OECD Territorial Reviews TORONTO, CANADA OECD Territorial Reviews The Toronto region is one of the chief economic powerhouses of Canada. It generates almost one-fifth of national GDP and 45% of Ontario’s GDP. The region is home to 40% of Canada’s TORONTO, CANADA business headquarters and is a main manufacturing hub, with major automotive, biomedical and electronics companies. Toronto is one of the most diverse metropolitan regions in the world: half of its population is foreign born and it hosted 40% of all immigrants to Canada during 2001-2006. Nevertheless, the region’s current economic development model is under pressure and its economic performance has been mixed in recent years. From 1995 to 2005, GDP per capita and GDP growth rates were below the Canadian average while its annual economic and labour productivity growth were lower than the average for OECD metropolitan regions. During this period, population growth boosted demand in the construction, sales and retail, professional and financial services sectors. However, the recent decline in the area’s manufacturing jobs has illustrated the structural difficulties of some traditionally strong areas, such as the automotive and electronics industries. This Review proposes a new sustainable competitiveness agenda to enhance productivity, focusing on innovation, cultural diversity and infrastructure, as well as on green policies. To implement such an agenda, the Review proposes improving the current governance framework by intensifying strategic planning at the level of the Toronto region. The Territorial Review of Toronto is integrated into a series of thematic reviews of metropolitan regions undertaken by the OECD Territorial Development Policy Committee. The overall aim of these case studies is to draw and disseminate horizontal policy recommendations for national governments. O E C D T e r r it o r ia l R e v ie w s T O R O The full text of this book is available on line via these links: N www.sourceoecd.org/governance/9789264079403 TO www.sourceoecd.org/regionaldevelopment/9789264079403 , C A Those with access to all OECD books on line should use this link: N www.sourceoecd.org/9789264079403 A D SourceOECD is the OECD’s online library of books, periodicals and statistical databases. A For more information about this award-winning service and free trials, ask your librarian, or write to us at [email protected]. ISBN 978-92-64-07940-3 -:HSTCQE=U\^YUX: 04 2009 12 1 P www.oecd.org/publishing OECD Territorial Reviews Toronto, Canada 2009 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. ISBN 978-92-64-07940-3 (print) ISBN 978-92-64-07941-0 (PDF) DOI 10.1787/9789264079410-en Series: OECD Territorial Reviews ISSN 1990-0767 (print) ISSN 1990-0759 (online) Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2010 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. FOrEwOrD – 3 Foreword across the OECD, globalisation is increasingly testing the ability of regional economies to adapt and exploit their competitive edge, even as it offers new opportunities for regional development. This is leading public authorities to rethink their strategies. Moreover, as a result of decentralisation, central governments are no longer the sole provider of development policies. new co-operation between different levels of government is now required in order to improve public service delivery. The objective of pursuing regional competitiveness and governance is particularly relevant in metropolitan regions. although they produce the bulk of national wealth, metropolitan areas often the focus of unemployment and economic distress and do not always exploit opportunities for growth. Effective policies to enhance their competitiveness need to address a functional region as a whole and thus call for metropolitan governance. in 1999, responding to a need to study and disseminate innovative territorial development strategies and governance in a more systematic way, the OECD created the Territorial Development Policy Committee (TDPC) and its working Party on Urban areas (wPUa) as a unique forum for international exchange and debate. The TDPC has developed a number of activities, including a series of specific case studies on metropolitan regions. These studies, following a standard methodology and a common conceptual framework, allow countries to share their experiences, and are intended to help formulate and diffuse horizontal policy recommendations. OECD TErriTOrial rEviEws: TOrOnTO, CanaDa – © OECD 2009 aCknOwlEDgEMEnTs – 5 Acknowledgements This review was elaborated by the Directorate of Public governance and Territorial Development (gOv) of the OECD, with the support and co-operation of the City of Toronto, the Province of Ontario, and the government of Canada. The OECD secretariat would like to thank the Mayor of Toronto, David Miller, as well as city, provincial and federal officials, including rosanna scotti, Christine raissis, Phil abrahams, Tobias novogrodsky, randy Mclean, Michael Jacek, anna Pace, Hilda logan, Peter vidicus, alan Meisner, susan Brown, sue Corke and Michael williams from the City of Toronto; Bob séguin, Dana richardson, Maurice Bitran, rob