Northern Economist 2.0

Sunday 22 October 2023

A New Research Project in the North and for the North

 

Northern Ontario has faced demographic and labour force challenges for several decades now.  Northern Ontario accounts for 90 percent of the province’s land mass but only about 6 percent of its population and though overall population appears to have stabilized since 2016, that share of population continues to decline as the rest of Ontario grows faster than its north.  To this long-term trend has been added the impacts of technological change and the digital economy as well as the effects of the COVID-19 pandemic.  As a result,given its aging population structure, issues of labour shortage have also come to mark the northern Ontario economy.

 

How to attract and retain labour in northern Ontario in both the short and long term is a pressing issue for the future growth and welfare of this diverse and sparsely populated region.  To date, much of the literature on labour force shortages and migration has been descriptive.  What factors are important in attracting and retaining population and labour forces in northern Ontario?  Given the presence of a substantial post-secondary education sector in the region, what factors and determinants are crucial in retaining skilled graduates for the labour force of the future.? To this effect, a pan-northern research team (of which I am pleased to be a member of) has begun a research project to address these questions and has obtained Social Sciences and Humanities Research Council of Canada (SSHRC) grant funding to help obtain some answers.

 

The project is titled “Northern Ontario Labour Force Retention and Attraction in a Post-Pandemic, Digital Economy.”   This is a broad-based survey project building on a pilot study that investigated factors influencing  local graduate retention rates for Algoma University in Sault Ste. Marie. The pilot developed and tested a survey and then completed a review on labour retention policy in the region. This research project scales up the investigation of graduate retention and contributing factors to migration in Northern Ontario, and the retention rates of all the region’s post-secondary institutions to identify factors influencing the regional retention of graduates qualified to fill labour shortages. Of special interest are the region’s unique demographic patterns, push and pull factors, migration networks, labour attraction and retention policies, and leveraging graduates’ temporary work permits.  A combination of student and  graduate surveys, focus groups, and secondary data will be used to examine the significant factors of graduate retention and ultimately aims to develop recommendations for how the region can retain more of its existing skilled labour pool and attract more skilled migrants. The study will also investigate the effectiveness of the Rural and Northern Immigration Pilot (RNIP) program in graduate retention.

 

The research team is interdisciplinary and includes social and community development experts, Northern Ontario economists, and labour market experts. The university-based research team includes Dr. Nusrate Aziz (Algoma) as Principal Investigator, Zeel Patel (Algoma) as Senior Research Assistant, Dr. Sean Meades (Algoma), Dr. Sadequl Islam (Laurentian), Dr. Livio Di Matteo (Lakehead) and Dr. Natalya R. Brown (Nipissing).  To date the project has also hired two students (Alex and Kashfia) – one based at Laurentian University and the other based at Lakehead University - to assist with the conduct of surveys targeting students enrolled in 3rd, 4th, and 5th year (graduate) studies as well as focus groups involving university and college level staff and administrators involved in recruitment and retention initiatives.  The surveys have begun, and the subsequent pool of data will yield a rich source of socio-economic data on a demographic vital to the future prosperity of northern Ontario. If you are contacted by our team for input, we hope you will take the time to help us out. 

 


 

Monday 13 February 2023

Policing in northern Ontario's cities: Some Stats

 

It does seem to have turned into Police Month here on Northern Economist given that the first four February posts have been reposting of a series I did for the Fraser Institute Blog on policing in Ontario.  Well, to add to that, some charts, and statistics on policing in the five major northern Ontario cities: Thunder Bay, Timmins, Greater Sudbury, Sault Ste. Marie, and North Bay. The data is from Statistics Canada - Table 35100077 - Police personnel and selected crime statistics, municipal police services, annually.  These provide an overview of police resources in these cities and perhaps the best way to start off is with an overview of crime.  

 


 

 

Figure 1 plots the Crime Severity Index for these five cities over the period from 2000 to 2021.  Crime Severity was on a downswing in all five of these cities from about 2010 to 2015 and since then appears to have increased.  Between 2015 and 2021, crime severity increases 19 percent in Thunder Bay, 61 percent in Timmins, 78 percent in Sault Ste. Marie, 48 percent in Sudbury and 67 percent in North Bay.  While in 2010, crime severity was highest in Thunder Bay,  by 2021 Thunder Bay’s crime severity had been surpassed by Timmins, Sault Ste. Marie, and North Bay.

 

 


 

Figure 2 plots the number of municipal police officers for each of these five cities and the largest forces are in Sudbury, followed by Thunder Bay, Sault Ste. Marie, North Bay and then Timmins. In 2021, Sudbury reported 257 officers while Thunder Bay had 238, the Sault 136, North Bay 98, and Timmins 81.  Between 2000 and 2021, all of these police forces grew but since 2015 the Timmins force has actually shrunk 5 percent while the Sault and Sudbury remained flat and Thunder Bay and North Bay grew 7 percent each. 

 

 


 

Of course, police forces also employ civilian and other personnel to support the officers and Figure 3 plots the total number of these employees for the 2000 to 2021 period also.  Relative to 2015, these have increased though after a lengthy prior period of staying flat.  However, the largest increases appear to characterize Sudbury and the Sault.  Between 2015 and 2021 the number of civilian and other personnel employed by police forces grew 10 percent for each of Thunder Bay and Timmins, 24 percent in North Bay, 42 percent in the Sault and 43 percent in Greater Sudbury. The ratios of supporting civilian staff to police officers vary across these communities.  For example, Thunder Bay has 1 civilian staffer per 2.4 police officers while Sudbury has 1 civilian staffer per 1.6 officers.  

