For Urban Economics, it's Innovate or Get Left Behind
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For Urban Economics, it’s Innovate or Get Left Behind

Illustration by Brian McLachlan/Torontoist.

Bright and early this past Monday morning, Mayor David Miller launched the third Toronto Forum for Global Cities conference, dedicated to harnessing the economic power of large urban centres. Put on by the International Economic Forum of the Americas, and the Organisation for Economic Co-operation and Development (or OECD, whose scope encompasses thirty of the world’s wealthiest nations), the two-day conference at the Metro Toronto Convention Centre welcomed some of the world’s leading economists, city planners, CEOs, politicians, and economic policy makers to discuss how to restore growth in the post-bailout era. The overarching message was clear: cities have a huge role to play in leading the economic recovery, and the best way to do so is through innovation.

“The old city is no longer the optimal city,” said Adolfo Carrion Jr., director of the White House Office of Urban Affairs. Eighty-three percent of the OECD’s population lives in urban centres, and new ways of thinking are needed to create jobs and attract foreign direct investment (or FDI).
As a city that’s home to two-and-a-half million people, 40% of the nation’s businesses, and 17% of Canada’s GDP, “Toronto is the powerhouse of Canada’s economy,” said Mario Pezzini, director of OECD Activities that Promote Regional Competitiveness and Regional Policies. He presented the OECD Territorial Review for Toronto, a 213-page document that highlights Toronto’s strengths and weaknesses, and prescribes recommendations for the city’s private and public sector.
Toronto is in a great geographic position, has high entrepreneurship, low corruption, and has a highly skilled, and diverse, labour force, says the report. However, the city is too dependent on manufacturing, a sector which has seen a 10% drop in productivity since 2002.
The report recommends that collaboration between individual firms and the city’s three universities is crucial to promote research and development. We also need to continue funding our creative industry, which has seen a 50% increase in employment since funding increased in 1999. And we must relieve some of the transport congestion—which costs the local economy three billion dollars a year because of lost productivity—by making larger financing commitments to public transport, and by implementing fuel taxes to reduce car use.
And of course, the report also advised green growth. Stations to charge electric cars, a hydro Smart Grid, and re-training programs for green jobs can create sustainable employment. OECD Secretary General Angel Gurria said that innovative green shoots are already sprouting in Toronto: our use of cold lake water to cool fifty high-rise buildings downtown, he explained, is exactly the kind of innovation the city needs to compete in the new economic order. And the Mayor’s Tower Renewal Plan—an initiative set on greenifying some one thousand concrete apartment buildings around the city—is also generating a lot of economic activity.
The foremost impediment to innovation has, and will continue to be, the inability for the municipal, provincial, and federal governments to cooperate. Miller said we have a mind-set that needs to change, and pointed to the fact that Canada is the only G8 nation without a national transit strategy as a symptom of this disconnect.
By far the most stirring speaker at the conference was Robert Reich, member of President Obama’s Economic Advisory Board and former U.S. secretary of labor under Bill Clinton. He believes that being a cheap place to do business doesn’t cut it anymore, because there’s always somewhere cheaper. For developed cities to stay competitive, he said, they must have high degrees of knowledge, skill, creativity, productivity, and expertise; the best investment a city can make is an investment in educating its people so they can become the leaders in innovation.
“We have before us a huge opportunity,” he said. “The recession has empowered and legitimized people to think outside of the box.” If both private and public sectors invest in education, and research and development, it creates a “synergetic” environment where expertise circulates, and innovation flourishes.
Firms and government will need to act fast to take advantage of this unique opportunity to renew the economy, but the ideas, at least, are flowing.