Clusters in Ontario: Creating an ecosystem for prosperity

Released June 2016

Strengthening clusters can lead to increased productivity, economic growth, and prosperity because clusters foster interactions that can energize the regional economy. In Working Paper 26, Clusters in Ontario the Institute highlights five strong, traded clusters in Ontario. The Institute recommends that the Ontario government facilitate the growth of such clusters - rather than replicate them or force their existence. 

The Institute recommends that the Ontario government facilitate the growth of strong clusters through investment in the foundational elements that form a healthy cluster:

  • Develop a comprehensive cluster strategy that leverages improved regional data collection. Additional regional data supports business and cluster decision making.
  • Invest in inputs of production. Human and physical capital are key elements to all cluster environments. 
  • Government should reconsider its heavy involvement in venture capital markets. Business outcomes are improved when government backed investments are involved but the effect is declining as the portion of public to private funding increases.
  • The entrepreneurial culture of the province should be improved. Greater emphasis on entrepreneurism could be implemented in the education and skills retraining systems.
  • Encourage further interactions and collaboration within clusters to spur development and innovation. Government can bring cluster actors together through conferences, cluster associations, and industry leaders.
  • Expand trade for clusters by using the low cost Trade Commissioner Service. These commissioners work directly with companies to break into international markets.
  • Look at macro-regions such as the Great Lakes or the Kitchener-Cambridge-Waterloo-Toronto corridor for supercluster opportunities. Related clusters which span across these larger geographic areas have the ability to feed into one another and the spillover effects can elevate the region above other strong clusters.
  • Loosen foreign direct investment restriction. If FDI restrictions were loosened to the OECD average it is suspected that Ontario’s economy would grow by $4.5 billion or $648 per worker.
Topics: Economic policy, growth, and strategy, Government investment and innovation, Clusters