 


 

 

Another comparison is provided in Figure 4  for  police officers adjusted for population, that is police officers per 100,000 population and suggests an overall long-term increase in all of these communities from 2000 to 2021.  The most officers per 100,000 population in 2021 is in Thunder Bay at 200 per 100,000 followed by Timmins at 192, then the Sault at 177, North Bay at 170 and Greater Sudbury at 152.  Since 2015, the number of officers per 100,000 has grown 5 percent in Thunder Bay, 6 percent in North Bay, stayed flat in the Sault, and actually declined by 2 percent in each of Timmins and Sudbury.

 


 

 

Finally, what is the relationship between policing and crime in these five northern Ontario cities.  Well, figures 5 and 6 plot two relationships.  Figure 5 plots the Crime Severity Index against police officers per 100,000 and puts in a linear trend and it shows a positive correlation between crime severity and police officers per 100,000 population with a fair amount of variation around the trend.  In terms of interpreting the result, it could mean that communities with more crime severity need more police officers, or it could be that communities with more police officers are able to report more crimes.  However, if one wants a better indicator of effectiveness, then figure 6 may be more helpful.  It plots the relationship between weighted clearance rates and the number of police officers per 100,000.  Clearance rates are the proportion of crimes that are cleared, that is a charge laid.  A weighted clearance rate attaches a higher weight to the clearance of more serious crimes such as homicides. The chart shows a positive correlation between clearance rates and the number of officers per 100,000 also with a fair amount of variation around the trend. 

 


 

 

So, what is the takeaway from all this?  First, policing resources and crime severity vary a great deal even within these five communities.  Some of them have seen substantial surges in crime severity since 2015.  Second, police forces not only employ police officers, but they have substantial civilian staff also and some of them have more support staff than others. An important question is if these additional staff are able to free up officers for more police work and how effective their supporting roles are, but this question is difficult to assess without a lot more analysis with more confounding factors considered.  Third, as limited an analysis as it is, having more police officers per 100,000 is correlated with higher clearance rates though how many convictions ultimately result is also something that requires more data. 

 

One wonders if any of these municipalities have actually done any analysis of the data they must obviously have that examines their staffing and the relationship between staffing, crime rates and crime severity and clearance rates.  One imagines that all of these municipalities have in place staff with statistics training to do data analytics that can then be used to assess their own needs and performance as well as make the case for resources when the need.  I am actually surprised there was not more mention of things like "more officers improve clearance rates" in much of the public discussion reported on police requests for hiring.  Or, for that matter that large proportions of many police forces are nearing retirement age and you need to plan for replacements.  On the other hand, I may simply have an over active imagination and assume a lot about the abilities of public sector entities to make effective cases on their own behalf.

Sunday 4 December 2022

Northern Ontario: Economic Indicator Overview

 

This is a follow-up post to the post last week in the wake of  an economic overview of the challenges and opportunities facing northern Ontario’s economy presented at the Regional Meetings of the Economic Developers Council of Ontario in Thunder Bay.  As the year draws to a close and we enter 2023, along with the demographic indicators, it is worth presenting some of the highlights for the regional economy in terms of economic indicators.  This post, a quick overview of some of the key economic trends that have been emerging in northern Ontario over the last while and they provide a framework for viewing the future.

 

First, Figure 1 looks at the evolution of employment in northern Ontario since 2006 and presents it alongside the similar trend for Ontario as a whole (note the dual scale). Ontario as a whole has seen its employment grow from 6.53 million jobs in 2006 to 7.37 million jobs by 2021 – an increase of 13 percent.  Naturally, there have been bumps along the way – namely the 2008-09 Great Recession and of course the 2020 drop in employment as a result of the COVID-19 pandemic.  However, 2021 saw a recovery from the pandemic drop and as we close out 2022, Ontario has seen employment growth continue.  The north is a somewhat different story. Simply comparing the two end points of 2006 and 2021, total employment has declined about 5 percent in the Northeast and about 6 percent in the Northwest.  In the wake of the forest sector crisis of the early 2000s, there has been a permanent downsizing of employment in the region – that is, while there has been recovery and there is a stability in employment over the long term, not all of the jobs shed then have been recovered.  Moreover, in terms of the pandemic rebound, the northwest in 2021 rebounded better than did the Northeast as illustrated in Figure 2.

 


 

 

 


 

The last two decades have seen a period of unprecedented economic change in the north which has seen jobs both created and destroyed and also accompanied by a labor force and population that has been aging at a faster rate than the rest of the province.  Altogether, the economy has been stable and has shown signs of growth in several sectors.  Employment over the long term has been growing in agriculture, profession, scientific and technical services, education and health and social services. With respect to the two largest cities, employment has actually grown somewhat in Sudbury and Thunder Bay but has shrunk outside of these two centers for the overall slight decline in the region.  Moreover, as a result of the rapid aging of the population, the labor force has shrunk faster than employment resulting in unemployment rates as low or often lower than the provincial average.  

 


 

 

 


 

There is growth in total output in northern Ontario particularly in the major centers of Thunder Bay and Sudbury as illustrated in the two final figures.  Real GDP in 2022 will finally have reached pre-pandemic levels in both cities.  Post-pandemic recovery in terms of real GDP growth in 2021 was actually better in Thunder Bay relative to either Sudbury or Ontario as a whole.  For 2022, the year is expected to end out seeing growth in real GDP in Thunder Bay and Sudbury that pretty much matches Ontario as a whole.  The robustness of the mining sector and growing Indigenous economic development, along with opportunities in tourism, agriculture and health and education services appear to be the source of growth and are the drivers in addressing the twin challenges in 2023 of fostering both economic and population growth in the north.

Sunday 27 November 2022

Northern Ontario: Demographic Indicator Overview

 

Last week, I gave an economic overview of the challenges and opportunities facing northern Ontario’s economy at the Regional Meetings of the Economic Developers Council of Ontario in Thunder Bay.  I covered a lot of ground, and it is worth presenting some of the highlights for the regional economy in terms of current indicators.  This post, a quick overview of some of the key demographic trends that have been emerging in northern Ontario over the last while.   

 

 


Figure 1 provides Census results from 2006 to 2021 and they show that despite the perceptions, northern Ontario’s population is starting to grow once again.  While the period 2006 to 2016 saw a slight decline, the 2021 Census shows that population is up in both the Northeast and Northwest of the region. Between 2016 and 2021, northern Ontario’s total population grew from 780,140 to 789,519 – an increase of 1.2 percent (See figure 2) with the Northeast growing much faster that the Northwest.  On the other hand, from 2011 to 2016, the Northwest grew substantially while the Northeast actually shrank.  

 


 

 

Two other trends worth noting.  First, while the conventional wisdom is that the major urban centres in Ontario’s north are all major attractors of population within the region, it turns out that between 2016 and 2021, Thunder Bay, Sudbury and North Bay grew while Timmins and Sault Ste. Marie shrank somewhat (See Figure 3).  Second, the population that self-identified as Indigenous in the Census has been growing.  According to the Census (See Figure 4) the Indigenous population in the Northeast rose from about 61,000 to 67,000 (about a 10 percent increase while that in the Northwest grew from about 53,000 to 55,000 – about a four percent increase.  If one adds up the two regions, in 2021 about 122,345 people in that year identified as Indigenous in the north or about 15 percent of northern Ontario’s population.  About 24 percent of the Northwest’s population self-identified as Indigenous while 12 percent of those in the Northeast did so.  However, it should be noted that these figures may be an under count of the Indigenous population.

 


 

 

 


 

The trends are positive in that the region’s population is growing but the point to consider is that it is growing slower than Ontario as a whole.  While Ontario’s population was up nearly 5 percent from 2016, the North is only up about 1 percent.  This means northern Ontario’s share of Ontario’s population (which peaked in the early 1950s at nearly 12 percent) will continue to decline, all other things given.  While 2021 saw the region’s share at 5.6 percent, according to Ontario government population projections, that share could decline to 4 percent by 2046.  It is relative rather than absolute decline in population that is the real concern given that a declining share is also associated with declining long-term representation and influence within the province and the country.

Wednesday 14 September 2022

Redesigning Representation in Northwestern Ontario

 

In the wake of every Canadian Census, there is a redistribution of populations and representations for federal elections and the current census is no exception.  Much to the angst of many, the Federal Electoral Boundaries Commission is recommending the Kenora riding be merged into Thunder Bay-Rainy River, creating a new and more widely spread-out Kenora-Thunder Bay-Rainy River. riding  A new riding of Kiiwetinoong-Mushkegowuk has also been proposed to represent Ontario’s far north while Thunder Bay-Superior North remains relatively unchanged under the proposal. 

In the end, the ten federal northern Ontario ridings would go down to nine as Algoma-Manitoulin-Kapuskasing in the northeast is going to be eliminated and split between two neighbouring ridings. While its provincial representation for northern Ontario has been fixed for some time at eleven seats, there is fear that this decision may also be reversed down the road in the wake of these federal proposals thereby also weakening representation at the provincial level.

To provide a cohesive and distinct representative voice to the part of Ontario approximately north of 60 – which one thinks is part of the intent of this proposal - the result is somewhat lopsided ridings in Northwestern Ontario in terms of population.  The Kenora-Thunder Bay-Rainy River riding seems to clock in at about 101,000, Kiiwetinoong-Mushkegowuk at just over 36,000 and Thunder Bay-Superior north grows a bit to 99,035.  Given the competing needs to ensure adequate representation that considers geographic spread, low population densities and population size, the Federal Electoral boundaries commission no doubt feels this is a suitable compromise to deal with the exceptional circumstances of the Far North of Ontario.

In the end, northern Ontario  is the victim of a changing population distribution given that its population is growing more slowly than the rest of the country.  Over the last decade, the North only grew about two percent - much of that in areas with more Indigenous population - while the rest of Ontario grew by well over 10 percent.  The geographic size of two of these riding is such that one will not envy the MP elected to serve those constituents and current MPs have already brought this up. Indeed, how an MP can adequately be familiar with the needs of constituents spread across a riding the size of several European countries combined and effectively represent them is a valid concern.  One will also probably not envy residents of Kenora or Dryden who will be put in a riding where Thunder Bay voters are the majority, and their issues and needs could potentially overwhelm the rest of the riding – more than they already do. 

Indeed, a resolution by Fort Frances City Council reflects that concern as they are asking The Federal Electoral Boundaries Commission consider creating a separate, single urban riding encompassing the City of Thunder Bay.  That is, the ask seems to be for a rural Thunder Bay Superior North Riding, a rural Thunder Bay-Rainy River Riding and an urban City of Thunder Bay riding – along with the new Kiiwetinoong-Mushkegowuk one presumes.  Thunder Bay City Council not surprisingly has responded to the proposal with a request for the status quo- that is to maintain current representation.

These proposals are both unlikely to fly with the Commission given that it means either no change or four ridings instead of the proposed three as the overall population of the entire region obviously is slated for three ridings.  Thunder Bay voters and issues already dominate northwestern Ontario given that the city dominates the region with half of its population.    One could easily make the case for only two ridings in Northwestern Ontario – Greater Thunder Bay stretching approximately in a rectangle from the Town of Nipigon, north along highway 11 to Macdiarmid, west to Ignace and then directly south to the US border taking Atikokan along –Greater Northwest Ontario - the rest of Northwestern Ontario including the new Kiiwetinoong-Mushkegowuk riding.  Indeed, if the region does not start to pick up the pace of economic development and population growth, in a decade the redistribution may indeed have to consider how to divide the Far North and the Northwest into just two ridings.

Thunder Bay itself has had the historical fortune of once being two cities and two riding with a substantial national economic role and that parlayed itself into a continuation of two ridings with expanded boundaries.  It has therefore enjoyed representation out of proportion to population size and influence for decades but has not always wielded it very effectively.  In the end, the last real heavyweight powerhouse Minister the region had at the federal level was C.D Howe and frankly given the general calibre of representation in recent decades it probably would not matter that much if Thunder Bay had two federal representatives or one.  The best case for either the status quo or even four ridings in place of the current proposal is an effective marshaling of the case that really large geographic ridings in rural remote regions do not provide for effective representation of the needs of their constituents. 

 


 

Wednesday 9 February 2022

Northern Ontario’s Population Growing But Performance Is Mixed

 

The 2021 Census detailed population results have been released and they show that Canada has been undergoing robust population growth that exceeds that of the other G7 countries.  According to Statistics Canada: “Approximately 1.8 million more people were calling Canada home in 2021 compared with five years earlier, with four in five of these having immigrated to Canada since 2016. Although the onset of the pandemic slowed population growth from a record high in 2019 (up 583,000 or +1.6%) to its lowest growth rate in a century in 2020 (up 160,000 or +0.4%), Canada's pace of population growth remains the highest in the G7.” Indeed, since 2016, Canada’s population has grown 5.2 percent while Ontario’s has grown by 5.8 percent.

 

The results for northern Ontario are intriguing given that the long-term propensity in the north has been towards a relatively flat population.  After the decline of the 1990s, population in the region stabilized but since 2016 the overall population has also grown albeit at a much lower rate than the rest of the province and the country.  Moreover, the growth performance is uneven with some parts of the north seeing increases and others declines.  Figure 1 shows the population by northern district as well as regional agglomeration. The north grew 1.2 percent since 2016 – well below the Ontario and Canadian population growth rates.

 


 

 

The northwest saw relatively restrained growth at just over one-fifth of one percent.  Within the northwest, Rainy River saw a decline of 3.4 percent while Thunder Bay district and Kenora district saw increases of six-tenths and seven-tenths of a percent respectively.  Most of the growth in the north’s population is coming from the northeast which grew 1.6 percent. Even there, there are some differences ranging from lows of -2.6 and -2.2 percent in Timiskaming and Cochrane while Parry Sound saw a 9.5 percent increase, Manitoulin 5.1 percent growth and Sudbury District (including Greater Sudbury) an increase of 2.9 percent.  While the north grew by 1.2 percent from 2016 to 2021, the Indigenous population on reserves grew 1.5 percent though even here there were interesting divergences are the approximately 115 Indigenous Reserve divisions.  For example, Bearskin Lake grew 26 percent while Pic River shrank by 16 percent. 

 

Like the rest of the country, the greatest population growth was in urban centers though even there the results are quite mixed (Figure 2).  Of the five major cities in northern Ontario, three saw population increases in their CMA populations – Thunder Bay (1.4 percent), Greater Sudbury (2.8 percent) and North Bay (1.9 percent).  On the other hand, Timmins and Sault Ste. Marie saw declines of 1.5 and 1.8 percent respectively.  When some of the smaller towns are examined, often there are declines.  White River for example, shrank by nearly 14 percent losing 88 people while Nipigon shrank 10 percent losing about 170 people. Even Kenora managed a slight decline though Elliot Lake grew at the national and provincial rates coming in at 5.9 percent.

 


 

 

These of course are just numbers, but the real question is why the differential growth across the region. Obviously larger centers do better because they offer a better set of amenities and economic opportunities but even being a larger urban center is not a panacea given Timmins and the Sault.  Given low rates of natural increase, some northern centers have done a better job at attracting new migrants and overall, the northeast has done better than the northwest given its proximity to southern Ontario.  Higher housing costs have seen Toronto’s population growth fall below that of adjacent cities like Hamilton, Barrie, and Kitchener-Waterloo. Some of the exodus has obviously spilled over into the near north regions of Parry sound and Nipissing as well as Sudbury. 

Wednesday 14 July 2021

The Long Saga of Arrested Development in Northern Ontario

 

Ontario has suffered from slowing economic growth over the course of the late 20th and early 21st century but nowhere in the province has the problem been as severe as in northern Ontario.  From 1990 to 2005, total employment in Ontario grew 23 percent and real per capita GDP grew by 17 percent.  However, even omitting the pandemic year, going from 2005 to 2019, Ontario’s total employment grew only 15 percent while real per capita GDP grew by 8 percent.  There is a similar trend of slowing employment growth after 2005 on a regional basis but some regions - especially the north - have fared worse than others.

 

The most alarming picture comes from a glance at the overall employment growth picture from 1990 to 2019 (we need to omit 2020 because it is the pandemic year and makes things look even worse). As the accompanying figure shows, from 1990 to 2019, total employment in Ontario grew by 42 percent.  The fastest growing regions were Kitchener-Waterloo-Barrie, Toronto/GTA and Ottawa.  This triangle region has indeed become the new core of the Ontario economy with the rest of the province increasingly being relegated to more peripheral status with the peripheral nature worsening the farther out from this core.  In Ontario, being out of sight of Toronto in the end also means being out of mind.    Indeed, the most distant regions from this core – Stratford-Bruce, Windsor-Sarnia and the North have done the worse.  But it is only the North that has seen long-term employment decline over the course of thirty years with the Northeast shrinking by 1 percent and the Northwest by 7 percent.

 


 

 

 

Of course, the first response of most members of northern Ontario’s mover and shaker elite will be to rear up on their hind legs, shake a finger at government and bemoan their failure to promote northern economic development and argue we need a new program to address northern needs.  The fact is, it is not that there has been insufficient attention by government.  Indeed, the most significant growth industry of the last thirty years has been in government funded studies, reports and programs designed to kick start the northern Ontario economy and help engineer a new golden age of growth.   Here is a quick list of major initiatives at both the federal and provincial level that show the last 50 years has seen a plethora of plans, programs and policies.  Here they are:

 

Federal

 

1969-1987 Department of Regional Economic Expansion (DREE)

1987 to Present FEDNOR (1987 – present)

2018 to Present Prosperity and Growth Strategy for Northern Ontario

 

Provincial

 

1966 Regional Development Councils established (NWORDC & NORDC).

1970s Design for Development: Designation of “Primate Growth Centers.”

1970 Creation of Northern Affairs Branch within Department of Mines

1977 Ministry of Northern Affairs Created

1977-85 Royal Commission on the Northern Environment

1985: Ministry of Northern Development & Mines established

1985: Advisory Committee on Resource Dependent Communities: Rosehart Report

July 1986 Northern Ontario Relocation Program (1,600 public servants to North).

1987 Northern Ontario Heritage Fund

1999 Regional Development Teams

2002 Smart Growth Panels

2004 Northern Prosperity Plan

2005 Northern Development Councils & GO North Investor Program

2008 Northwestern Ontario Report: Rosehart as Facilitator

2010 Far North Act

2011: Northern Ontario Growth Plan – a “25-year plan” to strengthen Northern Economy

2011 to Present: Highway Four-Laning/Ring of Fire promotion/Northern Policy Institute

 

It is not that there have not been enough government attempts to save the north, it is that they have all been ultimately unsuccessful or at best a short-term holding action because they have not addressed the fundamental core economic problem of the region.  The three major engines of northern Ontario economic development are natural resources, transportation and indeed government.  During northern Ontario’s development, economic growth was most robust during eras where all three engines came together to provide the impetus for economic growth and employment creation. 

 

The most robust periods of economic growth and development occurred during the eras from 1867 to 1913 and 1946 to 1969.  Both of these eras coincided with good global economic conditions which fostered a demand for resource products and led to private capital investment flowing to production facilities and transportation networks.  Both of these eras also saw a large spending and policy role for government particularly in infrastructure which facilitated resource development.  However, the institutional environment of a region dependent on external decision making both in terms of public and private sector decisions  resulted in an inability of the region to retain maximum benefits from resource development. The fundamental problem is one of arrested economic development rooted in the long-term inability of the economy to diversify beyond the industries that powered its original takeoff because of the inability to substantially retain the economic linkages generated by those industries. 

 

Successful development and diversification via linkage retention requires retaining a greater share of the income through local entrepreneurs and government institutional policies to allow for local decision making in the development of the natural resource export base – the region’s comparative advantage.  Aside from wages to labour during the labour-intensive phases of development, the vast majority of the income flows from northern development went to external owners of investment capital in the railway, mining and transportation sectors who also made the investment decisions.  Absence of such flows reduces the opportunities that exercise and promote local entrepreneurial talent and development.  It is not that were no successful local entrepreneurs in forestry, mining and transportation.  It is just that there were not that many and they did not persist.

 

The failure of persistence of local entrepreneurial magnates was partly a function of being able to make more money elsewhere and partly the result of government policy at the federal and provincial level.  Government institutional decisions regarding taxation and natural resource policy were external as they were made at Queen’s Park or Ottawa.  Moreover, during the first 50 years of northern development, the private income flows out of the region were complemented by the resource rents going to Queen's Park from forestry and mining - that on average provided about 20 percent of provincial government revenues.  In northern Ontario’s case, it was bereft of its own institutional capacity for promoting linkage retention by being part of Ontario rather than a separate province such as Saskatchewan or New Brunswick. Government decisions were made more to promote provincial or national development strategies rather than the long-term economic success of the region.   In the end, the north was useful in driving economic opportunities for Ontario and Canada but ultimately expendable.

 

All those plans and programs?  They were not designed to actually really do anything that mattered.  They were short term political bones thrown to placate the locals and secure elections by providing evidence that government did indeed care.  And, in the short run they did create a few temporary jobs and allow some people to make money before moving on, while all the while professing how much they loved the north.  The long run implications are now evident.  Arrested regional economic development.

Friday 4 June 2021

NOSM Moves On. Good bye NOSM and Hello NOMU.

 

The creation of Ontario's newest universities - NOSM and Hearst - is a done deal. The successful passing of the legislation creating the Northern Ontario School of Medicine (NOSM) as a stand-alone university is not a surprise given that there is a majority government.  In addition, NOSM itself was not opposed and is in agreement with the move.  Indeed, one always wonders where the idea came from and one cannot help thinking that it was at the quiet instigation of NOSM itself given the disruption caused by the financial crisis at Laurentian and any issues with NOSM funds there. All NOSM would have to do is bring up their concerns about access to their funds - assuming there were any - and let the government's imagination do the rest. One expects there will be new capital projects in the offing to provide ribbon cutting opportunities as well as a new name for rebranding purposes - The Northern Ontario Medical University (NOMU). All governments like the sense of achievement that comes with new things even if they are a reconstitution of other people's hard work.

 

NOSM was always a unique entity in that it was essentially independent within the Laurentian-Lakehead operating framework.  The two universities helped provide its start with space and an administrative operating framework.  It was never truly a faculty within a university like all the other medical schools and that decision laid the groundwork for the day when NOSM would seek its full independence. Just imagine the provincial government trying to sever the University of Toronto medical faculty from the university - not likely. But who knows, perhaps the provincial government  will now feel inspired and free all the provincial medical schools from the tyranny of their own universities. Perhaps economics departments will be next.  As an aside, I always thought that Lakehead's economics department as a stand alone entity - The Lakehead School of Economics (LSE) would be wonderful for marketing purposes.  

 

The structure of the medical school was a political compromise twenty years ago so that both universities could have a medical school sparing the government of the day the political difficulty of picking one over the other.  The current government has no such political qualms because they already know the extent of their support within both Sudbury and Thunder Bay given their voting patterns over the last few decades.  There was no political cost to them.

In terms of the future, NOSM will not be leaving its main operations in Thunder Bay or Sudbury given they are  the northern Ontario communities with the largest concentrations of population and physicians.  However, that is not the same as not leaving the Lakehead and Laurentian campuses and setting up shop elsewhere in the cities. That is a distinct prospect in the longer term leaving both universities with the additional capital infrastructure and its associated costs.  As for the additional costs to the provincial government, it has already demonstrated by its actions that it is not worried about those costs.   NOSM's future as a stand alone entity is an undiscovered country and will be watched with interest by medical associations and medical faculties throughout North America.  Such is the way of the world.  


 

 

Wednesday 10 February 2021

The Mining Frontier in Northwestern Ontario: Second Star to the Right, and Straight On Till Morning

 

Northwestern Ontario is seeing some good news with respect to the mining sector.  One recognition of this was the recent announcement regarding Lakehead University and Impala Canada launching a new mining research project.  The five year project involves the creation of an industrial research chair in mineral exploration to be held by Lakehead University geologist Peter Hollings and it is good to see investment in regional knowledge.  The prospects for continued growth have also been put forth by the Community Economic Development Corporation in their new mining readiness strategy which was announced this week.

 

The strategy is designed to help Thunder Bay capitalize on opportunities from the projected continued development in the region’s mining sector.  It estimates that continued development of the sector with Thunder Bay benefiting from supply chain spillovers in mining supply, workforce training, transportation and electrical infrastructure, and research will be substantial.  The current six operating mines in the region may double to 15 essentially doubling the workforce from the current 3600 with peak employment reaching just over 7000 by 2028.  However, there are challenges, not least of which is ensuring a supply of electricity as well as transport infrastructure.

 

This strategy is laden with optimism and good news as  befits a municipal community economic development organization. The employment forecast is probably a bit rosy given that mining is not really a labor intensive activity and benefiting from the employment opportunities requires a lot of knowledge and skill intensive labor not least of which are skilled trades such as carpenters and plumbers – already in short supply in Thunder Bay given they are spending their time fixing leaky pipes – as well as trained technologists and scientists. 

 

They could probably also use some economic expertise but sadly many in government economic development organizations still do not understand the distinction between a business and economics graduate and prefer the boosterism and optimism of a business graduate rather than the more realistic analysis of an economist.  Bosses generally only like to hear what they can do rather than what they cannot or should not do.  Just ask the management at Laurentian University how things are going so far?

 

As well, included among the new projected projects is of course the Ring of Fire chromite deposit which has been on the verge of development for a decade now and we are still waiting.  The real challenge in developing the deposit is not even transport infrastructure or resolving negotiations with affected First Nations.  All of that would actually fall into place rather quickly if the key variable trended dramatically upwards –the price of chromite.  Indeed, all of the rosy projections for mining development hinge on a continued upturn in commodity prices.  It is easier to negotiate something and develop it if you know there is indeed a big payoff coming and what size it might be.

 

The good news is commodity prices seem to be doing well.  Silver, for example, is at an eight-year high. Gold rose dramatically in 2019 and 2020 though it seems to have declined a bit for 2021.  Palladium, nickel, copper and zinc are all up – however, chromium is down about 14 percent for the year.  Indeed, the price of high-carbon ferrochromium appears to have come down about 40 percent over the last two years.  Will the demand for chromium pick up as economies recover in the post-pandemic period?  Chromium is used to harden steel and make stainless steel, so it depends on what the demand for things that use stainless steel is going to be like.  Given the shift away from commuting, it certainly won’t come from the demand for automobiles.

