US dollars converted to Canadian dollars at 2009 PPP.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada, Consolidated Government Revenue and Expenditures (CANSIM Table 3850001);US Census Bureau, State and Local Government Finances; Office of Management and Budget, Historical Tables; National Academy of Social Insurance, Workers' Compensation:Benefits, Coverage, and Costs, 2008.

$4

2

3

Exhibit 13 In Ontario, public investment in education trails health care spending

Ontario health

Ontario education

US education

US health


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33 oeCD, Education at a Glance 2009, t C2.5.34 ins Cnss & psy nyss d on unss acn Cn (ouaC).35 Jn i, tnds, ss nd nnn sdn k c, bs Cnc, nn: http://www.slideshare.net/AoCino/

trends-stats-and-the-uture-o-the-international-student-market-place36

m hs, h-1b vss: by acn Cs tarp, BusinessWeek, Fy 6, 2009, nn: http://www.businessweek.com/blogs/money_politics/archives/2009/02/h-1b_visas_buy.html

Kngd, nd und Ss. Jsnd nnn sdnsn Cnd nd n scscncs, s, nd ns (wcncds cc) ny cng und Kngd 55 cn nd 42 cn n undSs. a d css cns nd n scncs ngnng. t nx s cn nn s n dscnsccnng 5 cn n Cnd,9 cn n und Kngd, nd7 cn n und Ss.33

in on, sdy ncs ncnssn , w d

cns ndcng s d sdy cc cc, ng-n, nd snss dnsn.Nx s s ndns, csn s y 19 cn cns n 2008, wd y17 cn csng ngnngnd 14 cn csng scncs.

acns n c s jdscns gw 20012003d nd n dcnd 2006. Snc2006, cns gwn swy 3 cn nny. 34

t n nnn sdnss jcd ncs dcyn cng ys nd s s cn c s sdns.uNeSCo ss w2.8 n nnn sdns n2007; edcn as jcs7.2 n y 2025 n nngw 5.4 cn. rscdn y bs Cnc, uKnnn c ns dy,ndcs dn xs

nnn sdns k Cn,mys, nd Sng wkng cng s cns nnnsdns. Jn nd S K xncng dcn n nsy-gsdns nd w ssn s scndy nsns gsng nnn sdns.ind s kng c gn

nsns d cks nd cs k sdns .35

t gnns Cnd ndon n cn w nddnsns w nd s kng s c nn-n sdns. t d gnnds k Cnd n d ws snsd y hnrscs nd Sks DnCnd nd sng scssnd wds cd y nnnsdns n Czns ndign Cnd ws. Cndnsss n wn gs n

wc nc nnn dcngs cn c.

tg ons on, nc gnn ssys snsng nnngds s-ckng nnsdncy. in s cn on-Cnd ssn, nc don s scndy dcn.

t unsy Wnds dds wn gd kng sgynd s cng sgncny

g cng nnnsdns. t nc gnnsn bs C, Qc, nd NSc ggss kngcgns n on.

as nd und Kngd c ws ngs nd dd kng cgns(.g., edcnuKnd). t uS Gnn n dd-n ws ds ysccn dsy nd nn

scs n y j cny n wd. unss c n dssns n y ndd ss.

t ins nd sdn sqns gdng nnnsdns s css jsdcns.

tycy sdns s y n ccd cgnzd

s scndy nsn, y w dng nd s n nn scy, nd y nnd cny n cn sds.

un gdn, nnn sdnsn Cnd g yn wk . ts s s und Kngd w gds g w-y n wk in as, nnn gds cny nn sdncy ss n gn-n y s. in und Ss, nnn sdnscn qy h1-b s y snsng y. t s s n

c ys w ss y -y xnsn. t s q n h1-b ssnd uS gnn s cnysd s s-sgd scnsn s ss cns cng

td ass r pg ndngy n nnn gdsnd h1-b s.36

Recent survey of international

students in Ontario points to

opportunities

t Cndn b innnedcn, n-- gnzn s Cnds nnnns g dcn, sysnnn sdns n Cnd.in gn, nnn sdns sscn w s ns sdyng n Cnd. Fy 95 cn nnn sdns gd y sw Cnd s gc d y n. t s sgncn sns csn sdyng n Cnd qy

dcn, sg dg, nd y sdns dsdg. hw, cn dn k css wcngcs:

by nd g s sdns wssd w pe- pce, g


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37 unss scss nd d nnn nd dsc sdns, dd ss n . rsns nssndc sc ndng nnn ndgds wd n cng nnc cnn.

