2008 Annual Toronto Region Innovation Gauge
WHO WE ARE
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With a population of more than seven million people (Fig. 1), the Toronto Region is the third largest of the comparator regions. It has fewer people than Illinois and Michigan, but a larger population than the other comparator regions. The region’s population growth rate, at almost 2% over the last 10 years (Fig. 2), is healthy, fueled by growing numbers of educated immigrants. Household income is relatively high, and many people subscribe to wireless services. Its industrial sectors are diverse, and the region fares well in the high technology-related fields.
population, however, is a quarter the size of the Toronto Region. In absolute numbers, the Toronto Region grew three times more – by approximately 140,000 people – than the Research Triangle, which grew by approximately 45,000 people. The Toronto Region’s net natural increase in population (i.e. births in the region) has remained steady at approximately 40,000 persons per year. As Fig. 4 shows, on balance, the population of the region increases by more than 80,000 persons annually – largely fueled by immigration, (i.e. adding births to immigrant numbers and subtracting migration from out of the region).
THE TORONTO REGION HAS RELATIVELY STRONG POPULATION GROWTH
Indeed, the number of immigrants to the Toronto Region has been more than double that of the Toronto Region’s closest comparator, the Research Triangle, in each year between 2000 and 2006.
As Fig. 3 indicates, the Toronto Region’s closest comparator, the Research Triangle, has a greater annual net migration. The Research Triangle’s
Fig. 1
Population, 2007 12.9
Illinois Michigan
10.1
Toronto Region
7.0 6.4
Massachusetts Montreal
3.7
Silicon Valley
2.6 1.6
Research Triangle 0
2
4
6
8
10
12
14
Persons (millions) Sources: Statistics Canada, Conference Board of Canada, U.S. Census Bureau, California Department of Finance
Fig. 2
Population, Compound Average Annual Growth, 1996-2007 Research Triangle
3.39%
Toronto Region
1.92%
Silicon Valley Montreal
0.82%
Illinois
0.55%
Massachusetts
0.39%
Michigan
0.31% 0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Compound Average Annual Growth Rate
Sources: Statistics Canada, Conference Board of Canada, U.S. Census Bureau, California Department of Finance
2008 Annual Toronto Region Innovation Gauge
1.04%
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Fig. 3
Annual Net Migration (International and Domestic), 2000-2006
140 120
Number of Migrants (thousands)
100 80 60 40 20
Toronto Region Montreal
0
Massachusetts Silicon Valley Research Triangle
-20
Michigan Illinois
-40
2000
2001
2002
2003
2004
2005
2006
Sources: Conference Board of Canada, U.S. Census Bureau, California Department of Finance
Fig. 4
Annual Components of Population Change, Toronto Region, 2000-2006 140
131
128
120
Persons (Thousands)
100
100
100 92
60 40 20 Net International Migration
-2 2008 Annual Toronto Region Innovation Gauge
100
80
0
10
93
0
-20
-14
Net Domestic Migration
-17
-20
-17
2003
2004
2005
-26
-40
2000
2001
Source: Conference Board of Canada
2002
2006
Net Natural Increase
MOST IMMIGRANTS ENTER THE REGION AS HIGHLY-EDUCATED WORKERS
Canada, welcoming approximately 400,000 people. This represents approximately. 60,000 more immigrants than the region’s closest comparator, Silicon Valley, and three times more than its Canadian comparator, Montreal.
The Toronto Region has been, and continues to be, a magnet for educated and experienced immigrants. Since 1961, more than a quarter of Ontario’s population (26.8%) has been born outside Canada. This proportion is 33.0% in all city regions, but 43.4% in Toronto.2
This influx of immigrants is particularly good news for the Toronto Region. In the years between 2000 and 2006, the Toronto Region welcomed increasing numbers of highlyeducated and skilled immigrants as Fig. 6 shows. Of these immigrants, 73% are in the labour force (Fig. 6a) and, of this, 88% or approximately 196,000, are employed.