 

In the end, the mining readiness strategy is a business case rather than an economic case with the economics consisting largely of the perfunctory economic impact study as the ceremonial accompaniment justifying the recommendations.  The recommendations include such potboilers as “promote Thunder Bay as a full-service community” – something right out of the 1970s -  as well as “regular government communications on mining”, “prioritize municipal infrastructure development” and “enhance existing mining supply/service directory”.  One suspects that ultimately the mining boom will occur more as a result of rising commodity prices and private sector initiative than anything a community economic development organization can do.

 

One more thing.  The mining readiness strategy is mainly concerned with getting things in place to help support and capitalize on mining development that in the end is really out of the hands of the Economic Development Corporation. It is important to be ready for when it happens. It is also important to be ready for after it happens.  Economic development thinking in Thunder Bay and the region is entirely focused on short term up front economic and employment benefits.  That is understandable given the generally low growth in the region and the hunger for jobs.   It is also the legacy of a natural resource extraction mentality that has always assumed that there is a vast stock of resources and once one larder has been emptied, you can move to the next one. Where the next larder will be is usually not on the radar until the first one is empty.

 

How can the benefits of a growing mining sector be channeled into long-term benefits via either investment of resource rents and revenues or the use of acquired expertise to service mining projects around the world and create future high-end employment locally? What is the plan for when current mines near the end of their production in terms of creating opportunities based on those employed in a project that is wrapping up?  I suppose no one is really thinking about that but then I suppose one of the features of a natural resource economy is boom and bust and one enjoys the boom and then worries about the bust when it happens and hopes it is somebody else’s problem.   In northern Ontario, it is always clear sailing ahead and one cannot rightly imagine a morning without economic challenges for its children.

 


 

Sunday 9 February 2020

A Very Brief Survey of Northern Ontario Economic History



I have been working on an article surveying the economic history of northern Ontario and thought a summary overview draft of where I am going with it would be a worthwhile post. The entire article is going to be much more detailed but this excerpt below provides a pretty good overview of the direction it is going. Enjoy.


 A Very Brief Survey of Northern Ontario Economic History
Livio Di Matteo
 Northern Ontario’s economy began in the 19th century as a booming resource frontier as a result of favourable international market demand for natural resource commodities which were supplemented by government policy initiatives in transportation and protectionism. Export-led growth approaches to development suggest that such a growth process can ultimately expand population and market size leading to self-sustaining economic growth, but Northern Ontario never made that transition and in the latter part of the twentieth century and early twenty first century can be viewed as having undergone arrested development. 
Northern Ontario is a vast region of over 800,000 square kilometers covering about 90 percent of Ontario’s land mass.  While long the home of a substantial and well organized indigenous and First Nation population[1], industrial economic development of northern Ontario under European settlement began in the 19th century as a booming natural resource frontier driven by rising international market demand for natural resource commodities – mainly forest and mineral products – combined with government policy initiatives in transportation infrastructure and economic protectionism via what was known as the Manufacturing Condition.
In defining the region, it is important to note that is geographically, geologically and biologically a distinct region traditionally defined as the area of Ontario north of the French River – Lake Nipissing – Mattawa River system.  It is essentially Precambrian shield made up of some of the oldest rocks in North America and as a result of glaciation scraping its soil consists of shallow soils with some alluvial soil deposits in areas such as the Clay Belt regions and a mainly boreal forest ecology consisting largely of coniferous forest.[2]
In defining the region there is the question of borders as some include the Districts of Muskoka and Parry Sound in northern Ontario – as indeed they are for the purposes of federal and provincial regional development policies – while other might consider them not as the north but the ‘near’ north.[3]  There is also the question of thinking about the north as a region given that it is a very diverse area that in many respects is not one north but ‘many’ norths.[4] 
Geographically, there is the Northwest consisting of the Districts of Thunder Bay, Rainy River and Kenora while the other two-thirds of the region is the Northeast consisting of Cochrane, Timiskaming, Algoma, Sudbury, Nipissing and Manitoulin.  There is also the vast sparely populated area north of 50 which in some respects does not fit into either the northeast or northwest except by government fiat.  And of course, there is a rural remote north of small towns and Indigenous reserves as well as an urban north consisting of the five major cities – Thunder Bay, Sault Ste. Marie, Timmins, Sudbury and North Bay.  And the Northeast is also marked by a strong francophone population component while the region as a whole has a large Indigenous population.
The themes of Northern Ontario’s economic development are three-fold: natural resources, transportation and government.[5]  Northern Ontario’s economic development can easily be discussed within the framework of economic staples – products with a high natural resource content – given the importance of fur, lumber, pulp and paper and mineral products to the north’s economic history. As for transportation, this is a key theme given the importance of the Canadian Pacific (CPR) and Temiskaming and Northern Ontario Railway (TN & O) in providing access to northern Ontario resources in the 19th and early 20th centuries as well as providing the means for them to exit the region to world markets.  Finally, government is important given the federal role in providing transportation infrastructure that accessed and served the North such as the CPR, the Trans-Canada Highway and the St. Lawrence Seaway as well as the Ontario government given its parallel regional development program in the 19th century consisting of the building of the TN & O as well as the protectionist Manufacturing condition and its own agricultural land settlement policy.
Given the importance of natural resources to northern Ontario’s economy, the analytical framework best-suited to outlining the causal relationships of the development process is the Staples Approach or more generally, models of export led development.  The Staples approach sees a region’s natural resource base as the most important determinant of both the pace as well as the patterns of economic growth with the classic exposition provided by Harold Adams Innis who viewed economic development as springing from the interplay between an industrial heartland and a resource reducing hinterland.[6]  In the case of northern Ontario, it can be viewed as a resource hinterland not only to the industrial south but also the rest of the world economy given the international market for its mineral and forest products.  More modern versions of the Staples Approach see economic development as the process of diversification around an export base with the degree of diversification a function of what are termed economic linkages.  These linkages involve producing inputs for the resource export sector or investing in industries that use the output of the export sector as an input as well as the final demand for domestically produced consumer products.[7]   
Figure 1 outlines the export led/Staples growth process with an increase in exports generating an increase in the regional economy’s output/income (Y).  The presence of rising income and economic opportunity in the resource sector leads to population increase both via natural increase but also migration into the region.  This leads to an increase in the labour force which feeds back into the generation of income.  As well, the increase in income leads to an increase in regional saving which fuels investment as well as external investment flowing into the region to provide the capital stock needed to expand production of the resource export.  This process continues in a circular fashion until both the income and population become large enough to provide a market for regionally produced goods and services on top of the export sector and it is this expansion of regional manufacturing production as well as services to meet local needs and substitute for imports that becomes the process of diversification.  A failure to grow and develop beyond the initial export industries that powered development can be seen as incomplete or arrested development.[8]

