Ontario must prepare for disruptions ahead
Ontario’s prosperity gap continues to widen. In 2014, GDP per capita in the province was $12,015 lower than the median of the North American peers.
Further, Ontario workers were less productive than their peers in both the goods- and service-producing sectors. At the same time, business investment, a driving force of productivity, was the lowest amongst all peer jurisdictions. Merchandise exports also did not grow as quickly in Ontario compared to most peers. Importantly, this occurred alongside rising inflation, which can lower Ontarians’ purchasing power and standards of living.
Ontario’s comparatively poor economic performance is concerning given the prevalence and relevance of disruptions. Sharp, unexpected changes that interrupt a course of events can significantly influence an economy’s growth trajectory. In particular, this impacts economic output, business investment, employment, and consumer confidence. This begs the question: How will Ontario remain dynamic and resilient in the face of disruption?
To answer this question, the Institute analyzed two types of disruptions in its forthcoming Annual Report: fluctuating oil prices and innovative technologies. Although both of these disruptions can have a significant impact on the economy, the Institute’s research finds that only one has the potential to throw Ontario off course.
Although news headlines lead us to believe otherwise, changing oil prices do not seem to influence GDP and employment in Ontario. This may be because Ontario’s key sectors are less dependent on oil relative to their peers. Instead, broader industrial shifts – whereby Ontario’s economy transitions from producing goods toward providing services – may be driving changes in GDP and employment.
The Institute turned its attention toward another type of disruption: innovative technologies. Continuously improving technologies, such as mobile internet, the Internet of Things, Big Data, and cloud computing are influencing the work of the private and public sectors. For example, three of Ontario’s major industries – automotive, insurance, and finance – are being disrupted by new models of car access, the Internet of Things applications, and peer-to-peer lending. Here, government should facilitate industry partnerships, and business leaders should strive to develop flexible products and services.
Innovative technologies are also transforming the delivery models of education and health care, two sectors that are fundamental to the province of Ontario in virtue of their size and lifelong impact. Massive Open Online Courses, along with telemedicine, provide access to knowledge and can improve the effectiveness and efficiency of public services. However, they also challenge cultural attitudes and business practices, implying that Ontario’s education and health sectors need to be prepared for disruptions ahead. To ensure that Ontario remains dynamic and resilient in the face of disruption, the Institute proposes five recommendations for the province’s policy-makers and business leaders.