Large numbers of educated immigrants are symptomatic of a national trend. In 1995, 21% of immigrants to Canada had a university degree; in 2000 this percentage had risen to 26%. The percentage of native-born Canadians with university degrees rose at a much slower rate, from 16% to 18% over the same period.3
The positive contribution of educated immigrants to the Toronto Region is corroborated by national studies, which show that a higher percentage of immigrants with postsecondary education are entering the workforce. According to a recent StatsCan study on immigrants to Canada, “in 2007, the largest gains in immigrant employment were among university-educated immigrants of core working age. While employment for immigrants with other levels of education was mostly unchanged, those with university degrees had an estimated gain of 62,000 (+7.0%), all in full time.”6
Results from the 2001 census indicated that immigration has continued to be of growing importance to the region’s population.4 By 2006, of the 636,500 recent core workingage immigrants who arrived in Canada, the lion’s share went to Ontario’s labour market (51.1%), followed by Quebec (19.2%) and British Columbia (15.9%).5 As Fig. 5 shows, between 2001 and 2006, the Toronto Region benefited from almost 45% of the new immigrants to
Fig. 5
Number of Immigrants as a Percentage of the National Number, 2001-2006
45%
40
30
20
15%
10
6%
5%
3%
2%
0%
Toronto Region: 398,980 Montreal: 133,650 Silicon Valley: 341,207 Illinois: 279,358 Massachusetts: 178,329 Michigan: 119,974 Research Triangle: 17,593
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M ic h
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Ill in o
Va lle y Si
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Re gi o
n
0
To ro nt o
Sources: Statistics Canada, U.S. Census Bureau 2008 Annual Toronto Region Innovation Gauge
Percentage of National Immigration
50
11
Fig. 6
170
Immigrants to the Toronto Region, Highest Level of Education, Period of Immigration, 1991-2006 180
109
12
140
85
86
100
81
120
59
80
17
20
15
40
36
14
60
26
Number of Immigrants (Thousands)
160
High School Apprenticeship College University
0
1991-1995
1996-2000
2001-2006
Years
Fig. 6a
2006 Labour Force Status of Immigrants Arriving Between 2001-2006
Not in Labour Force
2
73% of immigrants
(221,000) arriving between 2001-2006 are in the labour force. Of this number:
27%
73%
In Labour Force
– 196,000 were employed (88%) – 25,000 were unemployed (12%)
Source: Statistics Canada
2008 Annual Toronto Region Innovation Gauge
WHY ARE POPULATION GROWTH AND IMMIGRATION IMPORTANT?
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The high rate of population growth in the Toronto Region is widely considered to be a requirement for economic growth, providing human capital and a constant influx of talent. As Dr. Larry Swanson, associate director of the University of Montana’s O’Connor Center for the Rocky Mountain West pointed out, “economic strength follows population strength: population growth means economic growth and diversification; population loss means economic loss or stagnation.”7 Immigrants – particularly the well-educated immigrants who are coming to the Toronto Region – are of particular importance in bolstering labour force growth. Immigrants enrich the Toronto Region with their skills, training and life experiences, augmenting the region’s foundation for innovation. In fact, the Caledon Institute of Social Policy points to immigrants as a counterpoint to the much-debated “brain drain.”8
THE TORONTO REGION IMMIGRANT EMPLOYMENT COUNCIL (TRIEC) Established in September 2003, TRIEC is comprised of employers, labour, occupational regulatory bodies, post-secondary institutions, assessment service providers, community organizations, and all three levels of government. Its primary goal is to find and implement local solutions that help break down the barriers immigrants face when looking for work in the Toronto Region. “The Toronto Region continues to attract large numbers of skilled immigrants who comprise virtually all net labour force growth in the region,” says TRIEC director Elizabeth McIsaac. “This offers the local economy a competitive advantage if the skills and knowledge of these workers can be effectively leveraged and integrated.”
Immigrants also add what one researcher calls “knowledge spillover,” the learning and transfer of knowledge between individuals and firms that precedes innovation.
ENCOURAGING IMMIGRATION OF SKILLED AND EDUCATED WORKERS
“Innovations occur when individuals with high degrees of existing creativity or knowledge make new and novel combinations of this knowledge with new insights observed or learned through spillovers,” say Brian Knudsen, Richard Florida, Gary Gates, and Kevin Stolarick in Urban Density, Creativity, and Innovation. They go on to point out that such spillovers occur “when one individual’s creativity is transferred to another individual or firm. These creative spillovers are in part believed to arise due to frequent face-to-face interactions and communication between individuals.”9
• Ontario now has an uncapped number of work permits available to foreign workers. For intracompany transfers, the process is fast and straightforward: transferees can quickly obtain a work permit for up to seven years. (www.cic.investinontario.com/bi) • Ontario’s Provincial Nominee Program, an expedited permanent resident visa program, allows employers to permanently recruit highend research staff and other workers within defined occupations. (www.ontarioimmigration.ca/english/pnp.asp)
Is the Toronto Region taking full advantage of this latent potential?
• The 2007 federal budget created a Foreign Credential Recognition office (which has, however, so far limited itself to giving referrals to appropriate provincial offices).*
Recognition of immigrants’ credentials has been a stumbling block in the past. According to data from Status of Women Canada, just over half of foreign-trained professionals are working in professions or trades three years after immigrating.10 In addition, the human capital of increasing number of immigrants from eastern Europe, south, east and west Asia and Africa who are now arriving (rising from 35% in 1981 to 72% in 2001) “may initially be less transferable due to potential issues regarding language, cultural differences, education quality, and possibly discrimination.”11
• In November 2007, Ottawa announced expanded foreign credential referral services in India and China that offer orientation sessions for potential immigrants.* * The Conference Board of Canada, The Canada Project Progress Report 2007: The Roads Not Travelled: Insights You Can Count On, (Ottawa: The Conference Board, 2008)
EMPLOYMENT IN KEY INDUSTRIAL SECTORS IS STRONG
strong regional focus and expertise in many sectors outside its traditional manufacturing base. Fig. 7 shows that the Toronto Region has a wide range of industrial sectors, and that the majority of industries in the Toronto
The Toronto Region has high levels of employment in key non-manufacturing industrial sectors, largely due to its
Fig. 7
Industry Sectors, by Size, Average Wage, and Relative North American Concentration, Toronto Region, 2006 100,000
Finance & Insurance
70,000
Utilities
Health Care & Social Assistance
80,000
Information & Cultural Industries
Public Administration
Educational Services
Retail Trade
60,000
Construction
50,000
Professional, Scientific & Technical Services
Wholesale Trade Other Services
40,000 Manufacturing
30,000 Transportation and Warehousing
Waste Management & Remediation Service
20,000
Agriculture, Forestry, Fishing & Hunting
10,000
Arts, Entertainment & Recreation
Accommodation & Food Services
0
0.50
0.60
0.70
0.80
0.90
1.00
1.10
Location Quotient Sources: Statistics Canada, U.S. Census Bureau
Real Estate & Rental Leasing
1.20
1.30
1.40
1.50
2008 Annual Toronto Region Innovation Gauge
($) Average Wage
90,000
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“…what you’re looking at here is really a story of diversity versus one of specialization.”
Region are performing better than in the rest of Canada. The X-axis of this graph shows its Location Quotient (LQ) – the employment concentration of industry clusters in the Toronto Region compared to the same industry clusters across North America. Industries with a LQ of one are performing at the average level. Those with a score higher than one have a higher competitive advantage. The Fig. 7 also shows that salaries are high in many of the region’s larger and stronger sectors. The relative size of the sphere shows the number of people employed in the sector, and many sectors in the region are quite large.
Fig. 8
– Meric Gertler, Dean of Arts and Science, University of Toronto
The region has high levels of employment in the Manufacturing and Professional, Scientific and Technical sectors as well as in Finance, Insurance and Real Estate sector and compares favorably to Silicon Valley and Massachusetts, in each of these sectors (Fig. 8). This is of particular importance as these regions are strong performers in both R&D and innovation performance.
Industrial Employment, Percentage in Key Sectors, 2007 Professional, Scientific and Technical Services
4.6%
Toronto Region
3.0% 2.9%
Michigan Illinois
4.3%
Montreal
5.1%
Research Triangle
8.2%
Silicon Valley
4.1%
Massachusetts
Manufacturing
7.6%
Toronto Region
6.1%
Michigan
5.2%
Illinois
7.1%
Montreal
3.5%
Research Triangle
6.2%
Silicon Valley
4.3%
Massachusetts
Finance, Insurance and Real Estate Services
4.4%
Toronto Region
2.2%
Michigan Illinois
3.4% 3.4%
Montreal
2.6% 2.6%
Research Triangle Silicon Valley
4.0%
Massachusetts
0
2
4 % of Total Employment in Area
2008 Annual Toronto Region Innovation Gauge
Sources: Statistics Canada, U.S. Census Bureau
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6
8
EMPLOYMENT OPPORTUNITIES ARE DIVERSE
MANY “FIRMS TO WATCH”
The Toronto Region has a wide range of specializations and many occupations within the working population (Fig. 9). Approximately 75% of these occupations require specialized training and education, indicating the region has a labour force which is “rich” in specialized skills and education.
