Local economic development practices in Ontario

Abstract

SUMMARY It is clear that urban economic development practices in Ontario tend to cluster in certain classifications. The most widely and consistently used practices are in the area of marketing. On average, nine out of eleven techniques are practised by the cities surveyed. Governance tools and infrastructure investments are also fairly widely employed, with an average of six out of ten uniformly used. Governmental regulations, land and property management activities, and financial tools are less widely employed, with averages of five of thirteen, four of eleven, and two of twelve techniques practised by all cities respectively. In total, cities in Ontario employ an average of twenty-five out of fifty-seven economic development techniques listed. The ten most widely practised techniques across all categories are identified in Table 6. Again, marketing activities figure predominantly. However, landbased incentives and initiatives such as land acquisition, industrial zoning and industrial parks, and infrastructure improvements also are important. Based on these findings, it appears that cities in Ontario offer a range of economic development incentives which conforms closely to those widely practised by other cities. Marketing, site acquisition, and infrastructure improvement are among the most commonly used techniques according to literature. Indeed, because much of the literature focuses on cities in the United States, this research also suggests that similar economic development incentives are offered by cities in Canada and the United States. However, financial incentives such as tax abatements, loans, and loan guarantees are notable by their absence in Ontario cities. Does the limitation on bonuses affect economic development practices in the other categories? In other words, what appears to be the result of provincial restrictions on bonuses? Based on survey results and personal interviews with a small sample of economic development officials in Ontario, it does seem that restrictions have had some impact. While common techniques do centre in the marketing and land based areas, it appears that Ontario cities are also more likely to use more innovative means of attracting economic development. For example, business incubators and training programs are utilized by over 25 per cent of the cities. Thus these techniques, often promoted in the literature as more advantageous to cities, seem to be used more widely in Ontario than in many other cities. Regulations to limit or control certain facets of development also seem more prevalent than easing governmental regulations to promote development. Finally, some innovative techniques such as awards for research and development are also evident. While many economic development officials acknowledge that provincial restrictions limit their ability to compete with other cities, particularly those in the United States (52 per cent agree), they are split over whether such restrictions are too extreme (40 per cent feel they are too restricted, 43 per cent feel that they are not). In interviews it was often suggested that such limitations do reduce the inter-city competition for development which often drives economic development policies in cities that are allowed to offer tax abatements and other incentives. Further research is warranted to explore more fully the effect of restrictions on economic development bonuses. If such limitations regularly result in practices that are judged to be effective in promoting economic development, then such policies as those contained in the Municipal Act appear promising.