Misdiagnosing the Economic Problem

This – http://www.theglobeandmail.com/report-on-business/economy/ontario-lags-on-prosperity-potential/article2236059/ – is an interesting article, but it misses important aspects of currently evolving economic trend and thus misdiagnoses the economic problems facing Ontario, Canada.

1. Just by itself, the economic development of other areas is not necessarily a bad thing.  In fact, a general uplift in the world economy can work to everyone’s advantage.  So a narrow focus on comparisons is not helpful.

2. However, too small an increase in the local economy and especially in productivity are important concerns, so Ontario does have reason to worry.

3. If there is evidence of a significant use of the Internet, it may be that some of the economic activity that is going on in Ontario is not being properly measured because it is not monetized.  (Think about how little of the value of Wikipedia is monetized and thus how much of its value is ignored by standard economic statistics.)

4. They do need to step up innovation and the skills/knowledge of the people who live there.  Spending more on traditional educational institutions may not be the best way to do this.

5. You won’t be surprised if I add that “poor functioning of industry clusters, fewer workers living in urban areas” is just a reflection of what is going on elsewhere in the developed world and not something unusual to Ontario.  Economic strategies based on physical proximity will increasing be challenged by virtual connections.  

By the way, the report is much more nuanced than the newspaper story, but unfortunately it is usually only the newspaper stories that get read.

Here’s the link to the report: http://www.competeprosper.ca/

© 2011 Norman Jacknis

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