Ontario’s Cluster Performance and Policy Evolvement

Weiru Shi

Parallel Session 1.4: New Direction in Cluster Policy for Sustainable and Inclusive Competitiveness

Ontario’s Cluster Performance and Policy Evolvement

Weiru Shi Institute for Competitiveness and Prosperity

105 St. George Street, Toronto, ON, Canada M5S 3E6E-mail: w.shi@competeprosper.ca

Agenda

Introduction of the Institute for Competitiveness & Prosperity (ICP)

Ontario’s Cluster Performance

Ontario’s Cluster Policy Evolvement

ICP is an independent, not-for-profit research organization in Ontario

• Working Paper 1: A View of Ontario: Ontario’s Clusters of Innovation, 2002

• Working Paper 5: Strengthening structures: Upgrading specialized support and competitive pressure, 2004

• Working Paper 6: Reinventing innovation and commercialization policy in Ontario, 2004

• White Paper: Assessing the Strength of the Toronto Biopharmaceutical Clusters, 2004

• White Paper: Assessing Toronto’s financial services cluster, 2007

• White Paper: Toward a Toronto region economic strategy, 2014

ICP has released several research papers on clusters since 2002

ICP is the only organization that presents the cluster data across Canada

Ontario has many strong clusters in its CMAs

Ontario has eight highly concentrated clusters

8 highly concentrated clusters:

• Marketing, Design and Publishing • Financial Services • Automotive • Plastics • Metalworking Technology • Communications Equipment and Services• Biopharmaceuticals • Downstream Chemical Products

0 50 100 150 200 250 300 350 400 450Leather and Related Products

FootwearFishing and Fishing ProductsMusic and Sound Recording

Water TransportationForestryApparel

Upstream Chemical ProductsTrailers, Motor Homes, and Appliances

Textile ManufacturingMedical Devices

Aerospace Vehicles and DefenseVulcanized and Fired Materials

Video Production and DistributionPerforming Arts

Oil and Gas Production and…Recreational and Small Electric Goods

Downstream Chemical ProductsEnvironmental Services

Wood ProductsLighting and Electrical Equipment

BiopharmaceuticalsPaper and PackagingLivestock Processing

Printing ServicesCommunications Equipment and…

FurnitureUpstream Metal Manufacturing

Downstream Metal ProductsInformation Technology and Analytical…

Construction Products and ServicesElectric Power Generation and…

Metalworking TechnologyPlastics

Production Technology and Heavy…Insurance Services

AutomotiveTransportation and Logistics

Financial ServicesFood Processing and Manufacturing

Marketing, Design, and PublishingHospitality and Tourism

Education and Knowledge CreationDistribution and Electronic Commerce

Business Services

Ontario, 2013 Employment by traded cluster (in thousands)

Source: Institute for Competitiveness & Prosperity analysis based on data from Survey of Employment, Payroll and Hours (SEPH), Statistics Canada (In thousands)

The Location Quotient (LQ) of the clusters in >1.3

-40,000 -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000Automotive

PlasticsUpstream Metal Manufacturing

Paper and PackagingMetalworking Technology

FurnitureWood Products

ApparelPrinting Services

Vulcanized and Fired MaterialsTextile Manufacturing

Production Technology and Heavy MachineryDownstream Metal Products

Hospitality and TourismDownstream Chemical Products

Lighting and Electrical EquipmentInformation Technology and Analytical Instruments

Trailers, Motor Homes, and AppliancesForestry

Recreational and Small Electric GoodsAerospace Vehicles and Defense

Distribution and Electronic CommerceFood Processing and Manufacturing

Upstream Chemical ProductsFootwear

Livestock ProcessingLeather and Related Products

Music and Sound RecordingFishing and Fishing Products

Water TransportationMedical Devices

BiopharmaceuticalsVideo Production and Distribution

Electric Power Generation and TransmissionCommunications Equipment and Services

Performing ArtsEnvironmental Services

Oil and Gas Production and TransportationInsurance Services

Marketing, Design, and PublishingConstruction Products and Services

Transportation and LogisticsFinancial ServicesBusiness Services

Education and Knowledge Creation

Ontario, 2003-2013Job growth by traded cluster

Net traded cluster jobs created, 2003-2013: -81,159

Source: Institute for Competitiveness & Prosperity analysis based on data Survey of Employment, Payroll and Hours (SEPH), Statistics Canada

Education and Knowledge Creation is the biggest driver for job creation

Ontario’s share of traded clusters started to decline after 2001

0

10

20

30

40

50

60

70

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Ontario, 1991-2013Share of traded clusters and local clusters in Ontario (%)

%

Local clusters in Ontario

Traded clusters in Ontario

Source: Institute for Competitiveness & Prosperity analysis based on data from Survey of Employment, Payroll and Hours (SEPH), Statistics Canada

Wage gaps in traded clusters is larger than those in local clusters

-40

-35

-30

-25

-20

-15

-10

-5

0

5

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

$

Ontario and US peers, 1991-2013Wage gap attributed to cluster mix and cluster effectiveness in local and traded clusters (C$2013, thousands)

Source: Institute for Competitiveness & Prosperity analysis based on data from Statistic Canada and the US Bureau of Labor Statistics

Wage gap, cluster mix in local clusters

Wage gap, cluster mix in traded clusters

Wage gap, cluster effectiveness in traded clusters

Wage gap, cluster effectiveness in local clusters

Wage gap (C$2013, thousands)$

Ontario and US peers, 1991-2013Wage gap attributed to cluster mix and cluster effectiveness in local and traded clusters (C$2013, thousands)

Source: Institute for Competitiveness & Prosperity analysis based on data from Statistic Canada and the US Bureau of Labor Statistics

Wage gap, cluster mix in local clusters

Wage gap, cluster mix in traded clusters

Wage gap, cluster effectiveness in traded clusters

Wage gap, cluster effectiveness in local clusters

0

Wage gap (C$2013, thousands)

Wage gap between Ontario and US peers is wider in high value added clusters

Ontario has supported cluster development since 2002

Year Program Target Cluster2002 Biotechnology strategy Biotechnology Cluster

2002 U of Waterloo research and technology park ICT Cluster

2003 The Interactive digital media small business fund Creative Cluster

2004 The northern Ontario biotechnology initiative Biotechnology Cluster

2004 Northern prosperity plan Mineral Cluster

2004 Commercialization strategy All Clusters

2006 Entertainment and creative cluster partnership fund Creative Cluster

2007 Northern industrial cluster Adv. Manufacturing

2007 Professional data center ICT Cluster

2008 nGen Creative Cluster

2009 Ontario’s enhanced film tax credits Creative Cluster

2009 Agricultural technology commercialization centre Agricultural Tech Cluster

2013 Creating jobs plan Aerospace/Manuf./ICT

2014 The better business climate act, 2014 All Clusters

Biopharmaceuticals (Already Clustered)

Medical Devices(Already Clustered)

Financial Services(Already Clustered)

Business retention strategy

Automotive(Already Clustered)

Information Technology

Aerospace

Mining

Food processing and manufacturing

Tourism

Ontario’s previous cluster policy

Communication Equipment and services

Video production

Marketing, Design and Publishing (Interactive New Media Development)

Agricultural Technology

Advanced Manufacturing

ICP recommended strong clusters

Ontario’s cluster policy and strategy attuned to “desired clusters”

Clean Tech

Thank you.

Weiru Shi Policy AnalystInstitute for Competitiveness & Prosperity105 St. George StreetToronto, ON M5S 3E6 Direct: (1) 416-978-7839 | Fax: (1) 416-946-7606 www.competeprosper.ca