d ndcd s s wngng ng ccdn,nng nds n, nd c-sndnc w nsy

in sns qsn n teee t C, gs nc ws gn qy dcn, snss Cnd, c g cc ws d n engs, ndCnds n

in gn, nnn sdns wssd w epeece t teC et. hw, sdny dsgd nscs

swd snsy c sss nscs swd ns n sdns cdc gss. S,ss n 10 cn dsgd y w ssd w dcsn sdy n Cnd y wdcnd Cnd n cny.

innn sdns d cngsn jt t et ee C. ms d sccss ncsng g sdy

jcs, n ndsndng nn snd n css, ndng n Cnd. b n d d n sccss ngng nd n n- nd -cs

cs, kng nds w Cndnsdns, nd n nng cdcdc.

Fnnc ncns wk w nsns n cng nnnndgd sdns, n s w gd sdns. ag nd y nnn ndgdsdns ngs wn $17,200 s nd scncs $19,000 cc, nd $20,800 ng-nng. ts s $4,000 $5,000 n w nsns c dscsdns g n nd gnnng gns.37 insns c

n gnn gns nnnsdns.

a gd , sn sdn. insns c n dsc nd nnn sdns ndgns nc gnn dsc sdns. hw, nsns d sgncn nncs wn scs c s sdns n gns cng js . tn c s nss c ss

n n nnn gdsdns n dsc sdns(Exhibit 14). in c, y ndg sgss y dng nnn dcsdns.

t cs nc nd dgnns gd sdns dsc nd nnn ssgncn.

acng nnn sdns ons nss s ny ns,ddng sg nd qy sc. Y nnc cn nsns nds ssssd. in sc nnc s, ns-ns d n ncn c nnn sdns. i ons s ww jc cng nnn sdns,w nd nk g nncncns cy.

Ctie iestig i peple

t ecage iati

Snc Fs ann r n 2002,w dnd nc nsng n s scndy dcn ons sy. t s csc sws s c sc nsn n sy gn cns nd ndds.

Post secondary education

has a significant impact on aregional economy

tdny, ns cncgw n ndsd c nd . b cnss

Exhibit 14 Universities generate less net revenue from international graduate students

Tuition from student

Operating grants from province

Gross revenue to institution

Institution support (e.g., student aid, teaching position)

Net revenue to institution

$ 7,538

12,864

$ 20,402

(9,875)

$ 10,527

Domestic

student

$ 16,464

$ 16,464

(12,292)

$ 4,172

International

student

Doctoral stream

Masters

$ 7,491

26,659

$ 33,150

(11,593)

$ 21,557

Domestic

student

$ 16,416

$ 16,416

(17,398)

($982)

International

student

Doctoral

Source: Institute for Competitiveness & Prosperity analysis based on data from Council of Ontario Universities and G13 Data Exchange.


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38 and bssnn nd Sn Sc, Ds hn C m Gw n oeCD Cns? ednc pd mn-G ess,OECD Working PaperN. 282, 2001.

39 Cg rdd, Education and Skills: An Assessment o Recent Canadian Experience, t unsy bs C nd Cndn ins adncd rsc, Dscssn p N. 01-06, 2001.

40 rcd Fd, Technology and Tolerance: The Importance o Diversity to High Technology Growth, Cn n un nd mn pcy, 2001.41 pcWsCs,The University o Waterloo: Regional Economic Benefts Study, 2001.42 bnk bsn ecncs Dn, MIT: The Impact o Innovation, 1997.43 ins Cnss & psy, Wkng p 11, Flourishing in the global competitiveness game, S 2008, . 27.44 Dd W, Sc C nd Cs Dn n lnng rgns, n a. hk nd D. W (ds.) Knowledge Clusters and Regional Innovation.

mn: mcG-Qns unsy pss, 2002.45 ins Cnss & psy, Trade, innovation, and prosperity, S 2010, . 40-43.46 S x W. Cg rdd, Education and Skills: An Assessment o Recent Canadian Experience. t unsy bs C nd Cndn

ins adncd sc, Dscssn p N. 01-23, 2001; an W. F nd W. Cg rdd, t r Cdns n Cndn lmk, Canadian Journal o Economics, 2002 v. 35, N. 4; Sscs Cnd, edcn nd nngs, Perspectives on Labour and Income, 2006, v.