The Toronto Region has many successful high-tech “firms to watch.” As Fig. 10 shows, the region fares well among its comparators with fastest-growing technology firms in North America between 2001 and 2007.
Fig. 9
While the region pales in comparison to the numbers in Silicon Valley and Massachusetts, it performs well in comparison to other selected regions, consistently out-performing Montreal, Research Triangle, Illinois and Michigan.
Labour Force by Occupation, Toronto Region, 2006 J. Processing, Manufacturing and Utilities 7%
A. Management 11%
I. Primary Industry 1%
H. Trades, Transport and Equipment Operators and Related 13%
B. Business, Finance and Administrative 21%
G. Sales and Service 22%
C. Natural and Applied Sciences and Related 8% D. Health 5%
F. Art, Culture, Recreation and Sport 4%
E. Social Science, Education, Government Service and Religion 8%
Source: Statistics Canada
Fig. 10
Technology “Fast 500 Companies” Annual Average Number, 2001-2007 70
50 40
35
20
14 8
10
8
7 2
Source: Deloitte and Touche
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0
2008 Annual Toronto Region Innovation Gauge
30
Si
Average Number of Companies
62 60
15
Fig. 11
53.6 47.1 34.9 38.9
48.8 50.3
60
49.3 50.5
53.4 56.2
($) Thousands
80
54.4 49.3
73.3 78.8
Median Household Income, Constant 2006 USD, 2000 and 2006
40
2000 2006
ga n M ic hi
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is no Ill i
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se ar ch Re
To ro n
to
Re gi
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M
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Va lle y lic on Si
on
20
Sources: Statistics Canada, U.S. Census Bureau, U.S. Department of Labor-Bureau of Labor Statistics
WHY IS A DIVERSE ECONOMY IMPORTANT?
WHY IS HOUSEHOLD INCOME IMPORTANT?
Diversity in the Toronto Region industry and multiple employment sectors has contributed to stronger population growth than in areas that are heavily reliant on a manufacturing base. Furthermore, the region’s diverse areas of specialization add economic stability. Because the Toronto Region is not dependent upon one sector, its economy may not be as vulnerable when one sector is suffering, because others are available to support the economy.
Good household income is a sign of overall economic prosperity and can act as an indicator of innovation. The Toronto Region ranks high in this category, likely due to its diverse industrial sectors, relatively low unemployment rate, and the consistent growth in its economy since the early 1990s.
Many strong industrial sectors indicate that the Toronto Region is doing an excellent job of maintaining and growing non-manufacturing related industries and supplying the human capital required for these jobs.
2008 Annual Toronto Region Innovation Gauge
HOUSEHOLD INCOME GROWTH IS HEALTHY
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The Toronto Region’s average household income growth, while lower than in Massachusetts and Silicon Valley, is healthy (see Fig. 11). The Toronto Region’s diverse industrial make-up will likely ensure that the region will continue to fare better than the U.S. comparator regions as the economic downturn in the United States begins to affect America’s overall income growth. Michigan and Illinois have already shown declines in household income due to the decline of manufacturing in these regions. A more diversified economy has prevented this from happening in the Toronto Region.
WIRELESS SUBSCRIBER RATE IS HIGH ACROSS THE REGION The Toronto Region is keeping up with or is on par with the comparator regions with respect to number of subscribers to wireless communications and services (Fig. 12). Since 2001, however, the region has fallen behind relative to its comparators. In 2001, the Toronto Region had the highest number of subscribers, with a 10% advantage over its closest comparators, Silicon Valley and the Research Triangle. By 2006, the region had fallen to third in this indicator.
WHY IS WIRELESS SUBSCRIPTION IMPORTANT? The Toronto Region’s high number of subscribers to wireless communications indicates a technologicallyconnected and progressive society.
Fig. 12
Suscribers to Wireless Communications and Services, Percentage of Population, 2001 and 2006 100
82
80
79
Percent of Population
80
75
73
68
60 60
59
50
49
47
45
41
46
40
20 2001 2006
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M ic hi
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s oi in Ill
on to
Re gi
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Tr ia ng
se ar ch Re
Si
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Va lle y
0
Sources: FCC, Statistics Canada
THE BOTTOM LINE • Toronto Region has a strong and growing population base • Toronto Region attracts and retains skilled immigrants • Toronto Region has a diverse economy, with strong industrial clusters in key areas • Toronto Region is tech savvy and inter-connected
2008 Annual Toronto Region Innovation Gauge
• The Toronto Region has “fast companies” with highlighted potential for growth
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