Northern Economist 2.0

Sunday, 7 May 2017

Evaluating Northern Ontario's Growth Plan-Part V: Economic Diversification

This is the fifth in a series of posts in which I am presenting evidence evaluating the Growth Plan for Northern Ontario, which was released on March 4, 2011.  The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy. The goal was strengthening the economy of the North by:
  • Diversifying the region's traditional resource-based industries
  • Stimulating new investment and entrepreneurship
  • Nurturing new and emerging sectors with high growth potential.
While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data. 

My first post was an overview while my second post looked at employment.  My third post looked at new investment spending as measured by building permits and my fourth post looked at consumer and business bankruptcies as an indicator of economic health. In this fifth post, I will be looking at changes in the composition of employment between 2011 and 2016 as an indicator of diversification.

Measuring diversification can be a complicated issue.  Is a diversified economy one more reliant on services rather than primary industries - in which case we are already there as the bulk of employment in northern Ontario is service oriented.  Is a diversified economy one in which we are less reliant on resource extraction or on any one sector?  Given the growing reliance on public sector employment in northern Ontario one might argue we have become less diversified in recent years.  In short, any measure of economic diversity is bound to be imperfect.

The data for this post are from Statistics Canada Table 282-0124 - Labour force survey estimates (LFS), employment by economic region based on 2011 census boundaries and North American Industry Classification System (NAICS), 3-month moving average, unadjusted for seasonality.

Based on monthly averages, in 2011, total employment in northern Ontario was 359,169 of which 86,746 were in goods production and 272,431 were in services.  By 2016, average monthly employment had declined by 3.4 percent to reach 346,985.  Good employment had declined by 11.2 percent to reach 77,062 while services employment fared better declining by only 0.9 percent to reach 269,923.

Figure 1 shows the percent change in employment by specific employment sectors.  Of these 16 sectors, 5 registered an increase between 2011 and 2016 while the remaining 11 saw a decrease. The increases ranged from a high of 11.9 percent for Accommodation and Food Services to 0.6 percent for Transportation and Warehousing.  As for the declines, they ranged from -14.1 percent for Finance, Insurance and Real Estate Services (FIRE) and -13 percent for Manufacturing to -0.3 percent for Wholesale and Retail Trade.


Figures 2 and 3 show that when pie charts showing employment distribution are plotted there does not to be very much change in employment shares between 2011 and 2016.  Some sectors increase a percent point such as Wholesale and Retail Trade (15 to 16 percent), Health and Social Assistance (16 to 17 percent) and Accommodation and Food Services (6 to 7 percent). Meanwhile, some decrease a percentage point such as Forestry Fishing and Mining (7 to 6 percent) and Manufacturing (7 to 6 percent).


The period from 2011 to 2016 appears to be characterized by shrinking total employment numbers and is accompanied with general stability in the employment shares across assorted sub-sectors. In this sense, there has been no major change in the northern Ontario economy's diversity.  We do seem to be reliant on the broader public sector and government for much of the employment - health and social assistance, education and public administration account for over 30 percent of employment but this share has also remained stable since 2011.  In short, there seems to be little change. Stay tuned for another post on this topic pulling it all together.