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Finlayson: Vancouver not an island, economically speaking (Vancouver Sun)

Vancouver Mayor Gregor Robertson shared his thoughts on the future of the city's economy in an address to the Vancouver Board of Trade on Oct. 16. The mayor got it partly right. He provided an update on recent economic and business developments in the city, particularly in the high-technology sector, and he emphasized the goal of making Vancouver a recognized leader in innovation.

The latter message resonates. Spurring innovation is critical to developing and sustaining a high-wage economy, one in which more local businesses succeed by selling products and services in export markets.

The mayor was also right to highlight the contributions of the advanced technology sector.

In fact, the total economic footprint of the technology sector is even greater than the dry statistics produced by government agencies suggest. The latest provincial data indicate that companies producing "high technology goods and services" account for 80,000 jobs and more than five per cent of British Columbia's GDP. But as University of California economist Enrico Moretti documents in his path-breaking 2012 book, The New Geography of Jobs, each high-technology job created in an urban region supports additional jobs in other nearby industries. When local technology companies are heavily involved in exporting, the multiplier can be as high as five to one, according to his research.

While the mayor's speech included a number of useful insights, it fell short in at least two key areas.

The biggest flaw is the absence of a regional perspective. Tellingly, Mayor Robertson had essentially nothing to say about Metro Vancouver. Yet the individual municipalities that populate the Lower Mainland do not constitute distinct economies. While the region is divided into many discrete jurisdictions, from an economic viewpoint it constitutes a single, diversified, and highly interdependent regional economy in which boundaries play a far less prominent role.

The economic geography of Greater Vancouver is metropolitan in scale, not municipal. People, goods, services, capital and information all move freely within and through the Metro area. Many employers in Greater Vancouver attract employees from different municipalities and purchase business inputs from suppliers scattered across the region. By the same token, most firms in Metro sell their goods or services to customers who reside in multiple communities. Individuals living in one city may shop or commute to college/university in another. And residents of suburban communities often travel to the urban core for entertainment or to access specialized health, education or business services.

Greater Vancouver is also bound together by shared infrastructures that form an integral part of the region's economic base and quality of life. These include critical transportation networks, systems and facilities; educational institutions (universities and colleges); research centres; industrial parks; and venues for arts and culture.

Because the municipalities that comprise Metro Vancouver are part of a single regional economy, it makes no sense to cultivate highly localized economic "visions," to hatch boutique economic development plans, or to adopt municipality-by-municipality approaches to business and investment attraction. Instead, local political leaders should explicitly embrace the concept of regional economic development and collaborate to market Greater Vancouver internationally as a desirable place to site highvalue economic activity. Mayor Robertson's forthcoming economic mission to Asia would hold greater promise if it was part of a wider regional initiative - and if it was co-ordinated with the provincial government's own efforts to promote trade and investment.

A second problem with the mayor's economic sketch is the limited attention given to Vancouver's status as a key North American gateway - and the powerful influence this has had on the evolution of the region's economy.

While Mayor Robertson and his Vision Vancouver colleagues are understandably keen to promote the city's "green" industries, they rarely acknowledge that Vancouver hosts Canada's largest port, and that the gateway transportation and logistics system centred around the port directly supports more than 80,000 jobs in the Metro area. Once the broader economic impacts are accounted for, a case can be made that the gateway transportation and logistics system ranks as the most important economic sector underpinning Greater Vancouver's economy. Unfortunately, the mayor and his political allies are prone to downplay the economic contributions of the port and the related transportation and logistics sector, and at times they seem to favour measures that would undermine Greater Vancouver's position as Canada's leading international trade gateway.

Finally, while the mayor did recognize B.C.'s resource industries in his speech, the production and shipment of resource-based goods and the transportation and logistics system that links the province and the country to North American and offshore markets need to figure more prominently in any realistic vision for Vancouver's economic future.