glaister, Chris Thompson, andrew Posluns, Janet gates, Catherine Tramsek, aleksandra wiacek, stellina volpe, weifang Dong, steve Harlow, John Bullen, Parastoo Hassaszadeh from the Province of Ontario; and Yazmine laroche, John Forster, guillaume Côté, nicola Bill, alexia Touralias, karl van kessel and lee weiler of the government of Canada; as well as the numerous other individuals and organisations that provided valuable inputs and contributions. special thanks are given to adam Ostry, infrastructure Canada and Chair OECD working Party on Territorial Policies in Urban areas for his key role in arranging the commissioning of this review and for his sustained commitment throughout the review process. a team of international peer reviewers participated in the review process: − United states: Mark Drabenstott, founding director of rUPri Center for regional Competitiveness, University of Missouri-Columbia − Japan: Yoshinobu Fukasawa, Director for Planning, national and regional Planning Bureau, Ministry of land, infrastructure, Transport and Tourism − italy: Marco Magrassi, Urban Policy Coordinator in the Ministry for Economic Development The review similarly benefited from the insight of international experts: Professor gianmarco Ottaviano (Professor of Economics, University of Bologna) and Professor kent Portney (Professor of Political science, Tufts University, United states). The OECD Territorial review of Toronto belongs to a series of OECD Territorial reviews produced by the OECD Division of regional Competitiveness and governance, directed by Mario Pezzini, Deputy Director of the Directorate of Public governance and Territorial Development. This review was coordinated and drafted by Olaf Merk, administrator, under the supervision of lamia kamal-Chaoui, Head of Urban Development Programme. individual contributions were provided by Michael g. Donovan, kazuko ishigaki and Javier sanchez- reaza. statistical support was provided by Daniel sanchez serra. valuable comments were provided by karen Maguire. sophia katsira prepared the review for publication. OECD TErriTOrial rEviEws: TOrOnTO, CanaDa – © OECD 2009 TaBlE OF COnTEnTs – 7 Table of contents Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Assessment and recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Chapter 1. Toronto: facing challenges, grasping opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 1.1. Main demographic, social and economic trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 1.2. Main challenges and opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Chapter 2. Capitalising on competitive assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 2.1 Fostering productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 2.2 leveraging cultural diversity for economic competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 2.3 Developing sustainable infrastructure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130 2.4. Making an innovation agenda sustainable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .144 Chapter 3. Improving competitiveness through better governance . . . . . . . . . . . . . . . . . . . . . . . . . 153 3.1 institutional framework in the Toronto region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 3.2 intergovernmental co-ordination in the Toronto region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 3.3 Financing metropolitan development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Figures Figure 1.1 Map of greater Toronto area and greater golden Horseshoe . . . . . . . . . . . . . . . . . . . . . . .38 Figure 1.2 average annual population growth in OECD metropolitan regions (1990-2005). . . . . . . . .39 Figure 1.3 share of foreign-born population in metropolitan regions in the OECD . . . . . . . . . . . . . . .40 Figure 1.4 Economic concentration in OECD countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Figure 1.5 Metropolitan gDP as share of national economy (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Figure 1.6 Economic growth among OECD metropolitan regions (1995-2005) . . . . . . . . . . . . . . . . . .45 Figure 1.7 labour productivity in OECD metropolitan regions (2005). . . . . . . . . . . . . . . . . . . . . . . . .46 Figure 1.8 labour productivity growth in OECD metropolitan regions . . . . . . . . . . . . . . . . . . . . . . . .47 Figure 1.9 Factors behind economic growth in OECD metropolitan regions (2005). . . . . . . . . . . . . . .49 Figure 1.10 Elderly dependency rate in OECD metropolitan regions (2005). . . . . . . . . . . . . . . . . . . . . .50 Figure 1.11 ageing in OECD metropolitan regions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 Figure 1.12 share of the total working population in OECD metropolitan regions (2005) . . . . . . . . . . .52 Figure 1.13 Unemployment rates in OECD metropolitan regions (2005) . . . . . . . . . . . . . . . . . . . . . . . .53 Figure 1.14 Change in unemployment rates in OECD metropolitan regions. . . . . . . . . . . . . . . . . . . . . .54 Figure 1.15 Higher-education attainment in metropolitan regions in the OECD (2004). . . . . . . . . . . . .55 Figure 1.16 sectoral dynamics in Toronto (2001-2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Figure 1.17 sectoral dynamics in Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Figure 1.18 Dynamics of location in Toronto (four-digit industry) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60 OECD TErriTOrial rEviEws: TOrOnTO, CanaDa – © OECD 2009 8 – TaBlE OF COnTEnTs Figure 1.19 location dynamics in Ontario (four-digit). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Figure 1.20 Productivity gap and economic specialisations of Toronto (2001 Census). . . . . . . . . . . . . .64 Figure 1.21 shares of domestic Canadian exports by three leading provinces (1999-2008) . . . . . . . . . .68 Figure 1.22 Traditional innovation indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Figure 1.23 Patent applications per million inhabitants in cities in the OECD (2005). . . . . . . . . . . . . . .71 Figure 1.24 Patent applications in iCT and biotechnology in OECD cities (2005) . . . . . . . . . . . . . . . . .72 Figure 1.25 Entrepreneurship rates in selected OECD metropolitan regions (2001-2006) . . . . . . . . . . .73 Figure 1.26 number of high-quality universities in OECD metropolitan regions (2007) . . . . . . . . . . . .75 Figure 1.27 Private equity in selected OECD metropolitan regions (UsD per capita). . . . . . . . . . . . . . .76 Figure 1.28 Public and business r&D in selected metropolitan regions . . . . . . . . . . . . . . . . . . . . . . . . .77 Figure 1.29 links between higher education institutes and industry in Ontario. . . . . . . . . . . . . . . . . . .78 Figure 1.30 ranking of cultural diversity in Canadian cities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81 Figure 1.31 Cultural diversity and city size in Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82 Figure 1.32 Cultural diversity and earnings in Canadian cities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82 Figure 1.33 Cultural diversity and economic growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Figure 1.34 Educational attainment of immigrants to Toronto. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 Figure 1.35 Employment rates of highly skilled foreign-born and non-foreign-born population in OECD countries (2003-2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Figure 1.36 Employment rates of low-skilled foreign-born and non-foreign-born population in OECD countries (2003-2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Figure 1.37 shares of foreign-born population in economic sectors in the Toronto region (2006) . . . . .88 Figure 1.38 self-employment rates of selected foreign-born population groups in the Toronto region (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89 Figure 1.39 residential concentration indexes in Toronto, Montréal and vancouver (2001). . . . . . . . . .92 Figure 1.40 average commuting time (of all commuters and different commuting modes) in minutes in OECD metropolitan regions (2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93 Figure 1.41 air quality in selected metropolitan regions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 Figure 1.42 Public transport and car transport as % of modal split. . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Figure 1.43 railway capacity in selected OECD metropolitan regions (2003) . . . . . . . . . . . . . . . . . . . .97 Figure 2.1 government transportation spending per capita (EUr, 2006). . . . . . . . . . . . . . . . . . . . . . 132 Figure 2.2 national and sub-national financing of transport (including economic affairs). . . . . . . . . 132 Figure 2.3 Transit spending (CaD per capita) in the greater Toronto area (2007). . . . . . . . . . . . . . .134 Figure 2.4 revenue sources of transit agencies in selected OECD metropolitan areas (2008) . . . . . .140 Figure 3.1 Dominance of core city as against the whole metropolitan area in a selection of OECD metropolitan areas (2006) (% population). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Figure 3.2 sub-national expenditures as a share of total government expenditures (%, 2006). . . . . .156 Figure 3.3 state and local expenditure shares in selected federal OECD countries (2006). . . . . . . . . 157 Figure 3.4 Main gross expenditure items in the operating budget of the City of Toronto 2008 (%) . . 158 Figure 3.5 Main gross expenditure items in the operating budget of the Peel region 2007 (%). . . . . 158 Figure 3.6 Main revenue sources, City of Toronto (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Figure 3.7 Main revenue sources, greater Toronto area (gTa) regions 2008. . . . . . . . . . . . . . . . . . 168 Figure 3.8 Decentralisation and dependence of local governments on property tax in OECD countries (2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Figure 3.9 local government debt as a share of gDP (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Figure 3.10 Property tax rates (in percentages) in the greater Toronto area (2008). . . . . . . . . . . . . . . 173 Figure 3.11 Population density and development charges in the Toronto region (2008-2009). . . . . . . . 178 OECD TErriTOrial rEviEws: TOrOnTO, CanaDa – © OECD 2009