Even In Atlantic Canada, Our Economy Is Intertwined With Toronto
David Campbell is a Moncton-based economic development consultant and co-host of the Huddle podcast, Insights. The following piece was originally published on his blog, It’s the Economy, Stupid!, on Substack.
This is the first time I have visited Toronto for work since the onset of the pandemic. Every time I come here I am reminded of just how intertwined the Canadian economy is with its “capital” city.
Every time you pay a bank fee, download a Drake song, watch the national news, book an airline ticket, and or participate in a host of other activities, Toronto’s GDP ticks up a notch. This mostly doesn’t work in reverse, which is why places like New Brunswick and Nova Scotia need to focus on nurturing their export industries.
A few years ago, I studied the meat processing industry on Prince Edward Island and found that for every dollar of direct output at the plant, industry output in Ontario increased by 26 cents.
Finance and insurance output related to the PEI manufacturing plant was higher in Ontario than on PEI; transportation and related services output were higher; wholesale margins were four times higher.
The meat processing industry on PEI boosted professional services output in Ontario by nearly a million dollars. When I studied the shipbuilding sector in Nova Scotia with the Conference Board of Canada, the effect was the same.
Again, that is not a bad thing.
In any country, you have concentrations of economic activity to take advantage of scale. It just happens that in the Big Smoke that impact is more pronounced than in many other countries.
Don’t forget the IT industry. Ontario generates more GDP from IT than Newfoundland, Nova Scotia, New Brunswick, PEI, Quebec, Manitoba, Saskatchewan, and Alberta combined. Almost all of that GDP is created in the Waterloo-Toronto corridor.
Smaller cities are not competing with Toronto any more than the mice are competing with an elephant for food. If you exclude Montreal, Toronto’s GDP increased between 2014-2018, more than all other Census Metropolitan Areas in Canada combined, east of British Columbia.
The bottom line is that Canada needs a strong Toronto economy. It accounted directly for 34 percent of national GDP growth between 2014-2018. It’s difficult to predict the ripple effects if the Toronto economy had stagnated over that period.
Many Atlantic Canadian cities are doing well by focusing on fundamentals, population growth, entrepreneurship, trying to nurture clusters of export-focused activity.
That’s the recipe for future success.
But a tip o’ the hat to the Big Smoke: “rots of ruck,” as Scooby-Doo would say, in the future. There is lots of opportunity to go around.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected].