Scorecard on Prosperity Sponsored by the Certified Management Accountants of Ontario

Transcription

1 Toronto as a Global City: Scorecard on Prosperity 2010 Sponsored by the Certified Management Accountants of Ontario Created with the research support of The Conference Board of Canada

2 Founded in 1845, the Toronto Board of Trade is Canada s largest local chamber of commerce, representing 10,000 members and connecting more than 200,000 business professionals and influencers throughout the Toronto region. The Board of Trade advances the success of its members and the entire Toronto region by facilitating opportunities for knowledge sharing, networking, business development and region building. Involvement with the Toronto Board of Trade delivers measurable professional and personal advantages for members. Equally important, the Board of Trade fuels the economic, social and cultural vitality of the entire Toronto region by fostering powerful collaborations among business, government, thought leaders and community builders. The Toronto Board of Trade plays a vital role in elevating the quality of life and global competitiveness of Canada s largest urban centre Toronto Board of Trade

3 Toronto as a Global City: Scorecard on Prosperity CONTENTS FOREWORD AND ACKNOWLEDGMENTS 2 PREFACE 4 1 EXECUTIVE SUMMARY 5 2 INTRODUCTION 10 3 METHODOLOGY 13 Metropolitan Area Selection Process 13 Indicator Selection Process 14 Ranking Method 15 4 THE BIG PICTURE 16 Overall Ranking 17 5 THE ECONOMY 22 Who s Best? 22 Focus on Toronto s Economy 34 6 LABOUR ATTRACTIVENESS 36 Who s Best? 36 Focus on Toronto s Labour Attractiveness 46 7 THE CAPITAL LENS 48 What City Is the Most Attractive for Capital Investment? 48 Focus on Toronto 49 8 INSIDE THE CMA: THE CITY AND SURROUNDING MUNICIPALITIES 52 Economy 52 Labour Attractiveness 55 9 CONCLUSION 57

4 2 / Toronto Board of Trade Foreword and Acknowledgments On behalf of all members of the Toronto Board of Trade, we are pleased to present Toronto as a Global City: Scorecard on Prosperity This second edition of the Scorecard arrives in the midst of a nascent economic recovery and at early stages of a transition to a new economic reality. Accordingly, this year s Scorecard helps show where our region has been resilient through tough times and can help chart the course for a successful transition in a time of global economic change. This report also arrives in the midst of a municipal election year and is part of the Board of Trade s VoteToronto2010.com campaign. Its assessment of the Toronto region s strengths and weaknesses will serve as the starting point from which the next administration s economic and social endeavours will be measured. And measurement matters. We cannot gauge our progress unless we track it diligently and in detail the very purpose of the Scorecard. The Scorecard has been expanded to include 11 additional indicators and five new cities, so that the Toronto region is now compared to 23 other global city-regions across a total of 34 indicators. The more encompassing sample size, combined with a more extensive data set, make the Scorecard s findings even more robust. Those findings show that, in terms of labour attractiveness, Toronto ranks second only to Barcelona as a global people magnet. Torontonians take great pride in the unique combination of civic values that define this region: diversity, philanthropy, sustainability, creativity. In recent years we have seen these values come to life through the rebuilding of our cultural institutions, the growth of our festival scene and the welcoming of highly skilled people from around the world. If Toronto scores highly on so many liveability indicators, it is because this region has made great collective efforts to produce those results. Yet those results also give rise to an intriguing riddle. If Toronto is rising to new heights as a magnet for the world s most talented, creative and mobile professionals, shouldn t its economy follow suit? After all, if the world s best and brightest are settling here, their working lives should presumably catapult Toronto s economic performance to new heights as well. It hasn t turned out that way. For all its strengths in attracting people, Toronto s economic performance remains middling, placing 11 th among the Scorecard s 24 ranked cities. The region s lack of growth in both productivity and GDP is troubling, as is its everlengthening commute times, its automobile dependency and its inability to attract a critical mass of venture capital.

5 Toronto as a Global City: Scorecard on Prosperity / 3 This year s Scorecard includes case studies on what other cities have done to solve these problems, to spur the discussion towards solutions for our region. Adopting and adapting the best practices of other regions are among the most effective ways of moving this region s economy in the right direction. But to spur that movement, this region will need to apply the same collective focus to its economy as we have applied to its liveability. Much like our civic values, Toronto also holds a unique set of business values that should be a point of pride: connectivity, foresight, opportunity, innovation, partnership. But to flourish, civic leaders must take up the cause of creating jobs, attracting investment and promoting the growth of Toronto s private sector a crucial message for mayoral candidates across this region in a municipal election year. We gratefully acknowledge the substantial contributions of the Conference Board of Canada and the Certified Management Accountants of Ontario, whose research and funding support, respectively, have been invaluable in the creation of the Scorecard. We also wish to thank the members of our Board of Directors, our Policy and Advocacy Committee, and our Economic Development Committee. They are businesspeople who give their time and expertise to the Toronto Board of Trade in the service of creating a better and more prosperous Toronto for all goals which form the core mission of the Scorecard on Prosperity. Bill MacKinnon Chair Toronto Board of Trade Carol Wilding President & CEO Toronto Board of Trade

6 4 / Toronto Board of Trade Preface Certified Management Accountants are passionate about measuring, managing and optimizing the performance of our organizations. Our enthusiasm for creating value and driving success is the reason why the Certified Management Accountants of Ontario so proudly sponsor Toronto as a Global City, our region s Scorecard on Prosperity. Prior to the Scorecard s existence, business, government and academic leaders had a limited ability to benchmark our municipal or regional economy especially on a global scale. I commend the Toronto Board of Trade and the Conference Board of Canada for removing this critical barrier to understanding where our economic engine is succeeding on the global stage and where we fall short. I believe in the phrase What gets measured, gets managed but I also believe it is imperative that we measure the right things. The Scorecard s robust indicators paint a vibrant picture of where we are succeeding, and where more effort is required. As business leaders, we aim to utilize this same type of rich information to paint a clear picture of our organizations strengths and weaknesses and develop integrated and holistic strategies for improvement. Certified Management Accountants are accountants, controllers, CFOs and CEOs of small, medium and large businesses across the province and in all sectors of the economy. The role that Certified Management Accountants play within organizations makes them among the first to experience changes in the economy. The Certified Management Accountants of Ontario is committed to enhancing the ability of our members to compete in the global economy and thereby championing the competitiveness of our cities and province as well. With the Scorecard results in hand, we now look to government, business, academics and citizens to discuss how best to improve our competitiveness, prosperity and our quality of life going forward. Merv Hillier President & CEO Certified Management Accountants of Ontario

7 Toronto as a Global City: Scorecard on Prosperity / 5 1 Executive Summary Toronto as a Global City: The Second Scorecard on Prosperity This is the second edition of the Scorecard on Prosperity. In this volume, the Toronto Board of Trade continues its examination of Toronto s economic development, benchmarking the Toronto Census Metropolitan Area (CMA) against 23 other great metropolitan areas around the world. The inclusion of 11 new indicators and updated data allows us to offer an enhanced picture of Toronto s performance, including a new analysis of Toronto s relative attractiveness for capital investment. In this way, we are able to provide a more comprehensive picture of how Toronto is doing compared to other Canadian CMAs and world-class cities around the globe. Like the first report, we use a scorecard to measure and monitor the CMA s performance and its potential for success based on 34 indicators grouped into two domains: Economy (18) and Labour Attractiveness (16). Within the Economy domain, we have added six new indicators 1 to help us better understand the business environment, with a particular emphasis on the knowledge economy. Overall Ranking Rank Metro Area 1 Boston 2 Dallas 3 Barcelona 4 Toronto 5 Calgary 6 San Francisco 7 Paris 8 Madrid 9 Seattle 10 Hong Kong 11 Sydney 12 Vancouver 13 New York 14 London 15 Montreal 16 Chicago 17 Los Angeles 18 Tokyo 19 Shanghai 20 Halifax 21 Stockholm 22 Oslo 23 Milan 24 Berlin 1. Last year s report contained 13 indicators in the Economy domain and 12 indicators in the Labour Attractiveness domain for a total of 25 indicators. Six new indicators were added to the Economy domain this year and one indicator was dropped due to lack of readily available data for the majority of cities in our sample (i.e., non-residential building-permits growth). Four new indicators were added to the Labour Attractiveness domain and the low-income cut-off was replaced with the Gini coefficient to better allow for international comparison across the cities in our sample.

8 6 / Toronto Board of Trade The Labour Attractiveness domain includes 16 indicators aimed at capturing the social and environmental factors that distinguish a great urban region from a mediocre one. Cities that fail to attract the creative class will struggle to stay prosperous and vibrant. Five new indicators, including commuting time, are added in this edition. Toronto Ranks Fourth, Same as Last Year Toronto s overall result is little changed from the 2009 edition of the Scorecard on Prosperity. Toronto remains in fourth place, in a slightly bigger class of cities (24, compared to 21). Even more than last year, Toronto shows itself to be a strong magnet for labour, better than all metro regions except one: Barcelona. While all of Toronto s strengths come together on Labour Attractiveness, a mixed performance in the Economy domain was still good enough to keep Toronto competitive. Toronto shares some Canadian advantages with Calgary (last year s top performer), such as safe urban environments, relatively affordable homes, a manageable cost of living and similar income inequality characteristics. Toronto distinguishes itself from the rest by having: The largest proportion of foreign-born residents of all 24 metro regions The highest share of professional employment of all North American metros and Sydney The highest share of high-tech employment in Canada The biggest market of all metros in North America within a day s drive of the dense eastern and big midwestern US cities. To a certain degree, Toronto s economic challenges mirror those of other Canadian CMAs. The city s most serious failings tend to cluster in the area of attracting capital investment, a problem aggravated by its lowproductivity growth. Toronto lacks some of the offsets evident in Calgary: robust GDP growth, league-leading unemployment rates and steady, high levels of employment growth (where Calgary is unmatched in North America and Europe). Leading all metro areas is Boston, which charged into first-place with a strong economic performance powered by the very innovation fundamentals that plague Toronto and all other Canadian CMAs. Boston vaulted from a four-way tie for fourth place with Toronto last year to become number one this year. Dallas held on to second place in the overall rankings, relying on a balanced combination of economic and labour attractiveness successes. Third-place Barcelona is this year s newcomer to the top tier. 2 There is little doubt that Barcelona s success comes from its ability to attract labour. Far from being an economic powerhouse, Barcelona nonetheless does well enough to place among the B metros in the Economy domain. Finally, fifthplace Calgary was toppled from its perch as the number one metro region in 2009, partly due to its poor performance on a number of the new innovation indicators that were added to this year s edition of the Scorecard on Prosperity. Focus on the Economy: Toronto Improves, but Not Enough Toronto has improved its ranking in the Economy domain since last year. Despite dropping two spots to 11 th place, Toronto has earned a B grade in a wider field of competitors. But the CMA has a long way to go to catch up to Boston, San Francisco and Seattle, the three cities with A grades. Results for Toronto are decidedly mixed, and some strong outliers often mask the real message. Some disappointing results for Toronto show the fault lines in Toronto s economy. Unfortunately, many of them link back to fundamental issues around the core economic indicators of productivity and GDP growth, further contributing to Toronto s poor innovation record. Key challenges come from: Productivity and productivity growth: Toronto, which received C grades on both indicators, is in the Canadian club of low-performing metros with growth below one per cent. At 0.6 per cent, Toronto is leagues away from top-ranked Hong Kong at 6.6 per cent and still far behind Boston at 3.9 per cent. 2. Barcelona was included in last year s report but was not part of the overall rankings due to insufficient data for a number of indicators.

9 Toronto as a Global City: Scorecard on Prosperity / 7 GDP and GDP growth: Toronto manages only a C grade on both indicators. Average GDP growth of 2.5 per cent positions the CMA behind every US metro except Chicago. Size of IPOs (new indicator): At an average size of $US67 million, IPOs in Toronto have a fraction of the value of those in Paris ($US564 million) or Boston ($US477 million). However, within the constellation of Canadian CMAs, Toronto leads all five with Vancouver ($US9 million) owning the bottom spot. This, however, is cold comfort for Toronto. Venture capital investment/gdp (new indicator): Toronto s venture capital investment of $1,069 per million GDP is just five per cent of that of first-ranked San Francisco at $21,720 per million GDP (all figures US$). Economy Overall Rank Metro Area Grade 1 Boston A 2 San Francisco A 3 Seattle A 4 Hong Kong B 5 Dallas B 6 New York B 7 Calgary B 8 Sydney B 9 Los Angeles B 10 Paris B 11 Toronto B 12 Madrid B 13 Oslo B 14 Milan B 15 Barcelona B 16 Tokyo B 17 Chicago C 18 Vancouver C 19 Stockholm C 20 Montreal C 21 Shanghai C 22 London C 23 Halifax C 24 Berlin D Boston was lifted to the number one spot in the 2010 edition (it came in fifth place last year with a B grade) partly on the strength of the new economy benefitting from significant venture capital investment and IPOs indicators not included in the 2009 edition. In turn, this has translated into high average incomes, strong productivity and productivity growth and the highest levels of GDP per capita in the US. Second-place San Francisco is in many ways a West Coast mirror image of Boston. Focus on Labour Attractiveness: Toronto Shines The results in this domain highlight what s best about Toronto. As a magnet for labour, its rise from fifth to second place positions Toronto solidly among the world s great metropolises. Toronto benefits from a highly diverse population base, strong and consistent population growth, a low homicide rate and an affordable cost of living. Canadian CMAs Calgary and Vancouver join Toronto among the top seven jurisdictions. In this domain, Toronto earned A or B grades on 13 of 16 indicators, ranking in the number one spot again on share of foreign-born population ahead of secondplace Vancouver. With the spotlight shining on Toronto, it is important to illuminate the areas where the CMA lags behind its global counterparts. Most glaring is Toronto s embarrassing last-place finish out of 19 CMAs on commuting time. Despite the fact that commuting times for US metros may be somewhat underestimated, Torontonians 80-minute average round-trip journey to work is enough to merit a punishing D grade. First-place Barcelona s reputation as a beautiful, sustainable and functional city is well-deserved. Its hospitable climate and short commuting times are the best in the field; and its high proportion of young labourforce adults is second only to its sister city, Madrid.

10 8 / Toronto Board of Trade Labour Attractiveness Overall Rank Metro area Grade 1 Barcelona A 2 Toronto A 3 Paris A 4 Madrid A 5 Calgary A 6 Dallas A 7 Vancouver A 8 London A 9 Montreal B 10 Sydney B 11 Halifax B 12 Chicago B 13 Shanghai B 14 Boston B 15 Seattle B 16 Hong Kong C 17 New York C 18 San Francisco C 19 Los Angeles C 20 Tokyo C 21 Stockholm C 22 Berlin C 23 Oslo D 24 Milan D Introducing the Capital Lens : Toronto s Achilles Heel In this edition of the Scorecard on Prosperity, we introduce the Capital Lens : a combination of eight of the Economy domain indicators most closely linked to capital attractiveness (including productivity, venture capital and office rents). The purpose of the capital lens is as an indicator of a metropolitan area s capacity to attract capital investment a key determinant of economic prosperity. It is here that we uncover the critical problem in Toronto s economy: Toronto posts a C or D grade on five of the capital lens indicators. Overall, this is where Toronto gets its worst result, taking 19 th place with a D grade. Despite Toronto s relative affordability as a place to do business, the CMA falls short when it comes to attracting significant capital investment. By contrast, Boston ranks first based on the same advantages that propelled it to the top of the Economy domain: outstanding levels of venture capital investment and IPOs, boosted by the availability of affordable office rents (even better than Toronto s) and a reasonable tax burden (although it is higher than Toronto s total tax index). Capital Overall Grade Rank Metro Area (normalization score) 1 Boston A Hong Kong A San Francisco A Paris B Milan B Dallas B Chicago B Los Angeles C New York C Barcelona C Madrid C Berlin C Stockholm C Seattle C Tokyo C Oslo C Shanghai C Sydney C Toronto D London D Montreal D Vancouver D Calgary D Halifax D 0.35 Inside the CMA: The City of Toronto and its Neighbours The city of Toronto has gained some economic ground compared to its surrounding municipalities, improving in each of its five major weak spots, which nonetheless remain as weak spots (GDP growth, income growth,

11 Toronto as a Global City: Scorecard on Prosperity / 9 employment growth, unemployment rate and total tax index). In some instances, these relative gains come at the expense of absolute declines in these economic indicators due to the effects of the global recession in In other words, the city centre weathered the economic downturn somewhat better than its surrounding municipalities. In this year s Scorecard on Prosperity we have included four case studies which highlight the best practices of other leading city-regions. These Metro Highlights allow us to begin addressing the barriers to Toronto s success in becoming a world leader in all categories. Conclusion Toronto has proven itself an attractive place to live, drawing in enough well-educated, skilled newcomers to keep it near the top of the labour attractiveness domain. Toronto leads the pack in its share of high-tech and professional workers and remains competitive in its share of the population with university degrees. Within an easy day s drive of the populous Northeastern and Midwestern US, Toronto has the market size to generate good investment opportunities and sustain solid productivity growth. With its relatively low business taxes and office rents, Toronto is affordable on the global stage as well. Yet when it comes to the fundamental markers of an innovative and productive economy GDP per capita, GDP growth, productivity and productivity growth Toronto struggles to succeed. In addition, poor results on the newest set of indicators most closely aligned with the knowledge economy (patents, venture capital) compound the bad news. The benchmarking work in this 2010 edition of the Scorecard on Prosperity validates what we already suspected: that Toronto s inability to innovate is not the result of an unskilled labour force. Our Capital Lens analysis points to one important root cause of this inability: the relatively small size of Toronto s (and/or Canada s) financial markets, which are unable to support the required levels of investment in physical capital that would generate strong productivity growth. The small average size of the IPOs in Toronto supports this conclusion. However, more research on this question is required possibly in the form of case studies or interviews to help determine the barriers to innovation and the best way to overcome them. Toronto s poor performance in innovation and productivity growth is troubling, since these two forces are the major drivers of future prosperity. If Toronto does not improve its prospects for future wealth generation, many of its current advantages will not be sustainable. A highly attractive quality of life comes at a price, a price that must be paid from the incomes of Toronto s residents; incomes that, in turn, depend upon strong productivity growth. A final word here about congestion. Toronto s most pronounced weakness on labour attractiveness is its lengthy average commuting time. Citing urban sprawl and under-investment in transit, the Organisation for Economic Cooperation and Development (OECD) warned in a recent report which should be seen as a call for action that congestion in Toronto is costing the Canadian economy over $5 billion a year.

12 10 / Toronto Board of Trade 2 Introduction This is the second edition of the Scorecard on Prosperity. In this volume, the Toronto Board of Trade (the Board) continues its examination of Toronto s economic development, benchmarking the Toronto CMA against 23 other great metropolitan areas around the world. The inclusion of 11 new indicators and updated data allows us to offer an enhanced picture of Toronto s performance, including a new analysis of Toronto s relative attractiveness for capital investment. We are thus able to provide a more comprehensive picture of how Toronto is doing compared to other Canadian CMAs and world-class cities around the globe. Like other global cities, Toronto is seeking to improve its economic success and sharpen its competitive edge. The importance of this task has come into sharp focus over the past 18 months as the region has faced its most serious downturn in nearly 20 years. As the place which accounts for about 18 per cent of total GDP in the country, Toronto s prosperity must be a concern for all Canadians. 3 The Board plays a vital role in elevating the quality of life and global competitiveness of the Toronto region through its continued legacy of public policy advocacy. Toronto s economic development is a key focus for the Board as we seek to understand how, why and whether the city centre and the region are progressing in the transition to a 21 st century economy. Benchmarking Toronto against other key Canadian cities and the world s great metropolises is one way we can better understand the region s strengths and weaknesses. As in the first report, we used a scorecard to measure and monitor the CMA s performance and its potential for success based on 34 indicators grouped into two domains: Economy (18) and Labour Attractiveness (16). Within the Economy domain, the Non-Residential Building-Permits Growth indicator was dropped from this year s edition of the scorecard because data was available for only seven of 24 metro areas. However, we have added six new indicators to help us better understand the business environment, including: 1. Venture capital investment per million $ of GDP 2. Average venture capital investment per firm 3. Size of IPOs 4. Office rents 5. Market size 6. Number of patents per 100,000 population While we believe that all 18 economic indicators provide important signals as to how a metro region is performing, four in particular serve as vital signs of a healthy urban economy. These core economic indicators almost always appear in metropolitan and national benchmarking studies: 1. GDP per capita 2. GDP growth 3. Productivity per capita 4. Productivity growth 3. Toronto is one of the chief economic powerhouses of Canada. The Toronto metro-region is Canada s biggest metropolitan economy. It generates almost a fifth of national GDP, and 45% of Ontario s GDP. - OECD Territorial Reviews: Toronto, Canada Paris: OECD, January 2010.

13 Toronto as a Global City: Scorecard on Prosperity / 11 Benchmarking Toronto against other key Canadian cities and the world s great metropolises is one way we can better understand the region s strengths and weaknesses. The labour attractiveness domain includes 16 indicators aiming to capture the social and environmental factors that distinguish a great urban region from a mediocre one. Cities that fail to attract new people will struggle to stay prosperous and vibrant. The low-income cut-off indicator was eliminated from this year s edition of the Scorecard because the level of the cut-off varies across countries, making meaningful comparisons impossible. In all, five new indicators were added in this edition: 1. Commuting time 2. Cost of living 3. Number of international visitors 4. Air pollution 5. Gini coefficient (a measure of income disparity replacing the low-income population indicator) In order to gain a better understanding of the dynamics of prosperity within urban regions, we have included a new section in this report called the Capital Lens (Chapter 7). By clustering together eight of the economic indicators, we have created a new suite of measures to benchmark Toronto s ability to attract capital investment. This allows us to shine a spotlight on the third of the three elements of economic prosperity: 1) a strong pool of labour; 2) high productivity and economic growth; and 3) capital investment. In addition, we continue to examine the Toronto CMA in more depth, looking at the city of Toronto s performance relative to surrounding municipalities (Chapter 8). A prosperous Toronto region requires both a strong city centre and strong surrounding municipalities. Breaking down the Toronto CMA s performance helps to reveal whether all parts of the region are performing equally well or if there are parts of the CMA lagging behind others in certain types of indicators.

14 12 / Toronto Board of Trade Map of the Toronto CMA Chippewas of Georgina Island First Nation Georgina New Tecumseth Bradford West Gwillimbury East Gwillimbury Newmarket Uxbridge Mono Aurora Whitchurch- Stouffville Orangeville King Richmond Hill Markham Pickering Ajax Caledon Vaughan City of Toronto Brampton Halton Hills Mississauga Milton Oakville Toronto CMA City of Toronto Surrounding Municipalities Source: Statistics Canada

15 Toronto as a Global City: Scorecard on Prosperity / 13 3 Methodology The Board seeks to ensure Toronto remains a competitive and vibrant city; that it contributes in a significant way to the prosperity of Ontario and the country as a whole. To assess just how competitive Toronto really is in terms of its economy and labour attractiveness, the Board commissioned the Conference Board of Canada (CBoC) with developing a scorecard on prosperity to benchmark the CMA against 23 metropolises around the world. But the Board was interested in taking the analysis a step further: we wanted to determine the city of Toronto s performance relative to the rest of the CMA, which includes 22 suburban municipalities defined by Statistics Canada (see map on facing page). Drawing on its previous success, the CBoC has replicated the methodology used in the 2009 Scorecard on Prosperity in the 2010 edition of the report. Thirty-four indicators were chosen to measure Toronto s success in: 1) the global economy; 2) its ability to attract and retain workers from around the world; and 3) its ability to attract capital investment. For more information on how Toronto stacks up relative to other cities, see detailed data tables in each of the Economy, Labour Attractiveness and Capital Lens chapters. Metropolitan Area Selection Process A key starting point for this benchmarking project was deciding which metropolitan areas to include. Based on the following criteria a preliminary list of cities was determined: 1. Cities comparably sized to Toronto: Barcelona, Boston, Milan, Madrid, Berlin, San Francisco and Seattle 2. Toronto s main Canadian competitors: Montreal, Calgary and Vancouver 3. Global cities to which Toronto is sometimes compared: Chicago, London, Los Angeles, New York, Paris, Tokyo and Sydney 4. Metro regions within North America to allow for regional comparison: Halifax and Dallas 5. Metro regions with progressive social and environmental policies: Oslo and Stockholm 6. Metro regions in rapidly emerging economies: Hong Kong and Shanghai The list of 23 comparator metropolitan areas specified in the above six criteria was finalized following an iterative process to screen out certain candidates due to lack of comparable data or uncertainty about data integrity. For instance, Dubai was proposed but eliminated due to a lack of data for a sufficient number of indicators and the difficulty of comparing its data to that of other cities. The comparator metropolitan areas used in this report will be reviewed for future editions of the annual Scorecard. The possibility remains that cities currently excluded will be included in future years (if better data becomes available) and/or that some cities currently included will be removed (if it becomes clear that their relative value as comparators is not high). In this edition of the Scorecard, for instance, Quebec City and Rome were removed while Tokyo, Sydney, Milan, Berlin and Halifax were added.

16 14 / Toronto Board of Trade Indicator Selection Process The search for indicators began with a commitment to find measures that showed the degree of economic strength, the degree of labour attractiveness, the degree of capital attractiveness as well as the human, social and environmental sustainability of each metropolitan area. The selection of indicators for each domain evolved over a period of weeks in order to allow for consultation with the CBoC and to enable a test run for data availability and reliability. The indicators selected provide valuable information on the performance or status of a metropolitan area within a particular domain, either as a direct output (e.g., disposable income) or a proxy measure (e.g., the number of teachers per 1,000 school-age children as a proxy for access to education). In the end, 34 indicators were chosen. Unfortunately, it was impossible to collect data on all 34 indicators for every metropolitan area due mainly to data incomparability. But all 34 indicators were available for the Toronto CMA. We screened all data sources rigorously to ensure that each indicator had the same definition for international cities as for their Canadian counterparts; in other words, we wanted to avoid apples-to-oranges comparisons. But there were a couple of exceptions. Some vital indicators, like housing affordability, were included despite slight differences in definitions across countries. In these cases, we standardized the data by dividing each city s indicator by its national average. Another issue that surfaced as we looked at the data was the question of what to do with outliers. In a handful of cases, some cities scored so well that nearly every other metro area was left with only a C or D grade. Conversely, some scores were so poor that nearly every other metro area was awarded an A or B grade. To combat this, we created best-in-class and worst-inclass outliers. For instance, San Francisco s dominant performance on patents is a best-in-class outlier. Conversely, the unemployment rate in the Berlin metro area is near 20 per cent a worst-in-class outlier that makes every other city look good in comparison. How did we tackle this issue? For best-in-class outliers, we left the data unchanged. San Francisco sets the standard on patents and every other metro area must strive to its level. However, worst-in-class outlier cities were removed when we recorded the results shown in the following tables. 4 We agreed, however, that the metro area with the outlier should still be penalized for its low score and it was therefore included in the calculation of the overall domain. Besides Berlin s unemployment rate, there are four other cases where this rule was applied: air pollution in Milan, and the productivity level, productivity growth and cultural employment in Shanghai. 5 The impact of this decision Milan and Berlin were ranked at the bottom for the overall score is quite telling. While Berlin received the lowest score in the Economy domain (due in part to its high unemployment rate), Milan trailed behind all other municipalities in the Labour Attractiveness section (due in part to poor performance on the air pollution indicator). Benchmarking studies use annual historical data as a means of comparing the performance of cities. 6 Given that this study was launched in the fall of 2009, data beyond the year 2008 was unavailable for all indicators. This means that the effects of the turmoil in world financial markets that erupted in September 2008 are not entirely reflected in this study. This does not imply, however, that the study s results are compromised. A benchmarking analysis, by definition, is a relative comparison. All the cities in this study were affected, one way or another, by the global economic downturn. Moreover, most of the economic indicators in this analysis are five-year averages, so the addition of oneyear s worth of data would have limited impact. It is safe to assume, therefore, that if full-year data for 2009 were included in this study, the overall rankings would remain fairly stable. However, more recent data was available for the comparison of the city of Toronto to its surrounding municipalities. For the indicators of employment growth, the unemployment rate and building-permits growth, comparisons were made using the latest available data. 4. We used two to three standard deviations from the mean to determine if an outlier existed. If that outlier completely skewed the distribution of grades, it was deemed worst-in-class and removed. 5. Shanghai was considered a worst-in-class outlier on three indicators as mentioned above. The city was thus removed when grades were assigned for these indicators but its worst-in-class values were still included in its overall domain score. 6. All international data was converted to US dollars using OECD purchasing power parity exchange rate estimates for the given year.

17 Toronto as a Global City: Scorecard on Prosperity / 15 Data from October 2009 was used regarding the labour force and data from September 2009 was available regarding building permits. Ranking Method This study uses a report card-style A B C D ranking to assess the performance of metropolitan areas for each indicator. We assigned a grade level to performance using the following method: for each indicator, we calculated the difference between the top and bottom performer and divided this figure by four. A metropolitan area received a scorecard ranking of A on a given indicator if its score was in the top quartile, a B if its score was in the second quartile, a C if its score was in the third quartile and a D if its score was in the bottom quartile. A metropolitan area was given an assignment of N/A if data was unavailable for that indicator. For example, on the labour attractiveness indicator proportion of the population that is foreign-born, 45.7 per cent of top-performer Toronto s population was foreign-born in 2006 while bottom-performer Shanghai s was only 1.1 per cent. Applying the method for scoring thus yields the following ranges for each grade: A : per cent B : per cent C : per cent D : per cent (Note: In this example, a high score indicates a high level of performance. For indicators where a low score signifies a high level of performance such as the homicide rate the ranking levels are reversed, i.e., the highest result receives the lowest grade.) It must be emphasized that if two cities get an A grade it does not necessarily mean they performed equally well. In the example above, a city scoring 36 per cent would get an A grade in the same way that a city scoring 40 per cent would. However, when we establish a ranking of cities, the city getting a result of 40 per cent would be placed higher than the one scoring 36 per cent even if both received an A grade. In the tables throughout this document, therefore, cities with a higher score are listed above those with the same letter grade. Overall domain rankings are based on a composite index (an average of the normalized scores for each indicator in each specific domain). In other words, the top-ranking metropolitan area for a given indicator will receive a score of 1, while the bottom-ranking metropolitan area will receive a 0. A notable change to this year s edition of the report was our decision not to create an overall composite score and letter grade for overall rankings. We recognize that Economy and Labour Attractiveness domains cover entirely different sets of indicators and their respective composite scores and grades should be reported separately. Normalization Formula Normalized value = (indicator value minimum value) : (maximum value minimum value) Using the example above, Toronto would be assigned a score of 1 given that it leads other cities in terms of its percentage of population that is foreign-born: ( )/ ( ). Likewise, Shanghai would receive a 0 given that it ranks last in terms of its percentage of population that is foreign-born: ( )/( ). A metropolitan area with a 25 per cent foreign-born population, for example, would get a score of 0.54: ( )/( ). To calculate domain rankings, metropolitan areas were ranked according to their composite index scores. Explicit differential weights were not assigned to indicators according to their importance; that is, equal weight was given to each indicator. A grade level was then assigned to the overall domain performance, which was achieved by calculating the difference between the domain composite index of the top and bottom performers and then dividing this figure by four. A metropolitan area received a scorecard rating of A for the domain if its score was in the top quartile, a B if its score was in the second quartile, a C if its score was in the third quartile and a D if its score was in the bottom quartile.

18 16 / Toronto Board of Trade 4 The Big Picture The world s biggest, most interconnected cities help set global agendas, weather transnational dangers, and serve as the hubs of global integration. They are the engines of growth for their countries and the gateways to the resources of their regions Global Cities Index, Foreign Policy 7 Acknowledging the growing importance of Canada s largest metropolitan area, the Board seeks to learn more about Toronto s place in the constellation of world cities. In this second edition of the Scorecard on Prosperity, we have entered Toronto in a field of 24 great global metropolises in North America, Europe, Australia and Asia. Berlin, Milan, Tokyo, Sydney and Halifax are this year s additions each offering a unique insight in comparison to Toronto. The trio of London, New York and Tokyo are often cited as the world s only true world class cities; however, China s cities (Shanghai and Hong Kong) are leaping ahead to lay claim to the status. Out of five US metro regions included in this study there are three outstanding high-tech poles: Boston, Seattle and San Francisco. The following table shows the 2008 population for each metropolitan area. Six exceed a population of 10 million, with the Tokyo region topping the list at 32.5 million a number roughly equivalent to the population of Canada. At 5.5 million, Toronto is in the middle of the pack, with about half a million less than Dallas and a million greater than Milan and Barcelona. Halifax, by far the smallest metropolis, is included because of its strong presence in the Atlantic region and its ties to the Northeastern US. Populations of Metro Areas Metro Area Population 2008 Tokyo 32,450,000 New York 19,006,800 Shanghai 18,884,600 London 12,875,000 Los Angeles 12,872,810 Paris 11,769,473 Chicago 9,569,624 Hong Kong 7,055,071 Dallas 6,300,006 Madrid 5,843,031 Toronto 5,531,263 City 2,925,710 Rest of CMA 2,656,084 Milan 4,861,502 Barcelona 4,607,317 Boston 4,522,858 Sydney 4,399,722 San Francisco 4,274,531 Montreal 3,750,540 Berlin 3,700,000 Seattle 3,344,813 Vancouver 2,271,224 Stockholm 2,011,047 Oslo 1,403,268 Calgary 1,182,446 Halifax 394,

19 Toronto as a Global City: Scorecard on Prosperity / 17 Overall Ranking Toronto s overall result is little changed from the 2009 edition of the Scorecard on Prosperity. Toronto remains in fourth place, albeit in a slightly bigger class of cities (24, compared to 21 in 2009). Boston leads all metro areas, having charged into first place with a strong economic performance powered by the same innovation fundamentals that plague Toronto and all other Canadian CMAs. Specifically, Boston, as the top-ranked metro region in the Economy domain, ranks among the top four cities on half of the Economy indicators including: venture capital investment (as a share of GDP and dollars per firm), size of IPOs, income per capita, productivity growth, high-tech employment, patents, GDP growth and professional knowledge employment. Boston vaulted from a four-way tie for fourth place with Toronto in last year s Scorecard on Prosperity to come out at number one this time around. Metro Highlight #1 on page 20 explains further why Boston is best in class. Dallas held on to second place through a balanced combination of economic and labour attractiveness successes. First in average venture capital investment per firm, Dallas also enjoys strong fundamentals with solid productivity growth and the best GDP growth in North America and Europe (only Hong Kong surpasses it). Dallas comes fourth in a string of powerful US technology poles with six per cent of its employment attributed to high-tech. Fast-growing Dallas (the only place to come close to Calgary s rapid population growth) also boasts the best housing affordability and third-best office rents. Overall Ranking Rank Metro Area 1 Boston 2 Dallas 3 Barcelona 4 Toronto 5 Calgary 6 San Francisco 7 Paris 8 Madrid 9 Seattle 10 Hong Kong 11 Sydney 12 Vancouver 13 New York 14 London 15 Montreal 16 Chicago 17 Los Angeles 18 Tokyo 19 Shanghai 20 Halifax 21 Stockholm 22 Oslo 23 Milan 24 Berlin Barcelona, this year s top-tier newcomer, is in third place. 8 There is little doubt that Barcelona s success comes from its ability to attract labour, including: ranking first on appealing climate (of 24), ranking second in young population (of 24), ranking first in short commute times (of 19) and ranking sixth on great alternatives to automobile commuting (of 21). Although it is far from being an economic powerhouse, Barcelona nonetheless did well enough to place among the top-flight metros. 8. Barcelona was included in last year s report but was not part of the overall rankings due to insufficient data for a number of indicators.

20 18 / Toronto Board of Trade Toronto is once again in fourth place. Even more than last year, the city shows itself to be a strong magnet for labour better than all metro regions except one (Barcelona). While all of Toronto s strengths come together on Labour Attractiveness, a mixed performance in the Economy domain was still good enough to keep it competitive. Toronto distinguishes itself from the rest of the field with: The largest proportion of foreign-born residents of all 24 metro regions The highest share of professional employment among all North American metros and Sydney The highest share of high-tech employment in Canada The biggest market of all metros in North America within a day s drive of the dense eastern and big Midwestern US cities To some degree, Toronto s economic challenges mirror those of other Canadian CMAs. As with Calgary, Toronto s most serious failings tend to cluster in the area of attracting capital investment, a problem aggravated by its low productivity growth. Toronto lacks some of the offsets evident in Calgary: robust GDP growth, leagueleading unemployment rates and steady, high levels of employment growth (where Calgary is unmatched in North America and Europe). Calgary, in fifth place, was toppled from its perch as the number one metro region in the 2009 edition of the Scorecard on Prosperity. Calgary s success continues to draw from a combination of solid fundamentals in both domains, not just from its powerful economy. In fact, Calgary s Economy domain ranking slipped from a first-place tie with Hong Kong to seventh place and a B grade, although it still held its lead on income growth and unemployment rate and was second only to Shanghai on employment growth. Calgary s economic star was tarnished, however, by some of the new indicators highlighting innovation (e.g., patents) and capital attractiveness (e.g., market size, venture capital investment), but proved itself to be great at attracting labour, notwithstanding the sobering effect of the Canadian climate. The fastest growing of all metropolises, Calgary ranked fifth in the Labour Attractiveness domain between Toronto (#2) and Vancouver (#7). Canada s CMAs in general offer safe urban environments, relatively affordable homes, a manageable cost of living and less disparity between rich and poor. Rounding out the top-ranked metros are high-tech magnets Seattle and San Francisco as well as two metro regions in Europe with strong attractiveness for labour: Paris and Madrid. The most acclaimed world cities, New York, London and Tokyo, do no better than the middle of the pack, and fall behind smaller, successful places like Barcelona, Seattle and Vancouver. London, in particular, suffered most at the hands of the economy and was unable to convert some of its most appealing features into a winning scenario (e.g., its foreign-born population, cultural employment, non-automobile commuting). New York and Tokyo, on the other hand, fared better on the Economy domain (better than Toronto, for instance), but stagnant population growth coupled with a high cost of living helped put both places near the bottom of the Labour Attractiveness domain. Tokyo lost more ground on its low foreign-born population (only two per cent of Tokyo s population was born outside Japan). New York has one of the worst income disparity problems, eclipsed only by Hong Kong.

21 Toronto as a Global City: Scorecard on Prosperity / 19

22 20 / Toronto Board of Trade Metro Highlight #1 Boston: Brains and Biotech Make a Winning Combination Where Boston is Leading Indicators relating to levels of education, innovation and capital availability. Indicator Ranking Population with at least a bachelor s degree 2 High-tech employment 2 Productivity growth 2 Avg. size of IPO 2 Avg. venture capital investment per firm 2 Venture capital investment per million $ of GDP 2 Number of patents 2 Knowledge employment 4 What s Behind Boston s Performance Boston leverages its intellectual capital to great effect, with government and private sector activity reinforcing the region s strong industrial sectors. Boston has arguably the strongest post-secondary sector in the world, with 35 institutions (including world leaders like Harvard and MIT) within the Boston MSA. As a result, young, creative people flock to Boston, which boasts a highly educated labour force, nearly 50 per cent of which is under the age of 35. Boston s education attainment of its population and its strong business services sector (35 per cent of jobs in the Boston MSA are in the business and professional services; education and health care sectors) have turned it into a hub of scientific research and innovation. More than 300,000 Bostonians are employed in high-tech jobs. Biotechnology is a particular strength: Boston has around 280 biotech companies employing 30,000 people, with industry leaders like Genzyme, Novartis AG and Wyeth Pharmaceuticals located in Cambridge (one of the three cities that form the Boston MSA). Novartis AG moved its research division from Switzerland to Cambridge in 2003 and has invested around $US 4 billion to build its presence in Boston. The company s senior management, citing the presence of a highly skilled biotech workforce as a prime reason for the move, expects to employ around 1,000 people in the Boston area. Almost eight per cent of the world s total pipeline of new drugs comes from companies headquartered in Cambridge alone. The decoding of the human genome, which will have an enormous impact on biotechnology and health care, began two decades ago in Boston. Boston s scientific research prowess is aided not only by government grants but, perhaps more importantly, by a multi-sector, common-vision approach. Boston businesses, academic institutions and all levels of government have demonstrated an understanding of the value of investing in life sciences through the formation of the Massachusetts Life Sciences Center, a quasi-public agency. Federal grants from the National Institutes of Health to Massachusetts (principally Boston) trail only California in terms of funds received. Further funds for scientific R & D are part of President Obama s stimulus program. At the state level, legislation was passed in 2008 which included $250 million in tax incentives for companies, $250 million in grants and $500 million in capital funding to support the growth of the

23 Lessons for Toronto life sciences industry over the next decade. The City of Cambridge has also set up seven business incubators (four for general business, two for high-tech start-ups and one for retail) that support innovative entrepreneurial activity by offering companies the opportunity to share an array of services and new business opportunities through strategic partnerships with other incubator clients. City officials continue to assess the need for new incubators. Boston s biotech cluster also attracts significant venture capital funds: since 2000, 65 companies based in Cambridge have received $3 billion in venture capital funding an amount equivalent to the total venture capital investment made in Canadian companies in 2007 and 2008 combined. Selected Sources: City of Cambridge: Economic Development Division IHS Global Insight (December 2009). Boston Cambridge Quincy MA NH (US Regional) Todd Wallack, Patrick Keeps a Promise to the Biotech Industry: Governor Set to Sign $1B Benefit Plan, The Boston Globe 16 June 2008[online][cited February 12, 2010] articles/2008/06/16/patrick_keeps_a_promise_to_ the_biotech_industry/>] Success requires a concerted and coordinated effort from the private sector, post-secondary institutions and all three levels of government. Many of the elements of Boston s success can already be found in Toronto: strong post-secondary institutions; an educated and skilled workforce; a strong biotech cluster (as well as strong clusters in other high-tech sectors); a strong professional services sector; and an innovative business incubator (the MaRS Discovery District). Boston s example, though, shows that R & D is a critical component of innovation, and that more funds, both private and public, need to be directed toward this activity. Further, coordinated government policy should aim to nurture and develop economically important sectors through funding, business incubator projects and an optimal climate for capital investment. Ultimately, better collaboration between governments, academia and the private sector are needed to drive innovation.

24 22 / Toronto Board of Trade 5 Economy Economy Overall Rank Metro Area Grade (Normalization Score) 1 Boston A San Francisco A Seattle A Hong Kong B Dallas B New York B Calgary B Sydney B Los Angeles B Paris B Toronto B Madrid B Oslo B Milan B Barcelona B Tokyo B Chicago C Vancouver C Stockholm C Montreal C Shanghai C London C Halifax C Berlin D 0.23 Who s Best? Perched at the top of the rankings is Boston a metropolitan region blessed with an abundance of universities and colleges and a dominant knowledgebased and high-tech economy. Boston was lifted to the number one spot in the 2010 edition of the Scorecard (it was in fifth place last year with a B grade) partly on the strength of its new economy, benefitting from significant venture capital investment and IPOs, indicators not included in the 2009 edition. These factors have translated, in turn, into high average incomes, strong productivity and productivity growth and the highest levels of GDP per capita in the US. San Francisco, in the number two spot, is in many ways the West Coast mirror image of Boston. Again, the inclusion of the new, knowledge-based economy indicators goes a long way toward explaining San Francisco s improvement from eighth place and a C grade in the last report. Renowned for its world-leading high-tech clusters, San Francisco leads all regions in number of patents and venture capital investment by very wide margins. At 176 patents per 100,000 population, San Francisco had nearly twice as many as second-place Boston and two-and-a-half times more than Seattle (ranked third). Similarly, San Francisco s stunning rate of venture capital investment put all but two metros (Boston and Seattle) into D territory. For many San Franciscans, this level of investment has translated into very high incomes and allowed this region to claim the highest average per capita income of all metro areas. Metro Highlight #2 on page 24 explains the best attributes of San Francisco s economy.

25 Toronto as a Global City: Scorecard on Prosperity / 23 Toronto s poor performance on innovation and productivity growth is troubling, since these two forces are the main drivers of future prosperity. Seattle, the only other A city, is the third partner in the successful US triumvirate of knowledge economy cities, earning its top marks in venture capital, per capita income, patents and high-tech employment. It would appear that having an innovative economy with high rates of innovation, patents and high-tech employment also translates into high per capita incomes and a strong pace of economic growth. Last year s leader in the Economy domain, Hong Kong, slipped to fourth place and a B grade. While Hong Kong s prominence in the fast-rising Asian economy continues, its relative decline stems from three important shortcomings, all linked to the new knowledge economy: 1) low levels of high-tech employment; 2) low patent numbers; and 3) poor IPO values. However, powerful economic growth assures Hong Kong a place near the top of the Economy domain. With 6.6 per cent average annual productivity growth, Hong Kong is way ahead of second-place Boston at 3.9 per cent and more than three times as strong as London at two per cent. Similarly, real GDP growth in Hong Kong is so strong (8.7 per cent per year) that the city is in sole possession of an A grade on this indicator, followed by only three cities with B grades (Dallas, Calgary, Boston). Of course, Hong Kong has another distinct advantage over other cities: a huge market of 336 million people, diminished somewhat by the overwhelming scale of the Shanghai market (at nearly half-a-billion people). Despite some significant economic strengths, Hong Kong fell from first to fourth place in the Economy domain a decline attributable to two factors: 1) the introduction of new, more comparable data sources for GDP and productivity; 9 and 2) poor performances on the new indicators. Hong Kong ranks 21 st on average office rents, 20 th on patents and 15 th on the average size of an IPO. Their second place finish on market size is the only bright spot among the new indicators. Calgary (ranked first together with Hong Kong last year) suffers a bit of the same fate as Hong Kong as a result of the introduction of the new indicators in the Economy domain. Calgary ranks in the middle of the pack on patents and office rents and brings up the rear on indicators pertaining to venture capital, IPOs and market size. The recent decline in oil prices does not seem to have greatly affected the city. Disposable income growth in Calgary is still the highest among all metros, while strong GDP growth pushed it up four places into third position on this indicator. Calgary s productivity growth ranking, however, fell two spots (to 14 th ) a signal that employment growth may possibly be too strong but also a prime reason its unemployment rate is the lowest among all metro areas (for 2007 only). On the other hand, lower oil prices may have affected the local housing market, as reduced levels of immigration reduced the demand for housing highlighted by Calgary s drop in ranking on residential building-permits growth. Please see the data for each of the indicators in this domain on page In this edition, economic data for Hong Kong comes from the IMF, widely judged as a more reliable source of data than the Government of Hong Kong (the source in the 2009 edition). This has lowered Hong Kong s ranking on indicators measured in per capita terms (GDP and productivity). There is also a slight difference when these indicators are measured in growth terms, although Hong Kong retains its first-place ranking. The only other instance where a change in data sources significantly altered the rankings is in the case of Shanghai. In this edition of the Scorecard, data was available for 2008, as opposed to 2005 in the first edition. A five-year average was thus used to calculate GDP and productivity growth this time around, instead of the three-year average used in the first edition. This change significantly lowered Shanghai s growth indicators, especially since its economic output was weak in 2008.

