New report reveals how to attract foreign investment to Toronto
A new first-of-its-kind report co-authored by a University of Toronto Mississauga researcher is poised to play a pivotal role in driving economic growth in the Greater Toronto Area.
Collaborating for Investment Attraction in the Toronto Region makes the case for cooperation between Toronto and surrounding municipalities as key to attracting foreign investment. Published this month, the 105-page report explains how multinational corporations choose operating sites with strong regional economies. It also demonstrates how foreign investment projects in one city lead to spillover economic benefits for surrounding cities. The report was produced by David A. Wolfe, UTM political science professor and co-director of U of T’s Innovation Policy Lab, and Richard DiFrancesco, associate chair and director of the program in planning in the Department of Geography & Planning at U of T’s St. George campus.
“To just focus on who benefits based on where a head office is located—that’s not how economics works,” says Wolfe, co-editor of Growing Urban Economies: Innovation, Creativity, and Governance in Canadian City-Regions. “A regional economy has its own boundaries, and goods, services, people, ideas and research flow throughout that region and cross political boundaries.”
The report was commissioned by Toronto Global, an agency established last February that unites GTA municipal leaders from the cities of Toronto, Mississauga and Brampton and the regions of Durham, Halton and York to collectively promote the Toronto Region to growing national and international companies as an ideal location for corporate expansion. Wolfe and DiFrancesco used economic modeling to assess the spatial-economic benefits of 11 local investment projects by companies such as General Motors, IBM, Cisco and Thomson Reuters. They also completed case studies of several of these companies to determine how their investment projects have economically benefited surrounding municipalities.
A review of a $190 million investment in October 2016 by Roche Canada’s pharmaceutical division in a new facility in Mississauga shows it will translate into $219 million in gross industry output (new goods and services production), $92 million in general GDP activity and $78 million in labour income in the Region of Peel. At the same time, Roche’s capital expenditures in Mississauga should stimulate substantial economic impacts in Halton, York, Toronto, Durham and other parts of Ontario. Also, the project will lead to employment opportunities not only in Peel but across Ontario, in areas such as manufacturing, trade, transportation, business services, finance and education.
A case study of IBM Canada shows how the software development lab it established in Markham in 1967 has grown to become part of IBM’s largest team of software engineers outside the U.S. The company has also initiated research and development initiatives across and beyond the GTA. Among them is the Southern Ontario Smart Computing and Innovation Platform, a research and development consortium that has generated at least 200 highly skilled research jobs. The company’s recent Innovation Incubator Project, meanwhile, will support the commercialization efforts of 500 technology startups in Ontario. These activities demonstrate how IBM’s original investment in Markham has led to broader economic benefits throughout the province.
The report shows how multinational enterprises prefer operating in regions that can provide strategic advantages such as lower costs, faster time to market and access to experienced labour. This means for Toronto Global to succeed at making the Toronto region a foreign investment magnet—and the winner of Amazon’s second headquarters competition—it must align the region’s assets to companies’ strategic needs.
“Cooperating on international marketing and investment attraction is what we’re currently doing,” Wolfe says. “The next step is figuring out how to coordinate more economic development activities between municipalities and regions.”