Canada has a lot going for it:
By land mass it is the second-largest country in the world, with the longest coastline. Bookended by the vast Pacific and Atlantic oceans it has enormous trading advantages, alongside access to the largely untapped Arctic to its north. It is a net energy exporter; it has the third-largest proven oil reserves and is the fifth-largest producer of natural gas — but it also boasts large deposits of critical minerals vital to the green energy transition. And, of course, it borders the world’s largest economy.
By purchasing power parity, its economy is ranked 15th globally by size, behind the likes of Turkey, Italy and Mexico. The OECD has forecast Canadian per capita gross domestic product growth up to 2060 to be the lowest among advanced nations.
Poor productivity is at the heart of the country’s growth challenges. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000.
The solution is probably a simple one: We need to innovate, invest more in R&D, and create stronger links between research and Canadian businesses. But executing on this has proven difficult:
Enormous efforts have been made to understand why businesses in Canada invest so much less in R&D than their counterparts in the U.S., much of Western Europe, South Korea and Japan. Is it our reliance on the export of natural resources and agricultural products? Is it reduced incentives to innovate for our heavily regulated and profitable oligopolies in sectors such as banking and telecommunications? Is it our decades-old reliance on incentivizing industrial R&D through federal and provincial tax credits?
It's hard to imagine a more important topic affecting all Canadians. So I would encourage you to read this recent opinion piece by David Naylor (president emeritus of the University of Toronto) and Stephen J. Troops (president of the Canadian Institute for Advanced Research).
It's a balanced piece. Neither of them are arguing for "empty credentialism" or for research that remains in academia. What matters is what we do with the work that our smartest minds are doing. And the overarching point is that innovative research needs to find demand within Canadian businesses.
Right now, we're very bad at this. That needs to change.
Chart: Globe and Mail
As many of you know, I am an advocate for high-speed rail in Canada. Specifically along the Windsor-Quebec City corridor, which is the most densely populated part of the country. And so I found this comparison interesting:
"If there is one project that would create thousands of jobs, improve business productivity, clean up the air, reduce the output of greenhouse gases and cut the demand for endless highway construction, it would be high-speed electric rail between Toronto, Ottawa and Montreal, where population densities are high enough to make the project sensible. Cost estimates are all over the map. The University of Toronto’s Munk School of Global Affairs & Public Policy put the price tag at about $12-billion, which is $2-billion less than the bucks being thrown at the Volkswagen battery plant alone. But forget it – the Canadian government wants more cars, not fewer. Canadian cities will remain car sewers forever."
The above excerpt is from this opinion piece talking about EVs and the public subsidies being paid to encourage battery production within Canada. I get that we want to be part of this important mobility shift. But we are way behind when it comes to high-speed rail.
And by behind, I mean that we don't have it at all in this country.
The School of Cities at the University of Toronto and the Institute for Governmental Studies at the University of California, Berkeley have been using mobile phone data to track the recovery of 62 downtowns across North America. This work has been being published at downtownrecovery.com, but it has also been widely cited.
First, to be clear on how this works, the data they are collecting is not dependent on people actually making calls or actively consuming data on their phone; instead it is simply based on people having a phone with them and being physically located in one these 62 downtowns. It also covers the period between January 2019 and November 2022, and includes cities with least 350,000 people.
I'm not exactly sure how long the phones need to be in a particular place or how they treat time in their data, but the unit of measure is something that they call a "Point of Interest." This includes things like restaurants and shops, so presumably this data isn't just saying, " I went downtown and sat in my office for 8 hours." It could also be, "I went downtown and ate good pasta."
I say this because, based on my understanding of the data, having a high Recovery Quotient (RQ) could mean a number of different things. It could mean that more people are back in the office, but it could also mean that the downtown isn't a monoculture and that it has other things going on besides just work.
In any event, here's what they have found:
The headline finding is that San Francisco has the lowest RQ at 31% and Salt Lake City has the highest at 135%. There does appear to be a bias toward higher recoveries with mid-sized cities, and one of the reasons for this is that these recovery quotients appear to be correlated with average commute times:
Some of the other strongly correlated explanations, include the percentage of jobs in professional, scientific, and technical fields:
And the number of days that events were shut down during the pandemic (note the Canadian cities on the right below; welcome, New Orleans):
I suppose one way to grossly oversimplify these findings is to say that some people have been avoiding going downtown if they can't quickly drive there (and have to take transit), if their job more easily allows them to work from home, and if things were shut down for too long during the pandemic. Because if it was, they maybe forgot about all of the fun things that typically happen downtown.
Image: The School of Cities