26 24 / Toronto Board of Trade Metro highlight #2 San Francisco: A Winning Combination of Innovation and Capital Where San Francisco is Leading Indicators relating to levels of education, innovation and capital availability. Indicator Ranking Population with at least a bachelor s degree 1 Disposable income per capita 1 Number of patents 1 Venture capital investment per million $ of GDP 1 Productivity growth 4 Avg. venture capital investment per firm 4 What s Behind San Francisco s Performance Silicon Valley, part of the San Francisco Metropolitan Area, is known around the globe as a high-tech, venture capital and entrepreneurial destination. Silicon Valley attracts talented, well-educated people and innovative companies to San Francisco. As a result, the city has a high concentration of knowledge-based industries such as Information, Communication and Technology (ICT), biotech and life sciences, as well as the high-paying jobs and investment attraction that such economic clusters generally bring. San Francisco also effectively leverages its favourable geographic location to be a hub for global commerce. Silicon Valley lies at the heart of San Francisco s and the world s high-tech industry sectors. The region s substantial biotech industry has its roots in the founding and initial public offering of Genentech in the 1970s, which grew out of Stanford University and the University of California San Francisco (UCSF). Today, the Bay Area is home to almost 1,500 life sciences and biotech companies, direct and indirect employment in these two industry sectors account for more than 20 per cent of the region s labour force. Further, Stanford University, Berkeley University and UCSF alone receive approximately $700 million annually in National Institutes of Health funding for scientific research. Silicon Valley also attracts more venture capital funding than any other jurisdiction; in 2008, almost $11 billion in venture capital nearly 40 per cent of all venture capital invested in the US was invested in San Francisco Bay Area companies. A strong management pool from which these innovative start-ups can recruit also helps in the attraction of venture capital investment. The region s economic development strategy is now focused on turning the Bay Area into a green technology hub. An impressive 181 green technology companies are already located in the region and one-quarter of alternative energy venture capital funding in 2008 was invested in the San Francisco area. State legislation has already made California one of the most progressive carbon jurisdictions in the US, encouraging the development of green technologies. Payroll tax exemptions are offered for businesses that engage in clean energy technology and a clean-tech incubator has also been created. The connection between academia and the private sector is well established in San Francisco, where numerous high-tech companies have been spun off from the area s major research institutions. The Bay Area s workforce is among the most highly educated and innovative in the

27 Lessons for Toronto world; its universities produce more Ph.D. scientists and engineers than any other area in the US. Many foreignborn engineers, software developers and innovators are drawn to Silicon Valley and are often inclined to form partnerships with former colleagues from Silicon Valley even after they have returned to their home countries a phenomenon that has been referred to as brain circulation. Selected Sources: San Francisco Center for Economic Development Profile of Biomedical Research and Biotechnology Commercialization: San Francisco Oakland San Jose Consolidated Metropolitan Statistical Area, Brookings Institute [online] [cited February 12, 2010] biotechsanfrancisco.pdf] The East Bay Cashing in on Clean Tech R & D, East Bay Economic Development Alliance [online] [cited February 12, 2010] research_facts_figures/economic_data.htm] San Francisco s example shows, among other things, how Toronto can foster the growth of its green technology sector. Toronto s sizeable high-tech and manufacturing sectors have positioned the region well for success in the emerging green technology sector. Ontario s landmark Green Economy and Green Energy Act, with its explicit job-creation objective, is a significant governmental action that will help the development of this promising sector. It is important to ensure that federal and municipal actions seek to foster this sector s growth in a similar fashion.

28 26 / Toronto Board of Trade Economic Indicators Definition Significance What about Toronto? The Grade Real gross domestic product (GDP) per capita ranked: 23 Overall value of goods and services produced within the metro region. Real GDP is divided by total population to get real GDP per capita. Data is for Per capita GDP is commonly used to compare relative wealth among regions. Toronto, 10 th out of 23, ranks below several US metros. At $42,538, Toronto s real GDP per capita is almost half that of first place Paris at $79,681. Calgary is Canada s leader on this indicator, with a real GDP per capita of $42, Paris A ($79,681) 2. Oslo A ($75,412) 3. Tokyo B ($53,071) 4. London C ($50,397) 5. Boston C ($47,383) 6. San Francisco C ($47,186) 7. Stockholm C ($43,731) 8. Seattle C ($43,130) 9. Calgary C ($42,675) 10. Toronto C ($42,538) 11. New York C ($42,525) 12. Milan C ($41,153) Data unavailable for Sydney. 13. Dallas C ($40,586) 14. Hong Kong C ($39,293) 15. Los Angeles C ($38,431) 16. Chicago C ($37,120) 17. Madrid D ($33,000) 18. Barcelona D ($29,927) 19. Vancouver D ($28,791) 20. Montreal D ($26,155) 21. Halifax D ($25,606) 22. Berlin D ($24,004) 23. Shanghai D ($22,720) Real GDP growth ranked: 23 The average annual increase in real GDP over a five-year period, as per: Canada, US, Hong Kong, Shanghai: Europe: Tokyo, Berlin: Stronger growth generates, among other things, more employment opportunities. Toronto ranks 14 th among the 23 comparator regions. Toronto s five-year average annual growth of only 2.5% is well below that of first place Hong Kong (8.7%) and slightly more than half that of second-place Dallas (4.4%). Shanghai and Berlin had negative average real GDP growth over the same five years. 1. Hong Kong A (8.7%) 2. Dallas B (4.4%) 3. Calgary B (4.3%) 4. Boston B (4.1%) 5. Stockholm C (3.6%) 6. Los Angeles C (3.6%) 7. Seattle C (3.6%) 8. London C (3.3%) 9. Madrid C (3.3%) 10. New York C (3.2%) 11. San Francisco C (3.1%) 12. Barcelona C (2.9%) Data unavailable for Sydney. 13. Vancouver C (2.9%) 14. Toronto C (2.5%) 15. Halifax C (2.0%) 16. Chicago C (2.0%) 17. Tokyo C (1.9%) 18. Oslo C (1.6%) 19. Montreal C (1.6%) 20. Paris D (0.7%) 21. Milan D (0.3%) 22. Shanghai D (-0.4%) 23. Berlin D (-1.0%) Productivity ranked: 22 Productivity is the level of real GDP divided by employment, measuring total output per worker. Data is for High productivity levels generate wealth, allowing businesses to pay higher salaries and wages. Toronto places 13 th overall, ranking below Tokyo, Hong Kong, four of the eight European cities and five of the seven US metro areas. At $76,796, Toronto is well behind the leaders: Tokyo ($112,188), Paris ($104,121) and San Francisco ($98,882). 1. Tokyo A ($112,188) 2. Paris A ($104,121) 3. San Francisco A ($98,882) 4. Oslo B ($95,112) 5. New York B ($93,465) 6. Boston B ($87,469) 7. Los Angeles B ($86,416) 8. Seattle B ($80,584) 9. Hong Kong B ($79,804) 10. London C ($79,804) 11. Stockholm C ($78,491) 12. Calgary C ($76,912) 13. Toronto C ($76,796) 14. Dallas C ($76,238) 15. Chicago C ($75,864) 16. Milan C ($74,823) 17. Madrid D ($63,412) 18. Barcelona D ($60,026) 19. Vancouver D ($53,530) 20. Berlin D ($52,676) 21. Montreal D ($52,402) 22. Halifax D ($48,329) Data unavailable for Sydney. Shanghai s data was considered to be an outlier and was removed for purposes of comparison.

29 Toronto as a Global City: Scorecard on Prosperity / 27 Economic Indicators Definition Significance What about Toronto? The Grade Productivity Growth ranked: 22 Productivity growth shows how quickly a CMA is gaining in wealth measured over a five-year period as per: Canada, US, Hong Kong: Barcelona, Madrid, Milan, Oslo, Stockholm: London, Paris, Berlin, Tokyo: Strong productivity growth allows for economic growth without inflationary pressures, fostering greater purchasing power for households. Toronto s productivity growth of only 0.6% positions it in 15 th place, behind all US MSAs and Calgary. Hong Kong leads the field with 6.6% growth, followed distantly by Boston, Stockholm and San Francisco, all with growth in the 3 4% range. 1. Hong Kong A (6.6%) 2. Boston B (3.9%) 3. Stockholm B (3.6%) 4. San Francisco B (3.0%) 5. Los Angeles B (2.8%) 6. Dallas B (2.7%) 7. Tokyo C (2.6%) 8. New York C (2.4%) 9. London C (2.0%) 10. Oslo C (1.8%) 11. Seattle C (1.6%) 12. Chicago C (1.5%) 13. Paris C (1.0%) 14. Calgary C (0.9%) 15. Toronto C (0.6%) 16. Vancouver D (0.6%) 17. Halifax D (-0.2%) 18. Montreal D (-0.2%) 19. Barcelona D (-0.3%) 20. Madrid D (-0.4%) 21. Berlin D (-0.6%) 22. Milan D (-1.4%) Data unavailable for Sydney. Shanghai s data was considered to be an outlier and was removed for purposes of comparison. Employment growth ranked: 24 Five-year average annual percentage growth in total employment is calculated on the basis of the following periods: Canada, US, Hong Kong: Barcelona, Berlin, Madrid, Milan, Oslo, Stockholm: London, Paris: Sydney: Tokyo: Shanghai: Strong employment growth means better opportunities for securing work. A high-growth CMA is more attractive. Toronto s five-year annual average employment growth of 2% seems mediocre but is good enough for a seventh-place ranking, ahead of every US metro area. Shanghai ranks first overall with five-year average employment growth of 4.7%. Calgary is the top-ranked North American city with average employment growth of 3.8%. 1. Shanghai A (4.7%) 2. Calgary A (3.8%) 3. Madrid A (3.7%) 4. Barcelona B (3.2%) 5. Vancouver B (2.3%) 6. Hong Kong C (2.0%) 7. Toronto C (2.0%) 8. Seattle C (1.9%) 9. Sydney C (1.8%) 10. Milan C (1.7%) 11. Dallas C (1.7%) 12. Halifax C (1.4%) 13. Montreal C (1.2%) 14. London C (1.1%) 15. Los Angeles D (0.8%) 16. New York D (0.7%) 17. Chicago D (0.5%) 18. Boston D (0.2%) 19. San Francisco D (0.1%) 20. Berlin D (0.0%) 21. Stockholm D (0.0%) 22. Oslo D (-0.2%) 23. Paris D (-0.4%) 24. Tokyo D (-0.6%)

30 28 / Toronto Board of Trade Economic Indicators Definition Significance What about Toronto? The Grade Unemployment rate ranked: 23 The percentage of the labour force not working based on 2007 data. A metropolitan area with a lower unemployment rate indicates a more engaged workforce. In turn, such places are more likely to attract people. With a 6.8% unemployment rate, Toronto is far from first-place Calgary at 3.2% and behind all US metro areas and almost all European cities. Toronto ranks 21st among the 23 comparator regions. Only Montreal and Paris fared worse. 1. Calgary A (3.2%) 2. Milan A (3.8%) 3. Hong Kong A (4.0%) 4. Vancouver A (4.0%) 5. Seattle A (4.0%) 6. Boston A (4.1%) 7. Oslo A (4.2%) 8. Dallas A (4.3%) 9. New York A (4.4%) 10. San Francisco A (4.4%) 11. Shanghai A (4.5%) 12. Tokyo A (4.5%) 13. Sydney B (4.6%) 14. Los Angeles B (4.8%) 15. Chicago B (4.9%) 16. Halifax B (5.3%) 17. Stockholm C (5.6%) 18. Madrid C (6.3%) 19. Barcelona C (6.6%) 20. London C (6.8%) 21. Toronto C (6.8%) 22. Montreal C (7.0%) 23. Paris D (9.2%) Berlin s data was considered to be an outlier and was removed for purposes of comparison. Disposable income per capita ranked: 23 Average after-tax income of the metro area* is divided by total population. Data is based on average after-tax income in US$ for Metro regions with high average incomes are likely to draw in more people. Toronto, like most Canadian metro areas, lags behind the US. The Toronto CMA s average disposable income of $23,444 is less than half that of first-place San Francisco at $50,077. Calgary ranks highest among the Canadian CMAs with an average after-tax income of $31, San Francisco A ($50,077) 2. Tokyo A ($46,710) 3. Boston A ($43,220) 4. New York A ($41,992) 5. Seattle A ($41,061) 6. Chicago B ($36,522) 7. Dallas B ($35,890) 8. Los Angeles B ($34,785) 9. Calgary B ($31,293) 10. Sydney C ($27,121) 11. London C ($23,514) 12. Toronto C ($23,444) Data unavailable for Hong Kong. 13. Oslo C ($22,841) 14. Vancouver C ($22,286) 15. Halifax C ($21,718) 16. Paris C ($21,196) 17. Montreal C ($20,133) 18. Milan C ($18,507) 19. Stockholm C ($18,330) 20. Madrid D ($15,221) 21. Berlin D ($14,302) 22. Barcelona D ($14,278) 23. Shanghai D ($5,970) Disposable income growth ranked: 22 Percentage changes in disposable income are measured over a five-year period. A higher ranking shows how quickly a CMA is improving its standard of living. Canada, US, Shanghai: Europe: Tokyo: Sydney: (three-year period). Strong income growth boosts a metro region s attractiveness. With 5.2% growth over a five-year period, Toronto ranks 10th overall. The two A grade performers are Calgary with 10% income growth and Shanghai with 9.1% growth. 1. Calgary A (10.0%) 12. Chicago C (4.9%) 2. Shanghai A (9.1%) 13. Halifax C (4.9%) 3. Madrid B (7.5%) 14. Boston C (4.6%) 4. Barcelona B (7.5%) 15. Paris C (4.6%) 5. Dallas B (6.3%) 16. Montreal C (4.3%) 6. Vancouver B (6.2%) 17. Milan C (4.1%) 7. Seattle B (6.0%) 18. Stockholm D (3.7%) 8. San Francisco C (5.5%) 19. Sydney D (3.0%) 9. New York C (5.4%) 20. London D (2.9%) 10. Toronto C (5.2%) 21. Tokyo D (1.7%) 11. Los Angeles C (5.1%) 22. Berlin D (1.6%) Data unavailable for Hong Kong and Oslo. * Disposable income from Eurostat is only available at the regional level. The boundaries of these regions are not strictly defined and vary greatly across European metro areas.

31 Toronto as a Global City: Scorecard on Prosperity / 29 Economic Indicators Definition Significance What about Toronto? The Grade High-tech employment ranked: 14 The share of total high-tech employment in the information and communications technology sector, expressed as a five-year average. Data is for the period, except for Sydney (2006 only). In line with the creative cities theory, high levels of employment in this sector signals an attractive metro region. With 5.9% employment in the high-tech sector, Toronto has a solid A ranking. The top four performers in this indicator are all US CMAs: Seattle (7.1%), Boston (7.0%), San Francisco (6.3%) and Dallas (6%). 1. Seattle A (7.1%) 2. Boston A (7.0%) 3. San Francisco A (6.3%) 4. Dallas A (6.0%) 5. Toronto A (5.9%) 6. Sydney B (4.3%) 7. Los Angeles C (4.0%) 8. Halifax C (4.0%) 9. Montreal C (3.4%) 10. New York C (3.4%) 11. Chicago C (3.3%) 12. Calgary C (3.1%) 13. Vancouver D (1.4%) 14. Hong Kong D (1.3%) Data unavailable for Barcelona, Berlin, Hong Kong, London, Madrid, Milan, Oslo, Paris, Shanghai, Stockholm, Tokyo. Residential building permit growth ranked: 12 The percentage increase in the number of residential building permits is calculated for the five-year period from Residential building permit growth indicates the rate of investment activity in the residential sector. As an important sector of the economy, housing is a proxy for confidence in the growth of the metro region. Toronto, which had negative growth (-0.9%) in the five-year period, falls behind three of the four other Canadian CMAs, with Montreal the top ranked Canadian CMA over a five-year period. First-place Seattle leads the pack with 7.5% growth. 1. Seattle A (7.5%) 2. New York A (5.8%) 3. Montreal B (4.2%) 4. Vancouver B (4.2%) 5. Boston B (3.6%) 6. Dallas B (2.4%) 7. Los Angeles B (2.0%) 8. Calgary B (1.7%) 9. Toronto C (-0.9%) 10. Halifax C (-1.0%) 11. San Francisco D (-2.8%) 12. Chicago D (-5.1%) Data unavailable for Barcelona, Berlin, Hong Kong, London, Madrid, Milan, Oslo, Paris, Shanghai, Stockholm, Sydney, Tokyo.

32 30 / Toronto Board of Trade Economic Indicators Definition Significance What about Toronto? The Grade Professional employment** ranked: 13 Based on the Statistics Canada definition, the share of total employment in 40 professional occupations, including but not limited to: engineers, physicians, judges and professors. This indicator does not take into account managerial or technical occupations. Comparable data are based on the following years: Canada, US: 2008 Sydney: 2006 This indicator is included as part of the creative cities agenda. High levels of employment in knowledge-driven professional occupations are correlated positively with an attractive metro region. Toronto is head of the class on this indicator. With over 19% of the local workforce employed in professional occupations, Toronto is well ahead of all US metro areas. 1. Toronto A (19.4%) 8. New York B (16.8%) 2. Calgary A (18.8%) 9. Halifax C (15.3%) 3. Sydney A (18.6%) 10. Seattle C (14.8%) 4. Boston A (18.1%) 11. Los Angeles C (14.8%) 5. Montreal B (17.5%) 12. Chicago C (14.3%) 6. Vancouver B (17.1%) 13. Dallas D (12.5%) 7. San Francisco B (16.9%) Data unavailable for Barcelona, Berlin, Hong Kong, London, Madrid, Milan, Oslo, Paris, Shanghai, Stockholm, Tokyo. Total tax index (TTI) ranked: 15 The total taxes paid by similar corporations in a particular location and industry, calculated as a percentage of total taxes paid by similar corporations across the United States. Data is for 2008 The index is designed to compare the total tax burden faced by companies in each city, including: income taxes, capital taxes, sales taxes, property taxes, miscellaneous local business taxes and statutory labour costs. Metro regions with lower tax burdens are more attractive to new business and investment. Toronto, along with all Canadian CMAs, ranks ahead of every US metro area and far ahead of London and Paris, the two European comparator regions. With an A grade, Toronto s tax burden is 85.4% of the US average; by contrast, Paris is 190.7% the US average. However, Toronto s score is the weakest in Canada. 1. Halifax A (66.6) 9. Los Angeles B (105.1) 2. Calgary A (69.3) 10. Chicago B (105.3) 3. Vancouver A (75.2) 11. Seattle B (107.1) 4. Montreal A (83.2) 12. New York B (109.2) 5. Toronto A (85.4) 13. San Francisco B (112.2) 6. Sydney B (101.4) 14. London C (130.3) 7. Boston B (102.1) 15. Paris D (190.7) 8. Dallas B (103.2) Data unavailable for Barcelona, Berlin, Hong Kong, Madrid, Milan, Oslo, Shanghai, Stockholm, Tokyo. ** Occupational data from the US Bureau of Labor Statistics was partially secured for some metro areas. Data was either missing or not available for various occupational categories. Therefore, the ranking for US Metropolitan Statistical Areas is underestimated.

33 Toronto as a Global City: Scorecard on Prosperity / 31 Economic Indicators Definition Significance What about Toronto? The Grade Average office rents ($US) ranked: 24 This is a measure of the total rental cost of downtown Class A office space. Data is for This indicator is a measure of the cost of doing business. Metro regions with lower office rents are more attractive to new business and investment. Toronto ranks 11 th overall with office rents of $62.44 per square foot more than twice the rent paid in top-ranking Halifax ($30.3). Nineteen of the 25 comparator regions receive A grades on this indicator thanks to the extremely high rents paid in the two worst performing cities: Tokyo ($220.3) and London ($299.5), which earned C and D grades, respectively. 1. Halifax A ($30.34) 2. Los Angeles A ($30.52) 3. Dallas A ($32.12) 4. Chicago A ($35.41) 5. Montreal A ($36.59) 6. Seattle A ($41.85) 7. Berlin A ($44.16) 8. San Francisco A ($49.71) 9. Boston A ($50.92) 10. Vancouver A ($55.42) 11. Toronto A ($62.44) 12. Barcelona A ($64.43) 13. Calgary A ($66.27) 14. Shanghai A ($68.45) 15. Sydney A ($68.52) 16. Milan A ($85.41) 17. Stockholm A ($86.69) 18. Madrid A ($96.64) 19. Oslo A ($97.30) 20. New York B ($103.43) 21. Hong Kong B ($126.79) 22. Paris B ($141.98) 23. Tokyo C ($220.25) 24. London D ($299.54) Number of patents per 100,000 population ranked: 24 Using utility patents from the US Patent and Trademark Office, total patents are divided by population to measure the degree of new product development or product improvement. Data is for This is a proxy for the amount of creativity taking place in a metro area. Metro regions with higher number of patents adjusted for the size of population indicate more creativity in the metro region. With 16.4 patents per 100,000 population, Toronto is middle of the pack when it comes to creativity. Although it ranks ahead of all Canadian CMAs except Vancouver, Toronto lags behind all US metro areas and Tokyo, Stockholm and Sydney. To be fair, all areas pale in comparison to San Francisco s striking result, which is clearly due to the influence of the local high-tech sector. 1. San Francisco A (176.0) 2. Boston B (92.9) 3. Seattle C (70.5) 4. Tokyo C (55.1) 5. Los Angeles D (39.0) 6. Dallas D (34.9) 7. New York D (30.6) 8. Chicago D (30.5) 9. Stockholm D (18.7) 10. Vancouver D (17.4) 11. Sydney D (16.5) 12. Toronto D (16.4) 13. Calgary D (16.3) 14. Paris D (15.2) 15. Montreal D (13.5) 16. Milan D (8.8) 17. Oslo D (7.2) 18. Berlin D (6.7) 19. London D (6.2) 20. Hong Kong D (5.3) 21. Barcelona D (2.2) 22. Halifax D (1.3) 23. Madrid D (1.0) 24. Shanghai D (0.7)

34 32 / Toronto Board of Trade Economic Indicators Definition Significance What about Toronto? The Grade Venture capital investment per million ($US) of GDP ranked: 12 This measures the average investment in new start-ups per $1 million GDP. Data is for the period. In line with the creative cities theory, high levels of venture capital investment signal an attractive metro region. Toronto ranks 11th among the 12 comparator regions for which data are available and scores a D grade. Toronto s venture capital investment of $1,069 per million GDP is less than 7% of first place San Francisco at $21,720 per million GDP. Vancouver is the top ranking Canadian CMA ($2,973), placing 7 th overall. 1. San Francisco A ($21,720) 2. Boston B ($16,148) 3. Seattle C ($7,956) 4. Los Angeles D ($3,413) 5. Dallas D ($3,185) 6. New York D ($3,031) 7. Vancouver D ($2,973) 8. Montreal D ($2,237) 9. Chicago D ($1,564) 10. Halifax D ($1,309) 11. Toronto D ($1,069) 12. Calgary D ($940) Data unavailable for Barcelona, Berlin, Hong Kong, London, Madrid, Milan, Oslo, Paris, Shanghai, Stockholm, Sydney, Tokyo. Average venture capital investment per firm ranked: 12 This indicator is a measure of the average investment in companies receiving venture capital financing. The unit of measure is thousands of US dollars. Data is for the period. In line with the creative cities theory, high levels of venture capital investment signal an attractive metro region. Sitting in 9 th position, Toronto ranks well below all US metro areas in the field. Toronto s average investment of $3.7 million per venture capital firm is nearly one-third that of first-place Dallas at $10.2 million. All five Canadian CMAs rank poorly on this indicator. 1. Dallas A ($10,139) 2. Boston B ($7,644) 3. Chicago B ($7,155) 4. San Francisco B ($7,137) 5. Los Angeles B ($6,569) 6. Seattle B ($6,240) 7. New York B ($6,038) 8. Vancouver C ($4,200) 9. Toronto C ($3,746) 10. Montreal D ($3,081) 11. Calgary D ($1,834) 12. Halifax D ($1,538) Data unavailable for Barcelona, Berlin, Hong Kong, London, Madrid, Milan, Oslo, Paris, Shanghai, Stockholm, Sydney, Tokyo.

35 Toronto as a Global City: Scorecard on Prosperity / 33 Economic Indicators Definition Significance What about Toronto? The Grade Average size of initial public offerings (IPOs) ($US million) ranked: 24 A measure of the monetary value of IPOs in 2005 and IPOs are generally issued by smaller companies seeking capital to expand but large companies can also issue an IPO. Though it can be seen as a risky investment, the size of an IPO typically appraises the net worth of smaller companies. The average size of an IPO in Toronto is about one-tenth the size of top-rated Paris. The silver lining for Toronto is that it receives the highest ranking among Canadian CMAs. That being said, these rankings show that Canada lags behind the rest of the world when it comes to the size of IPOs. 1. Paris A ($563.80) 2. Boston A ($477.05) 3. Milan B ($396.96) 4. Madrid B ($362.08) 5. Chicago B ($290.30) 6. Shanghai C ($286.12) 7. Barcelona C ($268.05) 8. New York C ($263.63) 9. Dallas C ($205.95) 10. San Francisco C ($181.17) 11. Los Angeles C ($157.68) 12. Sydney D ($138.05) 13. Tokyo D ($130.81) 14. Berlin D ($128.52) 15. Hong Kong D ($117.01) 16. Oslo D ($101.42) 17. London D ($87.98) 18. Toronto D ($67.35) 19. Stockholm D ($59.90) 20. Seattle D ($57.82) 21. Montreal D ($56.17) 22. Calgary D ($42.91) 23. Halifax D ($30.25) 24. Vancouver D ($8.55) Market size ranked: 24 This is a measure of total population within a 500-mile radius of the metro area. Data is for The greater the market size, the more attractive the metro region is as a place for new business and investment. Toronto ranks 8th overall with a market size of million. Not surprisingly, the two cities with the largest market size are Shanghai (453 million) and Hong Kong (336 million). At less than 15 million, Sydney, Calgary, Seattle and Vancouver have the smallest market sizes among the comparator regions. 1. Shanghai A (453,057) 2. Hong Kong B (336,045) 3. Paris B (273,736) 4. Milan B (252,254) 5. Berlin B (246,493) 6. London C (229,206) 7. Barcelona C (137,926) 8. Toronto D (120,297) 9. Tokyo D (108,775) 10. New York D (100,319) 11. Madrid D (98,380) 12. Montreal D (92,851) 13. Chicago D (90,387) 14. Boston D (80,286) 15. Stockholm D (73,936) 16. Los Angeles D (47,147) 17. San Francisco D (44,428) 18. Oslo D (38,362) 19. Dallas D (20,917) 20. Halifax D (20,753) 21. Sydney D (14,882) 22. Vancouver D (14,130) 23. Seattle D (13,955) 24. Calgary D (10,155) Sources: Conference Board of Canada; Statistics Canada; US Bureau of Labor Statistics; Moody s Economy.com; Organisation for Economic Co-operation and Development; Eurostat; International Monetary Fund; KPMG; Science-Metrix; Shanghai Statistical Yearbook; Government of Hong Kong; Thomson Reuters.

36 34 / Toronto Board of Trade Focus on Toronto s Economy Toronto has improved its overall ranking in the Economy domain since last year. Despite dropping two spots to 11 th place, Toronto has gained a B grade in a wider field of competitor cities. But the CMA has a long way to go to catch up to Boston, San Francisco and Seattle. Results for Toronto are decidedly mixed, and some strong outliers often mask the real message. Where do we find the most encouraging results? Without a doubt, it is in Toronto s first-place finish in professional employment (19.4 per cent), where it bests a field of all North American metros and Sydney. Nearly 20 per cent of Toronto s employment is accounted for by professional occupations; employment in these sectors being a strong marker of a robust knowledge economy. In this regard, Toronto is better than Calgary, Sydney and Boston, which are all in the 18 per cent range. Other positive signs for Toronto include: High-tech employment: Toronto is the top-ranked Canadian CMA, earning an A grade and 5 th place ranking, just behind Dallas. Just under six per cent of Toronto s employment is in the high-tech sector, not far off the 7.1 per cent share enjoyed by first-place Seattle. Total tax index (TTI): Once again, Toronto s total tax index is well below that of its international competitor cities. Although it earned an A grade, Toronto is nonetheless the most burdened of the five Canadian CMAs. At 85.4, Toronto s TTI is only half that of last-place Paris (190.7). Market size: Viewed at a glance, Toronto s results in market size might appear more disastrous than encouraging. However, this is a case where a D grade masks a positive result, one that is in this case attributable to Shanghai, a huge outlier with a tremendous market catchment of 453 million people. But with a market size of over 120 million people, Toronto sits in eighth place ahead of every metro region in North America. Toronto lies in an enviable location, accessible to the big metropolises in the Northeastern and Midwestern US, an advantage no other North American city enjoys. The challenge for Toronto will be to cash in on this in the wake of international trade issues and the thickening of the border. Do Local Markets Matter? In an increasingly globalized economy, why does local market size matter? Who cares if a city is within a day s drive of 120 million people? For many businesses, the costs of moving goods are a decisive competitive constraint and obviously transportation costs increase with distance. And for many services even in the new economy immediate access and face-to-face contact can t be replaced by virtual networking. On the other hand, disappointing results for Toronto on a number of indicators show the fault lines in the city s economy. Unfortunately, many of them link back to fundamental issues around the core economic indicators of productivity and growth that further contribute to Toronto s poor record on innovation. Productivity and productivity growth: Toronto, with C grades on both indicators, is in the Canadian club of low performing metros. All had productivity growth below one per cent and, in the case of Montreal and Halifax, productivity levels showed an absolute decline. Toronto, with an average annual growth of 0.6 per cent, is leagues away from top-ranked Hong Kong at 6.6 per cent but perhaps more significantly, it is far behind Boston at 3.9 per cent, Stockholm at 3.6 per cent or San Francisco at 3 per cent. GDP and GDP growth: Toronto s per capita GDP earns a C grade, at $42,538 scarcely more than half that of first-ranked Paris but well ahead of Vancouver, Montreal and Halifax (all below $30,000). Average GDP growth of 2.5 per cent is only good enough to merit a C grade and positions the CMA behind every US metro except Chicago. No metro region comes close to Hong Kong (8.7 per cent) but Dallas, Calgary and Boston all exceed four per cent annual GDP growth.

37 Toronto as a Global City: Scorecard on Prosperity / 35 Size of IPOs: At an average size of $67 million, IPOs in Toronto have a fraction of the value in Paris ($564 million) or Boston ($477 million). Within the constellation of Canadian CMAs, however, Toronto leads all five, with Vancouver ($9 million) owning the bottom spot which can only be considered cold comfort for Toronto. Venture capital investment/gdp: Toronto s venture capital investment of $1,068 per million GDP is just five per cent that of first-ranked San Francisco at $21,720 per million GDP, 6.5 per cent of second-place Boston and behind all other US and Canadian metros except Calgary. None of Canada s CMAs come close to the top US metro regions, although Vancouver and Montreal have levels of venture capital investment that are more than double that of Toronto. The low levels of venture capital investment mirrors the small average dollar value of IPOs in the Toronto CMA. Venture capital investment/firm: In line with the previous indicator, Toronto s average investment per venture capital firm highlights another weakness in the region s economy. Compared to top-ranked Dallas, where the average investment per venture capital firm was over $10 million, Toronto averages just over one-third of that amount ($3.7 million). Patents: This is the fourth in the quartet of indicators that are strong markers for innovation. Once again, Toronto finds itself behind all US metro regions and nowhere in sight of first-place San Francisco, which averages 176 patents per 100,000 population. Toronto averages less than one-tenth of that (16.4), putting its CMA in league with the other Canadian CMAs and ahead of all European metros except Stockholm. Overall, Toronto has the same issues with the core economic indicators and determinants of productivity that plague Canada as a whole. This becomes particularly evident when we see the clear pattern that emerges for Canadian CMAs all clustering near the bottom of the key indicators linked to economic growth, innovation and productivity. Yet Toronto, like its Canadian counterparts, is affordable within the international arena, offering low office rents and business tax advantages. And more than any other CMA in Canada, Toronto can draw from a huge market of over 120 million people one big enough to attract investment and sustain solid productivity growth. Furthermore, with strong levels of high-tech and professional employment, Toronto attracts a welleducated labour force with all the hallmarks of the so-called creative class. The bottom line is that Toronto s productivity and innovation problem is not the result of an unskilled labour force. This leads us to conclude that Toronto does not have enough physical capital (structures and equipment) to generate strong labour productivity growth. One likely cause is that the financial markets in Toronto and/or Canada simply are not able to support the required levels of capital investment (the small size of the IPOs supports this conclusion). However, more research on this question is required possibly in the form of case studies or interviews. Toronto s poor performance on innovation and productivity growth is troubling, since these two forces are the major drivers of future prosperity. If Toronto does not improve its prospects for future wealth generation, many of its current advantages will not be sustainable a highly attractive quality of life comes at a price, a price that must be paid from the incomes of Toronto s residents; incomes that, in turn, depend upon strong productivity growth.

38 36 / Toronto Board of Trade 6 Labour Attractiveness Labour Attractiveness Overall Rank Metro area Grade (normalization score) 1 Barcelona A Toronto A Paris A Madrid A Calgary A Dallas A Vancouver A London A Montreal B Sydney B Halifax B Chicago B Shanghai B Boston B Seattle B Hong Kong C New York C San Francisco C Los Angeles C Tokyo C Stockholm C Berlin C Oslo D Milan D 0.31 Who s Best? What s best about Toronto is highlighted by the results in this domain. With an A grade and a number two ranking just behind Barcelona, Toronto benefits from a highly diverse population base, strong and consistent population growth, a low homicide rate and an affordable cost of living. Toronto is joined by two other Canadian CMAs posting an A grade: Calgary and Vancouver. On the world stage, both of these Canadian urban areas show similar strengths to Toronto when it comes to cost of living, population growth, proportion of foreign-born population and homicide rates. Calgary has a unique advantage in having the fastest growing population among all cities; while Vancouver combines a better climate and clean air to generate a healthy and attractive living environment. Vancouver has improved the most from last year, vaulting from a C to an A grade, principally because of its strong showing on two of the new indicators (air pollution and cost of living). As for first-place Barcelona, its reputation as a beautiful, sustainable and functional city is well-deserved. Its hospitable climate and short commute times are the best in the field, while its high proportion of young adults in the labour force is second only to its sister city, Madrid. Barcelona s biggest shortcoming is the absence of diversity among its population only two per cent of its population is foreign-born compared to 46 per cent in Toronto.

39 Toronto as a Global City: Scorecard on Prosperity / 37 With an A grade and a number two ranking just behind Barcelona, Toronto benefits from a highly diverse population base, strong and consistent population growth, a low homicide rate and an affordable cost of living. What about the other A metro regions? All maintained their status among the most attractive places for labour, 10 having ranked among the top seven in last year s report. Dallas, in sixth place, stands as the only US metro to achieve this grade, while Paris (third), Madrid (fourth) and London (eighth) complete the quartet of attractive European cities behind Barcelona. Each region, of course, offers unique attributes. There is London s diversity; Paris cultural employment; Madrid s young population; and Dallas population growth. But European metros in particular share high marks for commuting options that make travellers much less automobile-dependent. (See Metro Highlight #3 on Paris: A Multitude of Mobility Choices.) London may well have scored better (and avoided slipping from third to eighth place) if not for its high cost of living, one of this year s new indicators (only Tokyo is worse). Please see the data for each of the indicators in this domain, which can be found starting on page Vancouver was among the top 11 in last year s report. The addition of new indicators such as air pollution and the Gini coefficient are primarily responsible for Vancouver s progression into the top seven cities this year. Eliminating Quebec City also improved Vancouver s ranking on the number of teachers per school-aged children indicator. In regards to new indicators, Oslo performed poorly on international visitors and cost of living; New York suffers from high commute times, a high cost of living and a high Gini coefficient; and Shanghai has horrific air pollution. All of these shortcomings combined to allow Vancouver to leapfrog these cities in the rankings.

40 38 / Toronto Board of Trade Metro Highlight #3 Paris: A Multitude of Mobility Choices Where Paris is Leading Indicators relating to labour attractiveness (where Paris ranks third overall) and economic prosperity. Indicator Ranking Real GDP per capita 1 Average size of IPOs 1 Cultural occupations 1 Travel to work: transit, walking and other non-auto 2 Productivity 2 Population years old 3 Market size 3 Number of international visitors 3 What s Behind Paris Performance The metropolitan area of Paris is the sixth largest overall city in terms of population and the second largest in Europe (after London) in the Scorecard on Prosperity. Despite its size, only one-quarter of all Parisians rely on personal automobiles to get to work. The wealth and convenience of options available allow 75 per cent of Parisians to commute by transit, cycling or walking. The Paris Métro, with its Art Nouveau-influenced station architecture, is a defining symbol of the city. The Paris Métro is the second busiest rapid transit system in Europe, after Moscow s. As of 2007, it carried approximately 4.5 million passengers per day (three times the TTC s ridership at that time). The Paris subway system has 16 lines and 300 stations (62 have connections for more than one line, creating 384 stops in total) for a total length of 214 km. Paris subway stations are the most closely spaced in the world, with 245 located within the city of Paris. As a result, every building lies within 500 m of a metro station. Paris metro system also includes a regional express network (the RER), an extensive suburban rail system and comprehensive bus services. Paris is often credited for having the most efficient and integrated metro system of any major city in the world. Funding for the system comes from a combination of fare box revenues, government subsidies and a dedicated payroll tax that provides 40 per cent of the total budget. Paris is also looking to expand its rapid transit network. Last year, the French parliament passed a law to create a Greater Paris : the plan at this point being mostly comprised of the construction of a US$32 billion, 130-km super-metro running in a loop around outer Paris that will link the airports with the business centres and some banlieues through its 40 stations. Each station will be built as an economic hub, with surrounding land developed by a centrally run Greater Paris corporation. Parisians mobility options go beyond transit. As part of a mobility plan that prioritizes pedestrians and discourages private vehicle use, Paris has introduced an inexpensive bike-sharing program, Velib, that has spawned similar programs in cities such as Copenhagen, Dublin and Montreal. Launched in 2007, there are now 20,000 bikes for hire through this program with roughly one rental station every 300 m throughout the city centre. Paris is now looking at introducing a similar scheme for electric cars. In addition, more than 314 km of bike lanes

41 Toronto as a Global City: Scorecard on Prosperity / 39 Lessons for Toronto have been built since 2003, resulting in a 48 per cent increase in cycling over that time. Other initiatives in the mobility plan include the elimination of free parking spaces in the city centre, the widening of sidewalks and a proposal to ban non-resident vehicles from the city centre by These innovative measures and their measurable reduction of Paris greenhouse gas emissions contributed to Paris receiving the 2008 Sustainable Transportation Award from the Institute for Transportation and Development Policy. Selected Sources: The Economist (December 3, 2009). Wider Still and Wider. Régie autonome des transports parisiens (RATP) London, Paris Edge Out Guatemala City; Eugene, Oregon & Perreira, Colombia for 2008 ST Award. Institute for Transportation and Development Policy, January 14, Toronto s transportation infrastructure is continually cited as a major impediment to the region s global competitiveness. Congestion, along with the expansion of our transportation system, have been identified as top issues by Board members for the past number of years. Paris example shows that, given extensive, convenient and affordable options, people will choose to commute in ways other than by car, thereby reducing the congestion that clogs our roads and negatively impacts our productivity. This underscores the importance of the successful implementation of Metrolinx s regional transportation plan and of finding a way to fund it. Paris also shows that planning and transit expansion go hand-inhand. It is important that transit stations are properly developed to ensure a population and/or job-intensive use of this valuable space. As Metrolinx s regional transportation plan involves the creation of transit hubs in multiple municipalities, it would be beneficial to empower Metrolinx as the single developer of these lands, rather than leaving it to each municipality. Finally, Paris shows that government regulations to make commuting by car more difficult can be effective in reducing such traffic, but they need to be introduced either at the same time as, or following the expansion of, other options. Otherwise, such regulations can create more congestion and productivity loss.

42 40 / Toronto Board of Trade Labour Attractiveness Indicators Definition Significance What about Toronto? The Grade Population years old ranked: 24 The proportion of the population between the ages of 25 and 34, as per: Canada, US, Hong Kong, Shanghai*: 2008 Europe, Sydney: 2006 Tokyo: 2007 This age group represents the mobile, educated and creative core of the talented labour pool. A metro region able to attract workers in this age cohort will be better positioned to thrive in the future. Toronto ranks 13 th on this indicator with 14.9% of its population in this age group. Vibrant cities in Europe have the highest proportion of 25 to 34 year olds, while Calgary is the top-ranking North American CMA with 16.8% of its population in this cohort. 1. Madrid A (19.2%) 2. Barcelona A (18.4%) 3. Paris B (17.2%) 4. London B (17.1%) 5. Calgary B (16.8%) 6. Shanghai B (16.7%) 7. Tokyo B (16.7%) 8. Oslo B (16.7%) 9. Sydney C (15.9%) 10. Dallas C (15.6%) 11. Stockholm C (15.6%) 12. Hong Kong C (15.4%) 13. Toronto C (14.9%) 14. Vancouver C (14.9%) 15. Milan C (14.9%) 16. Montreal C (14.7%) 17. Halifax C (14.5%) 18. Seattle D (14.0%) 19. Chicago D (13.7%) 20. Los Angeles D (13.7%) 21. Berlin D (13.3%) 22. San Francisco D (13.0%) 23. New York D (12.9%) 24. Boston D (12.8%) Immigrant population ranked: 24 The proportion of the population who were foreign-born. US, Berlin, Milan, Shanghai*: 2008 Canada, Europe, Sydney, Hong Kong: 2006 Tokyo: 2007 Paris: 2002 With lower birth rates, immigration is critical to boosting the future workforce. New immigrants seek openminded and diverse places, which is why a metro area with a high proportion of foreign-born residents scores best. With nearly 46% of its population being foreign-born, first-place Toronto is the top performer, well ahead of second-place Vancouver (39.6%). Those with the lowest proportion of immigrants are Shanghai (1.1%), Tokyo (2%), Barcelona (2%) and Madrid (2.5%). 1. Toronto A (45.7%) 2. Vancouver A (39.6%) 3. Sydney B (34.4%) 4. Los Angeles B (34.1%) 5. London B (31.1%) 6. San Francisco B (29.1%) 7. New York B (28.0%) 8. Calgary B (23.6%) 9. Montreal C (20.6%) 10. Chicago C (17.5%) 11. Dallas C (17.3%) 12. Boston C (15.8%) 13. Seattle C (15.4%) 14. Berlin C (13.9%) 15. Milan C (13.9%) 16. Paris D (10.0%) 17. Stockholm D (9.9%) 18. Halifax D (7.4%) 19. Oslo D (6.8%) 20. Hong Kong D (6.2%) 21. Madrid D (2.5%) 22. Barcelona D (2.0%) 23. Tokyo D (2.0%) 24. Shanghai D (1.1%) Population with at least a bachelor s degree ranked: 23 The percentage of the population aged 25 and over with at least a bachelor s degree, based on: US, Hong Kong: 2008 Canada, Berlin, London, Milan, Stockholm, Sydney: 2006 Tokyo: 2007 Barcelona, Madrid, Oslo: 2002 Paris: Universityeducated population figures are commonly used as an indicator of a professional labour force. The higher the percentage, the higher the score. Toronto has a strong seventh place finish, with nearly one-third of its population having at least a bachelor s degree. San Francisco (42.4%), Boston (40.6%) and Seattle (36.1%) lead the field. Toronto ranks ahead of all the other Canadian CMAs on this indicator. 1. San Francisco A (42.4%) 13. Vancouver B (27.7%) 2. Boston A (40.6%) 14. Halifax B (26.5%) 3. Seattle A (36.1%) 15. Hong Kong C (24.7%) 4. New York A (34.5%) 16. Tokyo C (23.6%) 5. Oslo B (32.8%) 17. Montreal C (23.6%) 6. Chicago B (31.6%) 18. Madrid C (23.1%) 7. Toronto B (30.2%) 19. Barcelona C (22.2%) 8. Stockholm B (29.6%) 20. Sydney C (20.0%) 9. Dallas B (29.4%) 21. London C (19.8%) 10. Los Angeles B (29.3%) 22. Berlin C (17.8%) 11. Paris B (29.1%) 23. Milan D (9.1%) 12. Calgary B (28.4%) Data unavailable for Shanghai.

43 Toronto as a Global City: Scorecard on Prosperity / 41 Labour Attractiveness Indicators Definition Significance What about Toronto? The Grade Cultural occupations** ranked: 17 The proportion of the workforce employed in cultural occupations, based on 2008 data, except for Europe (2006) and Sydney (2006). The prevalence of artists, writers, performers, musicians, etc. indicates a community that nourishes creativity and promotes culture. A metro area with a higher share of cultural workers will be more attractive. Toronto ranks 12 th among the 18 CMAs for which data are available. Currently, 4.5% of Toronto s workforce is employed in cultural occupations. The CMAs with the highest proportion of their populations employed in cultural occupations are: Paris (7.1%), Los Angeles (7.0%) and Seattle (6.4%). Among the five Canadian CMAs, Toronto ranks second after Montreal. 1. Paris A (7.1%) 10. Boston C (4.7%) 2. Los Angeles A (7.0%) 11. Montreal C (4.7%) 3. Seattle A (6.4%) 12. Toronto C (4.5%) 4. London A (6.1%) 13. Halifax C (3.8%) 5. San Francisco A (6.0%) 14. Vancouver C (3.7%) 6. New York B (5.7%) 15. Calgary D (2.5%) 7. Chicago B (5.7%) 16. Berlin D (2.4%) 8. Sydney B (4.9%) 17. Madrid D (2.4%) 9. Dallas B (4.8%) Data unavailable for Barcelona, Hong Kong, Milan, Oslo, Stockholm, Tokyo. Shanghai s data was considered to be an outlier and was removed for purposes of comparison. Number of teachers per 1,000 school-aged children** ranked: 16 The number of elementary and secondary school teachers per 1,000 students aged 5 19 averaged, as per: Canada, US**, Hong Kong, Shanghai*: 2008 Sydney: 2006 Tokyo: This is used as proxy for the education system and assumes the greater the number of teachers per student population, the better the education. With 68 teachers per 1,000 school-aged children, Toronto ranks sixth and scores an A grade. The top two performers are both Canadian CMAs: Montreal (75) and Vancouver (73.3). Metro areas in the US do not score as well. 1. Montreal A (75.0) 2. Vancouver A (73.3) 3. Shanghai A (72.0) 4. Sydney A (69.5) 5. Halifax A (68.3) 6. Toronto A (68.1) 7. Chicago B (66.2) 8. Dallas B (63.1) 9. San Francisco B (61.6) 10. New York C (60.9) 11. Boston C (60.4) 12. Tokyo C (58.8) 13. Calgary C (58.4) 14. Hong Kong C (56.5) 15. Los Angeles D (52.3) 16. Seattle D (46.9) Data unavailable for Barcelona, Berlin, London, Madrid, Milan, Oslo, Paris, Stockholm. * Unfortunately, five-year age cohorts are not available for Shanghai. As a consequence, for the indicator population years old, Shanghai s population between ages 17 and 34 was used. For the indicator teachers per 1,000 school-aged children, Shanghai s population below age 18 was used as the school age, instead of the 5 to 19 cohort. ** Occupational data from the US Bureau of Labor Statistics was partially secure for some metro areas. Data was either missing or not available for several occupational categories. Therefore, a complete indicator could not be created for some US Metropolitan Statistical Areas.

44 42 / Toronto Board of Trade Labour Attractiveness Indicators Definition Significance What about Toronto? The Grade Comfortable climate ranked: 24 The comfortable climate index is a measure of how far the average maximum temperature strays from 15 C in the winter months and from 25 C in the summer, adjusted for hours of sunshine. This is meant to capture the notion of an ideal climate. The lower the index, the better. Very hot or very cold places score poorly and have high index values. Toronto ranks 20 th among the 24 CMAs. Not surprisingly, all Canadian CMAs rank in the bottom 10 on this indicator. The top two metro areas are Barcelona and San Francisco, while the worst performers are both Nordic cities: Oslo and Stockholm. 1. Barcelona A (3.6) 2. San Francisco A (3.8) 3. Los Angeles A (4.4) 4. Madrid A (6.6) 5. Dallas A (7.5) 6. Tokyo A (7.6) 7. Shanghai A (8.8) 8. New York A (10.0) 9. Boston A (11.5) 10. Sydney A (13.3) 11. Chicago B (16.0) 12. Seattle B (16.4) 13. Hong Kong B (17.8) 14. Milan B (19.0) 15. Paris B (20.6) 16. London B (22.6) 17. Vancouver B (23.1) 18. Calgary B (23.5) 19. Halifax B (24.4) 20. Toronto B (26.1) 21. Montreal C (28.1) 22. Berlin C (36.4) 23. Oslo D (39.0) 24. Stockholm D (49.0) Crime: Homicide rate ranked: 15 The number of homicides per 100,000 people, based on an average from (Canada, US, Hong Kong) and (Europe). The lower the homicide rate, the more attractive the city or metro region. With a rate of 1.9 homicides per 100,000 people, Toronto places fourth overall and scores an A grade. Hong Kong ranks first with a very low rate of 0.5. At the other end of the spectrum, Los Angeles and San Francisco have the highest homicide rates, at 8.7 and 7.9, respectively. 1. Hong Kong A (0.5) 9. Vancouver A (2.6) 2. Montreal A (1.5) 10. Stockholm B (3.0) 3. Madrid A (1.5) 11. Seattle B (3.3) 4. Toronto A (1.9) 12. New York C (5.1) 5. Halifax A (2.1) 13. Dallas C (6.6) 6. London A (2.2) 14. San Francisco D (7.9) 7. Boston A (2.4) 15. Los Angeles D (8.7) 8. Calgary A (2.5) Data unavailable for Barcelona, Berlin, Chicago, Milan, Oslo, Paris, Shanghai, Sydney, Tokyo. Travel to work: Transit, walking and other non-auto ranked: 21 The proportion of the employed labour force that does not drive to work, as per: US: 2008 Canada, London, Stockholm, Sydney, Hong Kong: 2006 Barcelona, Madrid, Milan, Paris: A metro area with a high proportion of non-car commuters is more sustainable. These cities tend to have better access to public transit, better bike paths, and/or better walking paths, all of which makes them more attractive. Positioned 12 th of 21, Toronto ranks just behind Montreal but ahead of Vancouver, Halifax and Calgary. 28.8% of commuters in Toronto choose non-auto options. Hong Kong rates highest, with over 89% of commuters travelling to work using public transit, cycling or walking; Paris ranks second with 73.7% non-auto commuters. 1. Hong Kong A (89.2%) 12.Toronto C (28.8%) 2. Paris A (73.7%) 13. Vancouver D (25.3%) 3. London B (59.8%) 14. Halifax D (24.1%) 4. Madrid B (56.2%) 15. Calgary D (23.2%) 5. Stockholm B (51.0%) 16. San Francisco D (21.6%) 6. Barcelona B (48.5%) 17. Boston D (19.3%) 7. Berlin C (46.5%) 18. Chicago D (15.9%) 8. New York C (40.2%) 19. Seattle D (13.8%) 9. Milan C (34.9%) 20. Los Angeles D (11.2%) 10. Sydney C (33.0%) 21. Dallas D (4.6%) 11. Montreal C (29.5%) Data unavailable for Oslo, Shanghai, Tokyo.

45 Toronto as a Global City: Scorecard on Prosperity / 43 Labour Attractiveness Indicators Definition Significance What about Toronto? The Grade Commuting time*** ranked: 19 Calculated as the average time (in minutes) of a trip to and from work, based on: US: 2008 Canada, Europe, Sydney: CMAs associated with low commute times are considered to be more attractive places to live. With the highest average commute time, Toronto ranks last among the 19 metro areas for which data are available. With the exception of New York, the US CMAs do well on this indicator. London, Montreal and Toronto are the only CMAs to receive D grades. 1. Barcelona A (48.4) 11. Sydney C (66.0) 2. Dallas A (53.0) 12. Madrid C (66.1) 3. Milan A (53.4) 13. Calgary C (67.0) 4. Seattle A (55.5) 14. Vancouver C (67.0) 5. Boston A (55.8) 15. New York C (68.1) 6. Los Angeles A (56.1) 16. Stockholm C (70.0) 7. San Francisco B (57.4) 17. London D (74.0) 8. Chicago B (61.4) 18. Montreal D (76.0) 9. Berlin B (63.2) 19. Toronto D (80.0) 10. Halifax C (65.0) Data unavailable for Hong Kong, Oslo, Paris, Shanghai, Tokyo. Housing affordability ranked: 12 The relative spread of the ratio of housing prices to income to the national average in a specific metro region/city (using 2008 data). Metro areas where house prices are higher can perform well if the level of income in that metro area is relatively high. Housing affordability is a key factor when people decide where to live. Although bigger, fast-growing cities may have expensive housing, higher incomes may compensate for this. Cities and metro areas with better housing affordability are more attractive. Toronto does surprisingly well on the housing affordability indicator compared with most of the US metro areas and Vancouver. Of the 12 metros ranked, Toronto is fifth and scores an A grade. Dallas and Calgary come in first and second, respectively, while the two worst performers are the California metros of San Francisco and Los Angeles. 1. Dallas A (0.70) 2. Calgary A (0.77) 3. Halifax A (0.78) 4. Montreal A (0.81) 5. Toronto A (0.95) 6. Chicago B (1.14) 7. Boston B (1.34) 8. Seattle C (1.52) 9. Vancouver C (1.77) 10. New York D (1.83) 11. Los Angeles D (1.88) 12. San Francisco D (2.17) Data unavailable for Barcelona, Berlin, Hong Kong, London, Madrid, Milan, Oslo, Paris, Shanghai, Stockholm, Sydney, Tokyo. *** Commute time data from Eurostat is available only at the regional level. However, the boundaries of these regions are not strictly defined and vary greatly across European metro areas. In addition, data for US cities was calculated using the boundaries from the 2000 Census. These boundaries are much smaller than the MSA regions used to estimate GDP. Therefore, US commute times might be underestimated.

46 44 / Toronto Board of Trade Labour Attractiveness Indicators Definition Significance What about Toronto? The Grade Cost of living ranked: 22 An index is created based on the cost of various household items, such as food, clothing and transportation. Toronto is used as the baseline, while the other metro areas are measured relative to this baseline value. A score less than 100 indicates a lower cost of living relative to Toronto, while a score higher than 100 indicates a higher cost of living. Data is an average from The lower the cost of living, the more attractive the metro area is considered to be as a place to live. Toronto ranks sixth and scores an A grade relative to the two other CMAs for which data are available. Toronto has the highest cost of living among the Canadian comparator regions. The two metro areas with the lowest cost of living overall are Seattle and Montreal. Tokyo, London and Hong Kong fare the worst all score D grades. 1. Seattle A (88.4) 12. Madrid B (109.4) 2. Montreal A (93.9) 13. Stockholm B (113.6) 3. Boston A (95.0) 14. Shanghai B (114.2) 4. Calgary A (96.0) 15. Sydney B (118.4) 5. Vancouver A (97.6) 16. New York C (122.8) 6. Toronto A (100.0) 17. Paris C (124.7) 7. Chicago A (102.1) 18. Milan C (128.2) 8. San Francisco A (103.0) 19. Oslo C (131.8) 9. Berlin B (106.2) 20. Hong Kong D (142.1) 10. Los Angeles B (108.2) 21. London D (148.1) 11. Barcelona B (109.4) 22. Tokyo D (154.4) Data unavailable for Dallas, Halifax. Gini coefficient ranked: 15 The Gini coefficient measures income inequality by calculating the extent to which the distribution of income among individuals within a country deviates from a perfectly equal distribution. Data is for The Gini coefficient measures income distribution. A Gini index of 0 represents perfect income equality. The higher the index, the lower the ranking. With lower levels of income inequality, all the Canadian CMAs rank above the US metro areas. Toronto ranks seventh among the 12 CMAs for which data are available and scores a B grade. However, this result places Toronto last among Canadian CMAs. 1. Shanghai A (0.32) 9. Dallas C (0.46) 2. Tokyo A (0.33) 10. Chicago C (0.47) 3. Halifax A (0.35) 11. Boston C (0.47) 4. Montreal A (0.37) 12. San Francisco C (0.48) 5. Calgary B (0.38) 13. Los Angeles D (0.49) 6. Vancouver B (0.38) 14. New York D (0.50) 7. Toronto B (0.41) 15. Hong Kong D (0.53) 8. Seattle C (0.44) Data unavailable for Barcelona, Berlin, London, Madrid, Milan, Oslo, Paris, Sydney, Stockholm. Average population growth ranked: 24 The annual population growth rate compounded over five years ( ; in Tokyo). The exceptions are Sydney and metro areas in Europe, which are calculated based on four years of growth ( ). Population growth is a proxy for labour attractiveness. The higher the growth rate, the more attractive and vibrant an urban area. Toronto s average annual population growth of 1.9% gives it a third place finish. In spite of its high ranking, it only scores a B grade because population growth in both Calgary and Dallas is well above the 2% mark. 1. Calgary A (2.6%) 2. Dallas A (2.4%) 3. Toronto B (1.9%) 4. Vancouver B (1.8%) 5. Madrid B (1.7%) 6. Barcelona B (1.5%) 7. Seattle C (1.3%) 8. Montreal C (0.9%) 9. Milan C (0.8%) 10. Halifax C (0.8%) 11. Oslo C (0.7%) 12. Sydney C (0.7%) 13. Hong Kong D (0.7%) 14. London D (0.6%) 15. Chicago D (0.6%) 16. Shanghai D (0.6%) 17. San Francisco D (0.6%) 18. Stockholm D (0.5%) 19. Tokyo D (0.5%) 20. New York D (0.4%) 21. Paris D (0.3%) 22. Boston D (0.3%) 23. Los Angeles D (0.2%) 24. Berlin D (0.0%)

47 Toronto as a Global City: Scorecard on Prosperity / 45 Labour Attractiveness Indicators Definition Significance What about Toronto? The Grade International visitors ranked: 23 This indicator measures the total number of international visitors to the metro area in 2007 (in millions). Cities or metro regions with a high number of international visitors are considered to be more attractive. Toronto has the fifth highest number of international visitors out of the 23 metro areas for which data are available. London and Hong Kong are head and shoulders above the rest, but three Canadian CMAs, Toronto, Vancouver and Montreal, place in the top ten. 1. London A (15.3 m) 2. Hong Kong A (12.1 m) 3. Paris B (8.8 m) 4. New York C (7.6 m) 5. Toronto C (6.6 m) 6. Barcelona C (5.0 m) 7. Shanghai C (4.8 m) 8. Madrid D (3.4 m) 9. Vancouver D (3.1 m) 10. Montreal D (2.7 m) 11. Los Angeles D (2.7 m) 12. Berlin D (2.6 m) Data unavailable for Dallas. 13. Tokyo D (2.4 m) 14. San Francisco D (2.3 m) 15. Milan D (1.9 m) 16. Sydney D (1.9 m) 17. Calgary D (1.5 m) 18. Chicago D (1.1 m) 19. Boston D (1.1 m) 20. Stockholm D (1.1 m) 21. Oslo D (0.5 m) 22. Seattle D (0.4 m) 23. Halifax D (0.3 m) Air pollution ranked: 16 Air pollution is measured as the average accumulation of particulate matter, sulfur and nitrogen dioxide in mg per cubic metre (mg/m 3 ) for the years 2001 and The lower the level of air pollution, the more attractive the CMA is as a place to live. Toronto ranks seventh out of the 16 metro areas covered, with about 2.5 times the level of pollution as top ranked Stockholm. The top ranking Canadian CMA is Vancouver, which places second overall. Not surprisingly, Shanghai captures the only D grade. 1. Stockholm A (11) 2. Vancouver A (21) 3. Oslo A (22) 4. Berlin A (22) 5. Montreal A (24) 6. Paris B (27) 7. Toronto B (27) 8. Barcelona B (30) 9. Chicago B (32) 10. Los Angeles C (39) 11. Madrid C (40) 12. London C (41) 13. New York C (42) 14. Tokyo C (42) 15. Sydney C (43) 16. Shanghai D (66) Data unavailable for Boston, Calgary, Dallas, Halifax, Hong Kong, San Francisco, Seattle. Milan s data was considered to be an outlier and was removed for purposes of comparison. Domestic water usage ranked: 11 Domestic water usage only, based on the per capita average daily water flow in litres. Canada: 2004 Europe, Shanghai: Low water usage indicates more efficient and sustainable use of this natural resource. City/ metro regions scored highest when domestic water usage was low. Toronto ranks as Canada s best CMA, earning an A grade. Daily domestic water usage in Toronto is about twice that of Berlin, but Toronto residents use a lot less water than last-placed Oslo. 1. Berlin A (163.0) 7. Halifax B (296.0) 2. Barcelona A (197.0) 8. Vancouver C (369.2) 3. Madrid A (218.1) 9. Montreal D (456.9) 4. Toronto A (226.4) 10. Milan D (458.6) 5. Calgary B (266.7) 11. Oslo D (489.9) 6. Paris B (267.4) Data unavailable for Boston, Chicago, Dallas, Hong Kong, London, Los Angeles, New York, San Francisco, Seattle, Shanghai, Stockholm, Sydney, Tokyo. Sources: Statistics Canada; Census 2006; Environment Canada; Canadian Real Estate Association; US Bureau of Labor Statistics; Moody s Economy.com; Eurostat; Euromonitor International; Demographia World Urban Atlas; UK Census; Transport for London; Shanghai Statistical Yearbook; Government of Hong Kong; Hong Kong Census; Mercer Consulting; World Bank; Weather Network.

