The Martin Prosperity Institute’s (MPI) recently released report Ontario in the Creative Age¹ has provided Ontarians a fresh context for their conversations on provincial prosperity . The government commissioned report tells us that if Ontario is to be an exemplary global jurisdiction in today’s world, it must recognize the tight link between creativity and prosperity, and, in line with this recognition, it must move quickly to:

1. Harness the creative potential of Ontarians
2. Broaden our talent base
3. Establish new social safety nets
4. Build province-wide geographic advantage

The report breaks each of the action items above (diagram above¹) into a number of initiatives that it briefly discusses. Detailed blueprints are consciously omitted, since the report is intended to be an “opening of a dialogue with Ontarians.”

So how should the government and businesses operationalize the report’s recommendations? Below, a research agenda for blueprints across three crucial areas is discussed. The three areas are as follows:

1. More aggressively marketing Ontario as a creative and culturally diverse province.
2. Shifting Ontario’s export focus beyond the U.S. and towards high-growth economies, including but not limited to the BRIC countries, the Middle East, and South America.
3. Increasing the stock and flow of talent for both resident and immigrant Ontarians.
   While the first and third areas are directly related to the recommendations of the report itself, the second area of reorienting Ontario’s export focus is not. Nonetheless, there is a strong case to be made for each with regards to both creativity and prosperity.

1. More aggressively marketing Ontario as a creative and diverse province
Marketing Ontario as a creative and diverse province has the advantage of attracting both foreign business and talent. Businesses recognize the importance of creativity in an increasingly complex and competitive global landscape, and talented immigrants appreciate the opportunity to exercise their creativity at work and settle down in a place that embraces cultural diversity. However, Ontario’s success in such a marketing effort depends on at least three conditions: first, the province should possess characteristics that genuinely reflect creativity and diversity; second, it must have an institutional infrastructure to deliver the marketing message effectively; third, the message itself should be cogent and coherent. While we believe that the first condition is amply satisfied and attested to in a variety of sources, the second and third conditions are lacking.

Specifically, there is reason to believe that the international network of Canadian trade offices, provincial marketing centres, and embassies are not currently working together on marketing efforts. Part of this is natural – since distinct government organizations have distinct agendas – but part is artificial. For instance, by collaborating on marketing efforts at industry conferences, all organizations would further their individual goal of attracting more talent and/or investment. However, this collaboration ought to take place with a simple and coherent marketing message, lest salience be lost. Thus, it is important that Ontario’s numerous strengths – many of which are documented on government websites such as www.investinontario.com and www.international.gc.ca – be communicated under the overarching rubric of “creativity and diversity.”

2. Shifting Ontario’s export focus beyond the U.S. and towards high-growth economies, including but not limited to the BRIC countries, the Middle East, and South America
Exports have played an important role in making Ontario more competitive and prosperous, and the U.S. has been the largest export destination for Ontario’s companies, because of its proximity (and currency) advantage. The U.S.’s influence has also been reflected in the evolution of Ontario’s economic development pattern. For example, the automotive industry was once an extension of a manufacturing supply chain model built in Ontario for the purposes of serving the U.S. market. More recently, high tech companies and government bodies were envisioning a “Silicon Valley North” in the Ottawa region. As the name implies, Ontario was trying to emulate a model of development that proved successful in the U.S. and build it in Ontario as a cheaper alternative that could then export back to the U.S.

The line of thinking behind such an approach betrays Ontario’s inability to be at the forefront of the creativity race, since Ontario’s export strategy is essentially one of following and not leading. Recent successes cited by MPI papers in products such as Canadian Icewine and RIM’s Blackberry suggest that less U.S.-centric export practices should be investigated. Many companies are now realizing the export potentials outside of the U.S., but they seem to be confused about how to proceed. To the extent that exports to the U.S. and other fast growing regions are not mutually exclusive, it would be very valuable to study the business models and strategic thinking of those Ontarian companies that have become truly global exporters, and to understand how their approach to business thinking differs from the traditional U.S.-focused export model.

The natural outcome of a model that focuses on exporting to the U.S. is the entrenchment of a mindset that seeks to compete with U.S. companies in the U.S. market. In fact, many successful Canadian firms are sometimes mistaken to be U.S.-based, likely because of their large U.S. market. These include Nortel and even RIM’s Blackberry. This is a problem for the following reasons: first, growth is going to be faster in many regions outside of the U.S. for a long time to come; second, U.S. companies, the same ones Ontario companies are competing against, are not necessarily the most global and diverse; third, serving only the more homogenous North American market does not utilize the diversity potential of Ontario’s workforce (which the MPI report identified as a great but under-utilized asset). Ontario needs to know what it means to be globally competitive. This will not only give Ontarians a fuller appreciation of global opportunities, but also greater confidence that our diverse workforce is well-positioned to lead the world in the creative age.

3. Increasing the stock and flow of talent
Talent is the first and most important “T” of Richard Florida’s 4T framework for economic development (the other T’s are Tolerance, Technology, and Territorial assets). To the extent that human capital is a good proxy for talent, developing an action plan for increasing the stock and flow of human capital is a necessary condition for a more globally competitive and creative Ontario. The stock of human capital refers to the number of people with an “enhanced ability to think” (or talented people), a proxy for which is number of people with post-secondary education. On the other hand, the flow of human capital refers to the deployment of “enhanced thinking ability” (or talent) within one’s job. Dichotomies between stocks and flows may exist. For instance, immigrants from China, India, and Russia may possess advanced university degrees and thus contribute to the stock of human capital, but they have a hard time applying their power to think because of language barriers, resulting in poor flow of human capital.

Strategies for increasing the stock of human capital may be either organic or inorganic, that is, by increasing the educational level of existing Ontarians and/or by getting more educated immigrants. Making post-secondary education mandatory for every resident could be one way of increasing the former, while marketing Ontario as the talent province that actively seeks to integrate immigrants could be one way of increasing the latter. Improving the flow of human capital, on the other hand, presents additional layers of complexity. If better flow means using educated people more effectively, then any blueprint to achieve this goal must incorporate professional associations and businesses, in addition to the government. These stakeholders would, in turn, have to jointly address issues such as removing language and qualification barriers for skilled immigrants.

Conclusion
The research agenda outlined above is an important step to begin the process of helping governments and businesses operationalize the recommendations provided in the recent MPI report. Grappling with the issues discussed in this proposal will be complicated, and will involve mapping existing structures, reconciling competing interests, and assessing a range of possible options. However, there is no way around this. If the Ontarian government and businesses want to succeed in what the MPI report has dubbed the creative age, then they must strive to develop a blueprint through a focused research agenda.

Raymond Ma and Yousuf Haque are associates at Surje & Company, based in our Toronto office.

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