Regional and Sectoral Growth in Canada's Emerging Economy

Abstract This paper studies regional and sectoral concentrations of business activity in Canada. The analysis compares the spatial and sectoral characteristics of rapidly-growing firms, Next Wave businesses, with the largest firms in the country, Establishment businesses. The study shows that British Columbia, a strong next wave performer, has a sectorally-diverse and geographically-concentrated next wave business community, while Saskatchewan's relatively weak next wave community is sectorally-concentrated and geographically-dispersed. The paper discusses these results and links the findings to the further development of the literature of economic geography and its public policy applications. ********** Despite years of attention by federal and provincial levels of government, Canada continues to be marked by a concentration of economic activity in a select few urban regions. Although government policies, programs, and agencies over the past decades have focused on many aspects of encouraging economic development in Canada, the distinct geographic character of economic activity has been one of the most enduring issues vexing public policy makers. Regional economic development agencies such as the Atlantic Canada Opportunities Agency and Western Economic Diversification Canada, and their predecessors, have been established by the federal government specifically to address long-standing issues related to natural resource dependence and the consequent lack of diversification in many of Canada's regional economies. This paper focuses attention on business communities and economic development in Canada's regions. Regional scientists in Canada have demonstrated a high level of interest in the linked issues of regional growth and diversification (Polese 2000; Polese and Shearmur 2002). One aspect of recent work in regional science that relates directly to the level of development, diversification, and control resident in regional economies is research into the location and distribution of advanced administration functions and high-level support services. Numerous studies over the past decades have established the ongoing metropolitan orientation of head offices and information-intensive services in North America (Semple 1973, 1996; Klier and Testa 2002). A large-city bias has endured in head office location over the decades, but this has not been unaccompanied by change in business locations. A variety of researchers (Semple 1973; Lyons 1994; Klier and Testa 2002) have demonstrated an ongoing dispersion of head office activities throughout the United States from the 1950s to the 1990s. Similar observations have been made for Canada, although the Canadian urban system has been much slower than its US counterpart in distributing head office activities throughout its regions. For example, Meyer and Green (2003) show that in 2000 the top four head office centres in Canada hosted 56.4% of all head offices. In Canada's case in particular, research providing insight into regional business growth is of great importance, as the lack of dispersion of advanced decision-making and service activity presents many challenges for a country that continues to hold economic development and diversification of the country's regions as a national priority. This study investigates the location of head office activity in the regions of Canada. The analysis focuses on three unique regions: the Ontario-Quebec core long identified as the social and economic heartland of the country; the British Columbia region, far from the country's economic centre and continuing to have a high reliance on resource industries, but with vast economic potential in its growing international links to the Pacific Rim; and Saskatchewan, a peripheral, resource-rich province with a long history of economic struggle and out-migration. The study chooses the Ontario-Quebec core for analysis as a whole because of the region's collective and long-standing dominance of key industries in the national economy. …

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