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2005 09 27
Passing on Toronto
In its latest issue Canadian Business magazine ranked Toronto as one of the least attractive Canadian cities to do business in. We rank 39th out of 41 on the list. OK. What is the number one city? Saguenay, Quebec. Paradoxically, Toronto ranks number 15 in the list of the world's most livable cities according to the association of city mayors.

Now, what is the calculus that Canadian Business magazine uses to arrive at its city rankings? It is not that complex. The critical factors are low taxes, low cost of living, cheap housing, and, well, just cheap. The thought process is linear. Just think of the factors that would encourage a business to outsource production to an unknown province of China - a place with no regulatory infrastructure, no environmental controls, no troublesome unions, no benefits, and nothing else that would impede an easy flow of materials in and products out. Given a global logistics network that can deliver goods relatively cheaply without having to worry about paying for the real costs of say, gas and oil exploration, the development and upkeep of transportation networks, and environmental remediation, then the choice of setting up business in far-flung locals makes a lot of sense to the average CFO. And when you throw in economic incentives like reduced taxes or even tax holidays, well, you can see why Canadian Business would rank Toronto so low. There are just too many demands associated with living in and contributing to a civilized, modern society.

But this article reflects the most primitive form of economic analysis a company might adopt when selecting a city to live and work in. With a highly commoditized business like beer making - Canadian Business uses one as an example - low cost is a key success factor. However, beer making is not the kind of businesses that will make Canada a centre for innovation in the coming century unless the 21st century ends up more like Spring Break at Daytona Beach and less like Utopia. Innovation and knowledge driven businesses thrive in economic clusters boasting a critical mass of educated, talented, and entrepreneurial people. People like that do not want to live too far away from great cultural centres like Toronto. Their personal economic analysis is not solely a material one. And smart businesses know that they will thrive and prosper when they have an innovative, informed, and internationally competitive workforce.

Canadian Business's ranking makes sense in the old Canadian paradigm of being a commodity driven branch-plant economy. But if we want to compete globally we have to build our cultural and economic centres, not rip them down with fatuous, old world analysis. We expect more from one of Canada's top business publications. Don't we?

[email this story] Posted by R Ouellette on 09/27 at 10:22 AM

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