38, N. 03.47 ins Cnss & psy, Wkng p 10, Prosperity, inequality, and poverty, S 2007, . 46-47.

nw cncd knwdg ys cc n cnc gw. hnc ds, sks, nd xs s ndn n n cnc css. t dcn wkc s ndnd cnc gw.

rsc s d nn nsn ns scndy dcn cncgw. in n nnn sdy y oeCD, scs nd snd sgncn ns wnn ys scng nd c gw n .38 Cg rdds nd sng cn wn c qy (s sd y

s scs) nd c cncgw s.39 in ddn dng dcd wkc, sndngn s scndy dcn s nsy cd w nnnnd g-cngy nds cy.40

and nsng n nss s ssn sc sc. i nsys ddd wn w scsc gn nnn sys, ssc ws sc,w cn cczd ndd cnc gss.

Sndng n s scndy dc-n s s d c sknds gn ns. unss n swn sc dc cnc s cs, gn-ng nw snsss nd snnng ns ds n cnc cy.in 1999, x, unsy W ccnd $1 nn cnc cy n c gnnd $1.6 n nc-wd.41 an sdy nd gds

msscss ins tcngyd cd 4,000 cns

wd wd, w ss uS$232 n.42

rsc s ndcd snc sc nss ss ky c nncns s y k r&Dcn dcsns. mnn ssk ns ss cns n ndsy, gy qd c, s-cssnsc, nd ccss sccsc nss.43

unss s ndcy scnc gw g s knwdg g gds.

as cns dscy, nssxss s s gn ds. ins wy, y ngnd n nnnw cnns nng s sd.

t gs gds w n c cny nc w nsysd scs, y cng w c knwdg nd ds ndsy, nsy, nd ck gn.44

lnkgs wn nss ndndss c s knwdgw. C dcn gs,

ndsy-snsd sc, nd jnndsy-nsy sc gn-zns w xs scnkgs. t s s nwk w s knwdg cnn-sy. t snc sc nwks cc cnn c nss gdng nd nnn.innn s ncdy s ncns w nsyscs, ws y nc-n s dsc nw ds. Sncns nd cngy ns

cn ss nsy-ndsynss.

as ins nd n s cnWkng p n d, ncngndss w g cng wks n cy-nd cc-ns w ss n nds Cn.45 ts ccnsq g s dcn s ns sns g dcn s gddnc on s gzndncs nssy. b s n nsns n g dcn cc ndn nn-n cs.

Education makes a difference to

individuals economic well being

a sc s swn

scng s n s dc-s w ndds.rsc n nss nd g dcn, g s c n nd nc, s cd wg ndd nss. hgydcd ndds g wgsnd xnc ss nyn.

ty , ng, nd ss ky nd n c ns w w ys scng.46

in sdy y n Wkng

p 10, ins cncdd s scndy dcn ws ccngdn n dcng y.47 tins dnd s gs wd g-n-g nsy ng n y g sc d-s, cn gns, n ns, dsd, ncd nddswn gs 45 nd 64, nd

agns.


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48 Idem., Wkng p 9, Time on the job, S 2006, . 25-26.49 rg mn nd Js mwy, Enhancing the Productivity o Small and Medium Enterprises through Greater Adoption o Inormation and Communication

Technology, inn nd Cncn tcngy Cnc, ow, mc 2007, nn: http://www.ictc-ctic.ca/uploadedFiles/Labour_Market_Intelligence/Enhancing-the-Productivity-o-SMEs.pd

exc cn gns, dc-n nn css c sk gws w on g. ingn, wn c sk g, sw dcn cd cnc cs n s wss.

hg s dcn nns n c ss kd wkng nny cs dcd cnc sccss. in ssdy s wkd n Wkng p9, ins nd ncdnc nny - wk dcsds dcn nn ncsd.48

Bsiesses ee t step pthei iestmets i iati

o snsss cnn nd nsn nnn, s sd y n-n nd cncns cngy(iCt), sc & dn, ndn . W n n s s c xy nnn, gy n dssng c.