48 46 / Toronto Board of Trade Focus on Toronto CMA s Labour Attractiveness Toronto s reputation as a dynamic, diverse and multicultural city, reinforced by last year s Scorecard on Prosperity report, is given even more of a boost in this year s edition. Its rise from fifth to second place positions Toronto solidly among the world s great metropolises as a magnet for labour. In this domain, Toronto earned A or B grades on 13 of 16 indicators, including another first place ranking on share of foreign-born population ahead of second-place Vancouver. Close to half of the CMA population is foreign-born (47 per cent), well ahead of New York (28 per cent), Sydney (34 per cent) and San Francisco (29 per cent). With Toronto well-established as a magnet for immigrants, it should come as no surprise that the CMA also enjoys consistently high population growth. Toronto s 1.9 per cent average annual growth rate is third highest, following Calgary (2.6 per cent) and Dallas (2.4 per cent). London (ranked third in last year s edition of the report) performed poorly on new indicators such as commute times and cost of living. Madrid s (ranked first in last year s report) poor performance on commute times and international visitors also caused its ranking in the Labour Attractiveness domain to drop. This is countered by Toronto s strong scores on cost of living, Gini coefficient and air pollution, all of which are new indicators. Strength in education has been a hallmark of Toronto s success. With just over 30 per cent of its residents university educated, Toronto leads all Canadian CMAs and every European metro area except for Oslo (at 33 per cent) in this regard. Once again, the US powerhouses of San Francisco and Boston dominate this category, with more than 40 per cent of both cities over-25 populations having a bachelor s degree. Toronto also improved its overall results (and ranking) in the area of grade school education since last year, becoming an A city along with Montreal, Vancouver and Halifax. Montreal, like many cities in the province of Quebec, typically outscores its Canadian (and now, global) counterparts thanks to aggressive provincial targets for student-teacher ratios. As noted in the 2009 Scorecard on Prosperity, some of Toronto s problems seem less pronounced when compared to other metropolitan areas. For instance, housing affordability in Toronto is good enough to earn an A grade, although when the indicator is looked at within the Canadian context alone, Toronto generally comes out near the bottom. Similarly, the income gap between rich and poor in Toronto as in all CMAs in Canada is not as wide as that reported for US metros (as measured by the Gini coefficient). Toronto earns a B grade on this indicator. Within Canada, Toronto s cultural life increasingly draws more and more attention with the rapid expansion of its creative industries like film, theatre, fashion and music. On the world stage, Toronto s 12 th place ranking on cultural occupations may be sufficient for a B grade, but perhaps falls short of the city s own expectations of itself. Montreal edges out Toronto for best Canadian CMA on this indicator. Not surprisingly, Paris, Los Angeles and London are among the A cities. With growing interest in greening cities to create more sustainable and resilient communities, Toronto s performance on the two environmental indicators will become increasingly important in the future. Toronto scores well on domestic water usage it is the only

49 Toronto as a Global City: Scorecard on Prosperity / 47 Canadian CMA to earn an A grade but still falls well behind Berlin (where daily water usage is less than one-third of Montreal s). However, Toronto s results on air pollution are less encouraging, notwithstanding its B grade. The average quantity of pollutants in Toronto s air (27 mg/m 3 ) is more than double that of Stockholm (11.3mg/m 3 ) and well above that of Vancouver (21 mg/m 3 ). 11 With the spotlight shining on Toronto, it is important to illuminate the areas where the CMA lags behind its global counterparts. Most glaring is Toronto s embarrassing last-place finish on commuting time out of 19 CMAs. Despite the fact that commuting times for US metros may be somewhat underestimated, Torontonians 80-minute average round-trip journey to work is enough to merit a punishing D grade. 12 Although Los Angeles was expected to top the list of worst-commutes, the city fell short of this dubious honour (by more than 24 minutes compared to Toronto). Even accounting for possible under-reporting, recent surveys in the US support our findings that Los Angeles is not the commuting beast of legend. According to Forbes.com (using 2006 Community Survey data), what serves L.A. well is that all those office parks and strip malls dotting the basin make it easy for people to commute between surrounding municipalities as opposed to a central downtown location, and that makes commutes shorter in mileage terms. 13 Toronto s long commute times are particularly troubling in light of the fact that these results are averaged on the basis of all modes of travel, not just automobile trips. In the Toronto CMA, only 29 per cent of commuters leave their cars at home, well behind all European metro regions. Just under 74 per cent of Parisians, for instance, commute by transit, walking or cycling (in first-place Hong Kong, the comparable figure is just under 90 per cent). Toronto s commuting problems give rise to serious congestion issues, as noted by a landmark study recently prepared by the OECD. In the 2010 Territorial Review of Toronto, Canada, the OECD notes: High car-usage rates have led to traffic congestion, with annual costs for commuters in 2006 estimated at around $2.74 billion (US$) per year and the annual economic costs at $2.24 billion (US$) for the Greater Toronto and Hamilton Area. 11. Milan was considered a worst-in-class outlier on the air pollution indicator and was thus removed during grade-assignment for this indicator. Its worst-in-class value is included in its overall domain score, however. 12. As noted on the Labour Attractiveness Indicator table, commuting data for US metros comes from the US Census based on metropolitan boundaries in 2000, which may have resulted in under-reporting of commute times compared to Canadian CMAs. Census data from 2010 will provide more representative information once it is available. 13. Woolsey, Matt. Best and Worst Cities for Commuters. Forbes.com. (April 25, 2008), [cited February 12, 2010] com/2008/04/24/cities-commute-fuel-forbeslife-cx_mw_0424realestate.html

50 48 / Toronto Board of Trade 7 The Capital Lens Despite Toronto s relative affordability as a place to do business, the CMA falls short when it comes to attracting significant capital investment. Capital Overall Grade Rank Metro Area (normalization score) 1 Boston A Hong Kong A San Francisco A Paris B Milan B Dallas B Chicago B Los Angeles C New York C Barcelona C Madrid C Berlin C Stockholm C Seattle C Tokyo C Oslo C Shanghai C Sydney C Toronto D London D Montreal D Vancouver D Calgary D Halifax D 0.35 In this edition of the Scorecard on Prosperity, we introduce a new set of rankings based on a metropolitan area s capacity to attract capital investment. Focusing on eight of the Economy domain indicators most closely linked to capital attractiveness effectively creates a capital lens 14 on economic growth. Viewed through the capital lens, the CMA gets its worst result: 19 th place and a D grade. Looking closely at these results should thus help us identify critical problems in Toronto s economy. The capital lens comprises eight indicators defined in the Economy section of the report, including: Venture capital investment/per $million of GDP Average venture capital investment/firm Size of IPOs Market size Office rents Total tax index (TTI) Productivity Productivity growth What City Is the Most Attractive for Capital Investment? It is not surprising that Boston and Hong Kong dominate this list. The basis for their prosperity has been described in the Economy section, where Boston grabbed the number one spot, and Hong Kong number four. Boston s advantages, tied to outstanding levels of venture capital investment and IPOs, are boosted by the availability of 14. In this edition of the report, we have calculated a separate composite score for the set of indicators related to capital attractiveness. However, this composite score is not used in the calculation of final rankings for each city. We thus refer to this as a capital lens rather than a domain like Economy and Labour Attractiveness both of which form a critical part of the overall score calculation for each city.

51 Toronto as a Global City: Scorecard on Prosperity / 49 affordable office rents there (even better than Toronto s) and a reasonable tax burden (although it is higher than Toronto s TTI). Hong Kong s unique advantage comes from its tremendous market size. At 336 million people, Hong Kong s market is more than four times greater than Boston s. Hong Kong has also set the pace for productivity growth, which is about 70 per cent greater than secondplace Boston. Metro Highlight #4 offers a closer look at the forces behind Hong Kong s success. The strengths of San Francisco s economy align well with the capital lens criteria, making it the third most attractive place for capital investment and earning its CMA an A grade. But it is Paris and Milan that rise most convincingly in the standings compared to their overall economic performance. Both places share two important strengths: 1) they are part of the big European market; and 2) their IPOs have exceptionally high values. At $564 million, Paris has a commanding lead in the size of its IPOs, which is more than eight times greater than Toronto. Milan has the third-highest number of IPOs at $397 million. Paris can point to its high productivity as a major factor underpinning its capital attractiveness. It claims the second-highest productivity levels after Tokyo. investment relative to GDP (where it is second-worst). Toronto would rank high in terms of its number of IPOs, but this indicator was not included on the current Scorecard as a result of 2007 changes to the Canadian tax treatment of income trusts that would unreasonably bloat this figure. Toronto receives marginally better results with respect to the average investment of venture capital firms, where it ekes out a C grade with investment levels just over a third of leader Dallas. Weak productivity growth (0.6 per cent) helps to explain Toronto s second-rate performance as a magnet for capital. Although Toronto (and Vancouver) had the lowest rates of productivity growth, Toronto was kept from the absolute bottom by declines in seven metros. As explained in the Economy section, Toronto is not alone among Canadian CMAs in its struggle to keep up with capital investment. However, given that Vancouver, Calgary, Montreal and Halifax emerge as the four worst places for capital investment the fact of Toronto s better overall showing is merely cold comfort. Clearly, Canada s capital lens needs to be refocused on the country s national policies and institutions. Focus on Toronto Despite Toronto s relative affordability as a place to do business, the CMA falls short when it comes to attracting significant capital investment. On five critical measures, Toronto ranked a C or D grade. Toronto wallows in D territory on the size of its IPOs and on venture capital

52 50 / Toronto Board of Trade Metro Highlight #4 Hong Kong: Economic Success in Asia Where Hong Kong is Leading Core economic indicators, such as productivity and real GDP growth, as well as the indicators making up our capital lens. Indicator Ranking Productivity growth 1 Real GDP growth 1 Travel to work: Transit, walking and other non-auto 1 The Capital Lens 2 Market size 2 Number of international visitors 2 What s Behind Hong Kong s Performance Hong Kong continues to enjoy an excellent, friendly business environment, ranking third the past two years in the World Bank s Doing Business report (ahead of the US). Hong Kong offers a number of attractions for investors, including: 1) no foreign ownership restrictions; 2) a reputable and independent judiciary; 3) free movement of capital, talent, goods and information; 4) a fully convertible Hong Kong dollar; and 5) the widespread use of English. Many companies locate in Hong Kong as a springboard into the Chinese market and as a way to mitigate the latter s inherent business risks. Hong Kong is strategically and centrally located within the burgeoning Asian markets of Singapore, Japan and South Korea, and within an hour s drive of the Pearl River Delta, the world s largest manufacturing area and one that accounts for 30 per cent of China s exports. Partly as a result of these advantages, Hong Kong has experienced impressive growth over the past 25 years: averaging annual real GDP growth of about five per cent and labour productivity growth of around four per cent. As an emerging market, Hong Kong s ability to post high growth numbers is to be expected; what has made it noteworthy is its ability to sustain such high growth for an extended period. Hong Kong s substantial financial services sector has been a prime factor in its success. Viewed as the top asset management centre in Asia, Hong Kong s financial services sector comprises almost one-fifth of its GDP and includes several other key sectors such as investment banking, asset management and insurance. Hong Kong-based banks also export their services and invest throughout Asia. In 2009, the Hong Kong Monetary Authority examined the key attributes of Hong Kong s labour productivity between 2002 and 2007 (a period when the city s average annual growth was approximately five per cent). Productivity gains were mostly found to be concentrated in financial- and trade-related services. This growth was attributable to both the high value-added content of financial services (due to booming IPO and fundraising activities by mainland Chinese enterprises in Hong Kong), improved efficiency and a high-quality labour force. Steady expansion in business equipment spending, particularly IT-related spending, was also a notable factor.

53 Toronto as a Global City: Scorecard on Prosperity / 51 Lessons for Toronto Selected Sources: The Government of the HK Special Administrative Region [cited February 12, 2010] gov.hk/default_bodies/common/en_index.html Mitchell, Tom. One Country, Two Systems and Its Limits. Financial Times, June 28, [online] [cited on February 12, 2010] imatges/butlleti%20101/ft4.pdf Financial services sector as a Driver of Productivity Growth in Hong Kong. Hong Kong Monetary Authority (2009). [online] [cited February 12, 2010] pdf/hkmawp09_14_full.pdf Hong Kong s success offers a number of lessons for Toronto, including: the need to develop a sector strategy to foster world-leading industries; the need to leverage our preferential access to the US market for attracting investment and growth; and recognizing the importance of business investment, particularly ICT-spending, in regards to labour productivity. The Toronto Financial Services Working Group s recent plan to make Toronto a top financial centre offers exactly the right type of strategy, rooted in the need to build a selection of top industries that attract international attention. The market size indicator revealed that Toronto has the largest potential consumer market in North America. Given our preferred access under NAFTA and the welcoming environment we offer to skilled immigrants, Toronto should be marketing itself as a springboard to the US market through a single organization. It is important that Toronto also figure prominently in the Continental Gateway plans being developed by the federal, Ontario and Quebec governments for the movement of goods and international trade. Finally, Torontonians need to be concerned about the low productivity of all Canadian metropolises that has come to light in other research papers and has been reinforced in this report, since lower productivity means lower wages and a reduced standard of living. Business investment, an area where Canadian firms tend to spend less than their US counterparts (especially on ICT), needs to be increased.