 Figure 1: A Model of Export-Led Growth
 



 The economic history of northern Ontario can be divided into a number of stages.  They are: 1) Pre-European Settlement to 1867, 2) Boom, Colonialism and European Settlement, 1867 to 1913, 3) Consolidation, Depression and War, 1914 to 1945, 5) Post-War boom, 1946 to 1969 and 6) Arrested Development: Economic Dependency and Decline, 1970 to the Present. 
The economic development of northern Ontario followed a process of export-led growth fueled in particular by the export of mineral and forest products.  International demand and private sector exploitation of the region’s resource abundance starting in the 19th century was also accompanied by investment in transportation networks to bring resources out to market and government policies and initiatives designed to help facilitate development as well as take advantage of the public sector revenue potential of these resources.  Within this framework then, the three major engines of northern Ontario economic development are natural resources, transportation and government. 
During each of northern Ontario’s development periods outlined here, economic growth was most robust during eras where all three engines came together to provide the impetus for economic growth and employment creation.  The most robust economic growth and development occurred during the eras from 1867 to 1913 and 1946 to 1969.  Both of these eras coincided with good global economic conditions which fostered a demand for resource products and led to private capital investment in production facilities and transportation networks.  Both of these eras also saw a large spending and policy role for government which facilitated development.  The first era also saw northern Ontario as a major source of provincial government revenue.
Growth was poorer in the 1914 to 1945 as a result of erratic global markets, private sector weakness and the retreat of government involvement in northern development after the onset of the Great Depression and yet this was still an era of substantial population growth.  Economic growth since 1970 in the region has essentially stagnated along with population growth as a result of long-term technological change which reduced the labour intensity of natural resource extraction in the region.  While government did undertake more interventionist activity in an effort to arrest northern decline, it has failed to reverse the slow growth nature of the region given the absence of supporting private sector investment. 




[1] By the 17th century, the mainly Algonkian culture Anishnawbe and Cree indigenous population had developed a seasonal woodland economy and lifestyle centered on hunting and trading. See Bray and Epp (1984: 8).
[2] See Robinson (2016: 8-9) for a fuller description of the region.  The glaciers of the various ice ages periodically scraped topsoil off in northern Ontario and deposited it further south ironically enough making nature responsible for the first set of “resource transfers” from Ontario’s north to the south. According to Louis Gentilcore (1972: 7-8): “The acid nature of the podzols, the slower breakdown of the vegetable matter, and the prevalence of peaty soils create problems in the utilization of the soils of northern Ontario for commercial agriculture.”
[3] The 2011 provincial Growth Plan for Northern Ontario (2011) for example includes Parry Sound.
[4] For one point of view, see Miller (1985).
[5] See Di Matteo (1991, 1999) for overview of these themes.
[6] Innis (1930/84).
[7] These are generally known as backward, forward and final demand linkages.  See Watkins (1963).
[8] Part of this process of arrested development could also be referred to as a Staples Trap whereby an economy is not able to move beyond its initial export sector activities.  For a discussion of the Staples Trap see Watkins (1963).

References

Bray, M. and E. Epp, eds. (1984) A Vast and Magnificent Land: An Illustrated History of Northern Ontario. Ontario Ministry of Northern Affairs.
Di Matteo, L. (1991) “The Economic Development of the Lakehead During the Wheat Boom Era: 1900-1914,” Ontario History, LXXXIII, 4, December, 297-316.
Di Matteo, L. (1999) “Fiscal Imbalance and Economic Development in Canadian History: Evidence from the Economic History of Ontario,” American Review of Canadian Studies, Summer, 287-327.
Innis, H.A. (1930/1984) The Fur Trade in Canada, Toronto: University of Toronto Press.
Miller, T. B. (1985) “Cabin Fever: The Province of Ontario and its Norths.” In D.C.D.C. MacDonald, ed., The Government and Politics of Ontario. 3rd ed. Scarborough:Nelson, Canada, 174-191.
Ontario (2011) Places to Grow: Growth Plan for Northern Ontario.  Toronto: Ministry of Infrastructure and Ministry of Northern Development, Mines and Forestry.
Robinson, D. (2016) Revolution or Devolution?: How Northern Ontario Should Be Governed. Northern Policy Institute. Research Paper No. 9, April.
Watkins, M. (1963) “A Staple Theory of Economic Growth,” Canadian Journal of Economics and Political Science, 29, 141-158.