Ontario businesses continue to

trail their US counterparts in investing

in machinery, equipment, and

software to make their workers

more productive

Sc nsns d ycy cd iCt nd cgs, sc s ns-n qn nd dn cyqn. iCt ccns 40 cn nsn n cny,qn, nd sw.

on wk ss, uS s-nsss ns on snsss ncny nd qn w g ng g n iCt (Exhibit 15).

as c cny nd q-n s d, sngnng Cndn d s n n dn-g snsss. Cnsqny, g wn on nd uS ns-n wk gn nw n2005. in 1987, snsss nsd16 cn ss wk n cny, qn, nd sw; n2003, s g d gwn 31 cn;n 2009, d n 21 cn.

in 2009, on-uS g n iCtnsn wk ws $1,350 32 cn, w n cnynd qn g ws $600 12 cn. on n sngCndn d s ws cs d cny, qn, ndcngy nd s s ky c n nwng s nsn g.

Csng nsn g s n csng sy g.W g cny, qn,nd sw nsn wkccd dc. in 2007, ins ssssd w dn iCt y Cndn snsss, cy

s nd d nss.49 tsc w wd ndcs nsn n iCt nncs dcy s. a s sc ,sc y oeCD nd s ndcs qng s w cs ndsw ncss nd nndcy. a scnd ,cnncng cs n nwks nddwng n cngs cn ddcy n g. b ssgncn n iCt dn cn

0

3

6

$12

9

20091987

US

Ontario

US

Ontario

US

Ontario

20091987

88%91%

Ontario/USinvestment per

worker68%67% 79%84%

20091987

Private sector machinery, equipment, and software investment, 19872009

Note: US dollars converted to Canadian dollars using PPP for M&E.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada (special tabulations); Labour Force Survey (CANSIM Table 2820002);US Department of Commerce, Bureau of Economic Analysis; US Bureau of Labor Statistics, Current Population Survey; CSLS Database of Information and CommunicationTechnology (ICT) Investment and Capital Stock Trends: Canada vs. United States, available online: http://www.csls.ca/data/ict.asp.

Information andCommunications Technology (ICT)

Annualinvestment

per employedperson

000 C$(Current)

+ =All other machinery

and equipmentTotal investment in machinery,

equipment, and software

Exhibit 15 Ontario businesses lag their US counterparts in ICT investments


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50 oeCD, Frascati Manual, 1993, . 29.51 Z Gcs, indcn, n Nber, R&D, Patents, and Productivity, 1984, . 18.

52 oeCD, The New Economy: Beyond the Hype, 2001, . 43.53 Z Gcs, a pks nd bnwyn h, The Value o Patents as Indicators o Inventive Activity, Nber Wkng p N. 2083, 1988, . 3.

ns nd ns-n snsss g cngs nsnss csss gnzndsgn .

W cncd ck nsnn iCt cn d cs dn-d n sc n s ck c ss s Cndnsnsss d cngy, ssdq ngn cs dscn ns cngy nd cz n , nd g x-n n snss nsn.

ons sgncn x w -n x dsdng. and nng

d w e nd dngcns w ncs s ndss nsn.

Business R&D investment lags

peers spending

ons r&D nsn g w suS s s gy n n s-nss sc. as cng GDp,ons r&D nsn sw dcds s nd cdy ss, nd s dng

ss k Cn nd msscssy sgncn gn (Exhibit 16). acs xnn ons r&Dsndng ndcs g s n sc snss scnd dn, n n cy nddg dcn nd gnnsc nd dn. W dscsss w ndngs wng dnc nc r&D nnn nd sy.

r&d tte. t oeCD dydns r&D s c wk nd-kn n sysc ss n d ncs sck knwdg,ncdng knwdg n, c

nd scy, nd s s sck knwdg ds nw c-ns.50 r&D css sc sc,d sc, nd xndn nd s dsngsd ss, sc s dsgn, ksc, qy cn, n sy cncnd w dc-n gn knwdg, csss, dcs.

