BorderLines Toronto: Fostering Prosperity in North American City Regions

Presented by:
Ideas that Matter
The Centre for Research and Information on Canada, Canadian Unity Council
The Canada Institute, Woodrow Wilson International Center for Scholars
The Canada Institute on North American Issues

Opening remarks
Alan Broadbent, Chair, Avana Capital Corporation

Cities, Nations and Wealth: the role of cities in generating prosperity
Thomas Courchene, Professor, School of Policy Studies, Queens University
Discussant: Patrick Luciani, Senior Fellow in Urban Policy, Atlantic Institute for Market Studies

Critical elements for fostering urban competitiveness and prosperity
Riccardo Bodini, RW Ventures, LLC (Chicago, Ill.)
Peter Kwass, Mt. Auburn Consulting (Somerville, Mass.)
James Milway, Executive Director, Institute for Competitiveness & Prosperity
Moderator: Susan Reisler, Vice President, MediaProfile

Leadership and governance: what is needed
Ken Greenberg, Greenberg Consultants (Toronto, Ont.)
Brian Bosworth, FutureWorks (Boston, Mass.)

The Canada Institute was one of the co-sponsors of "BorderLines Toronto: Fostering Prosperity in North American City Regions," the final conference in the BorderLines series. Three panels of experts gathered in Toronto, Ontario to discuss the policy challenges facing city regions in North America, with a particular focus on urban competitiveness and prosperity. The BorderLines series began in September 2002 and is a joint effort between the Canadian Unity Council's Centre for Research and Information on Canada, the Canada Institute of the Woodrow Wilson International Center for Scholars, the Canada Institute on North American Issues; and Ideas that Matter. Papers and presentations as well as information regarding the first five conferences are available at BorderLines: Canada in North America

Rebecca Low presented the findings of the most recent public opinion survey conducted on behalf of Borderlines, comparing the views of Americans and Canadians on urban prosperity, labor mobility, border control, and immigration. The most pronounced differences were apparent in attitudes toward immigration, with Canadians far more likely than Americans to consider the impact of immigration on their local communities positively; border control, with more Canadians in favor of relaxing controls at border crossings than Americans; and urban prosperity, where Canadians appear more confident than Americans in their cities' capacity to provide "a better quality of life" to newcomers, but less sure than Americans when it comes to providing job opportunities.

Thomas Courchene presented his research on the political economy and fiscal federalism dimensions of city regions in North America. He forcefully argued that Canada's success depended on the prosperity of its city regions relative to competing cities in the United States. Challenges abound, however, as Canadian cities are not as nimble in attracting investment, providing tax incentives, or strengthening their human capital base. Canadian city regions typically lag behind in attracting and retaining "technology" and "talent," though they often score higher in "tolerance." Another challenge is the structure of Canadian public expenditures, which sees federal tax dollars redistributed to the provinces before reaching the cities, while urban regions have little room to raise revenues of their own compared to their counterparts south of the border. Courchene recommended three specific steps to address these challenges: allow a percentage of personal income tax to flow directly to cities; change the sales tax to a value-added tax; and replicate Quebec's decision of creating a provincial immigration department to better cater to the needs of city regions.

Patrick Luciani offered a number of comments on Courchene's paper. He cautioned against the use of indexes such as the 3 "Ts"—talent, technology, and tolerance—noting that a wide variety of such indexes could be put forth but ultimately fail to capture differences between city regions. On city growth, he remarked that a general consensus held that urban growth often drives economic growth, but little research has been done on what the "optimal size" of a city ought to be; indeed, has the urban sprawl in Mexico City or Los Angeles reached a point were it impedes economic growth more than it bolsters it? He also guarded against the notion that urban public policy is sufficient to successfully guide urban growth; Berlin tried to become the capital of Germany's corporate world by design, but instead has evolved into a hub for artists and software designers.

Riccardo Bodini presented the findings of a detailed quantitative study conducted on behalf of CEOs for Cities, which purported to identify the key drivers underlying urban economic growth. Highlights include the finding that cities attract talent and human capital based on an array of basic economic factors (such job opportunities, housing affordability, etc.); that businesses move in because of local talent appears to be less often the case. Further, population growth in North American cities and income growth over time appear no longer to be correlated: cities do not necessarily need to grow to become wealthier. Successful cities tend to outperform laggard cities by a significant margin, suggesting that city regions in decline face many more challenges to keep pace with competitors.

Peter Kwass discussed the role of higher education as a driver of regional economic competitiveness. Universities and colleges are correctly viewed as assets, but are often not used to their full potential for workforce development—training and retaining human capital to meet the needs of regional economies. Centers of higher education can also be leveraged as sources of "business spin-off activity," civic leadership, and investments into a city's "quality of life."

James Milway presented a detailed overview of how Ontario was faring compared to 16 peers states in the United States. Whereas the province's overall ranking suggest a competitive picture, in certain sectors, such as in the "traded" economic clusters, there is a significant gap with many U.S. states. Likewise, peer U.S. states with higher rates of urbanization than Ontario on balance also have higher rates of productivity, wages, and investment. Although Ontario outperforms many U.S. peer states in K-12 education, it lags behind in specialized support, higher education, and in maintaining an environment of competitive pressures; it also has higher corporate taxes and "taxes stupidly" in comparison to its U.S. peers.

Ken Greenberg argued that North American most successful city regions compete not just on cost—where they are often at a disadvantage—but also on "values" such as attractiveness, quality of life, ease of access, etc. Boston's waterfront and harbor restoration project is a case in point: additional funding was earmarked specifically for the purpose of connecting the new waterfront development to other neighborhoods by way of "pedestrian-friendly streets," which have resulted in much greater interest in the new neighborhood on the part of city dwellers. Similarly, a recent study of Minnesota's Twin Cities showed a strong correlation between the retention of real estate value over time and the proximity of parks and public spaces in a neighborhood.

Brian Bosworth addressed the challenges of leadership and governance in city regions, remarking that mayors and elected city officials often find their powers circumscribed by city jurisdictions that no longer encompass the entire economic space of an urban region. He argued that leadership across a city region will not evolve from civil side, but rather from civic side. The business community has a large role to play, but only as coalitions, for individual business leaders hardly ever wiled sufficient influence to affect decision-making across a city region.