Toronto’s economy helps shape the city. Economic activity affects where businesses are located, what kinds of buildings they occupy, how and where people commute to work, and where workers choose to live. The city’s planners and decision-makers need a realistic understanding of the economy in order to set policy and invest in improvements to the city’s infrastructure.
Yet, surprisingly, the changing nature of Toronto’s economy is not as well understood as it should be. Toronto does not have an agency or department that monitors the health and evolution of the city’s economy or the factors that affect where businesses are located. The last comprehensive study of the regional economy was completed in 1995 for the Golden Task Force on the Greater Toronto Area, and economic conditions have continued to change since then.
At the time of the 1995 study, Toronto’s economy was still adjusting to the aftermath of a prolonged recession in the early 1990s, the emergence of high-tech, knowledge-based industries, and the implementation of the North American Free Trade Agreement with the United States and Mexico (NAFTA). The 1995 study suggested that Toronto’s economy might take one of two possible paths. Either the city would continue to attract and retain knowledge-intensive companies that pay high salaries and attract educated workers, or it would lose its ability to compete in knowledge-based industries. The study also noted that many businesses were leaving the central city and relocating to the suburbs and surrounding municipalities.
Which path did the city take? And has the trend towards decentralization continued? To answer these questions, we will provide a brief overview of Toronto’s economy in four ways. We will:
- measure overall economic performance using leading economic and employment indicators;
- compare Toronto’s economy to that of other similar North American cities;
- review the location of businesses and major employment centres to find out if businesses are still moving away from the central city;
- examine indicators that shed light on Toronto’s ability to compete in an economy based on knowledge and innovation and its role as a centre of corporate decision-making.