ecnss gd sgncndnc s nswn r&D nd dcy nd dcd ssn r&Dnsn s ky d ng-sy. t sc s sws, w sgncn nsxss wn r&D nsnnd gw n ssqn dcy, ns wn gnnr&D nd dcy gw s n sdc. pc r&D y, w, s- snss r&D, wc n n csdcy.51 Ssc ss ssw s ns wn cng n g nnsy s-nss r&D nd cng n c

dcy gw.52 in ddn, r&Dnsn s n swn s ns w nng, s n sd s xy nn- cy.53

oe r&d epete ot

pee, ece f tf

e r&d. Gss xnd nr&D (GerD) s ycy ssssd n s: snss, gdcn, nd gnn. in

0

0.5

1.0

2.5%

1.5

2.0

Peer average

Ontario

Peer average

Ontario

Peer average

Ontario

Types of R&D spending as a percentage of GDP, 19812007

Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada; National Science Foundation, Division of Science Resources Statistics;and US Bureau of Economic Analysis.

BusinessPercent of GDP Higher education Government

20071981 1994 20071981 1994 20071981 1994

Exhibit 16 Ontario trails its peers in business R&D


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54 S mc p, t ecnc pnc rgns, Regional Studies, v. 37, N. 6-7, 2003, . 551 nd n 9, . 572 w cdcwk n sng ns s s nn ccy.

55 mn tjng, is Cnd mssng tcngy b? Cn Sdy lng Sndds, 1999, . 5.

snss r&D, on gs s ss sgncny. ts g d ncsng dng d-c , dy N, snc n, s nd gn. in cy ndd r&D yg dcn nd gnns wc y.

be etepe epete

eec eepet

(bErd) s n cnn GerD. o s dcd, berD non ncsd y 50 cn $4.8 n n 1997 $7.6 n n2007. as cng GDp, berDs 1.3 cn n 1997 k 1.7 cn n 2001

ng gn 1.3 cn n 2007.Cng ons nc w 14 ss nd Qc, wnd on sgncny ndd s jsdcns, nymsscss, mcgn, Nw Jsy,nd Cn n s berD GDp d.

he ect epete

r&d (hErd) s ncsd sdy non s 20 ys. Dng

1990s, herD s n sns ncss n ndng y ncnd d gnns. in c-sn s s, ondw n g dcn r&D s cng GDp nd c.by 2007, on sd scnd nherD GDp d (ng Qc).

geet epete r&d

(govErd) ks s -n r&D d n on, js 12 cn n 2007. in Cndnd und Ss, gnnr&D s cng GDp s nng- dcn.

in sy, y d-1990s, oncd g nc nr&D s cng GDp, g s snc wdnd gn w ky nd nsn ng n snssr&D.

Ontario businesses produce

fewer patents

a ky s nn ccynd csss s nng. W s

n n n nn- cy s cd y ns( x, n ngn cssns n sw), nycdcs w sdy nnn g nng s sd s nns gns nn .54r&D nd n csynkd ds sn y s-nsss n r&D d ns(Exhibit 17).

a n gns xcs c-c s nwy nnd dc.

accdng tjng, F n gnd, nnn s nn-, nng wd n

s skd cn n cngy, nd s s, nng s ncc .55

t s ons nnccy, w gd nn nns y Cndns uS pnnd tdk oc. uS n n-n s gd ndc Cndnscs ns n sg s

10,000 100,0001,000100

Triadic patentfamilies*(log scale)

Industry-financed R&D and patent output,Annual average, 20032007

* US Patent and Trademark Office, Japan Patent Office, and the European Patent Office.Source: Institute for Competitiveness & Prosperity analysis based on data from OECD Science and Technology Statistics.

1

100

100,000

10

1,000

10,000

Industry-financed gross expenditure on R&D (log scale)

Argentina

Israel

Romania

Slovenia

Denmark

Greece

Hungary

Iceland

Ireland

Luxembourg

Canada

$1,000,000Millions

Slovak Republic

Portugal

ChinaChinese Taipei

Russia

Spain

Italy

Turkey

Mexico

Poland

Czech RepublicSouth Africa

New Zealand

Singapore

Norway

Finland

Belgium

Austria

Netherlands

Sweden

SwitzerlandFranceKorea

UK

EU27

Germany

JapanUnited States

Exhibit 17 Business R&D spending is closely linked to patent output


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56 Ibid., . 4.57 ins Cnss & psy, Wkng p 6, Reinventing innovation and commercialization policy in Ontario, oc 2004, . 15-16.58 inds Dn bnds: acn pc bns s unc, a 1993, und Ss Gn accnng oc, Gao/rCeD-93-106.

nd s n uS w sn-dds ny sngnn n s en cns.56in ddn, cs s sz ndcnc sng, und Sssns sgncn n k yc n.

as w sd w wgnd dcy nc dd css, on s gdx dd css, y ssc n dcy nd wg -nc. in 2004 , insnd ons dd cssd uS s y y 55 cn nn 10,000 ys.

o x css ws sc ycd uS n ss, onns wd ny 2 cn nd ss ns. S, ny ons dsdng (53 cn 55 cn) s cs wcnss.57

m cn n d css ndss ys 2005 2007 mn psy insndc 40 cn g on

ss dn nc s ss. o sxn jsdc-ns, on nkd n, d Qc ny (Exhibit 18).

Lage icetie packages t

attact bsiesses ae fte

t wise iestmets

on sd d g ncnckgs c nw snsss nc. lk ss nd -ncs, on s dwn n scygd ncns c nw s-nsss sss n xnsns xsng ns. rsc y cdcssws sc ncns d n

dc cnc ss jsy xns.

ang c sc, w nd wng.

in 1993 sdy n cncc inds Dnbnds, uS Gnnaccny oc cncdd cnc c nds d

n jsy css gnn.inds Dn bnds ssd y gnns cnsqng nncng c xndn c jsdcn. t nds ns s nd cndns s n ncn c snss. t sdy ssssd68 jcs n o, indn, nd NwJsy ss ss 20 cn sc nds n und Ss. tsdy nd 60 cn d-s sd y wd sd jc w nd. h ds wd sds dns w nd.58

in 1993 sdy, cnss Jnbs nd mk mngyssssd cs tgdJs tx Cd, d x ssdy s wks w n w w dsd. tsdy ws sd n sy 3,400 ys w cd xcd n 1982 nd 1983. t sdycncdd 70 cn x

Patents per 10,000 employeesAnnual average, 200507

California

Massachusetts

Virginia

Michigan

New Jersey

New York

Texas

Illinois

MedianOhio

Pennsylvania

North Carolina

Indiana

Georgia

Florida

Ontario

Qubec

Source: Martin Prosperity Institute analysis of US Patent and Trademark Office results.

Exhibit 18 Ontario businesses trail their US peers significantly in patent output

2.7

4.4

11.7


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59 J. bs, nd m. mngy, Ds tgd Js tx Cd C Js Ssdzd Fs? Industrial Relations, 1993, 23 (3), 289-306.60 ty F. bss, t ec S tx incns n ecnc Gw nd F lcn Dcsns: an ow l,

Economic Development Quarterly. Fy 2001, . 90-105.61 tdd m. G nd Dd S. Ky, t ec S ecnc Dn incns n eyn Gw essns,

Journal o Regional Science v. 42, N. 4 2002, . 703-730.62 ens p. Gss nd Js m. ps, t ic tx incns: D in ecnc Cndns m? Growth and Change v. 32 (Sng 2001),

. 236-250.63 r S. Cnk nd Dn J. Wsn, S nsn x ncns: a z-s g?" Journal o Public Economies 92 (2008) 2362-2384.64 Jd Kk nd Dd Nk, w sc s ingd l-hng, bsnss lcn Dcsns nd eyn Dyncs n Cn,

pc pcy ins Cn, 2007.65 pcy C. Fs nd Dd tk, F nd tsn pdcn n msscss: an indsy ow nd anyss, Fy 11, 2010.

unsy msscss bsn.66 Ssn Cssn nd Nd rg, t C ecny s bg bsnss: eng S Sgs l Fks,Journal o Planning

Education and Research, 29 (3) 2009, . 336-352.

cd wn s wd d s wks nywy, nd c j ws ssdzd $5,270 $11,581 cd.59

t S Wsngn cd n js cd gncns gs nsd. t scs sdd1,279 css n 1994 nd csd n nc

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