Open for business: Strategies for improving Ontario’s business attractiveness

Released May 2015

Inspired by the announcement of the Jobs and Prosperity Fund (JPF), the Institute for Competitiveness & Prosperity conducted extensive research comparing Ontario to regional competitors to assess the areas where the government should act to improve business attractiveness. Our Working Paper 21 – Open for business: Strategies for improving Ontario’s business attractiveness – aims to advise the government on how to get the best return on investment for the Fund.

There are many factors behind a firm’s location choice, and Ontario falls short in some key areas. First, Ontario’s access to markets is poor compared to geographically close regions, and this is amplified by the lack of transportation infrastructure. Second, labour cost per unit of output in Ontario is among the highest relative to regions in the Northeast of North America. Lastly, although the province has low overall taxation, the corporate tax structure, as well as corporate tax burden relative to public services, might be hampering its capacity to attract businesses. The Institute provides six recommendations to help improve Ontario’s fundamental characteristics for business attractiveness.

Without bringing Ontario’s fundamental economic characteristics up to speed with those of other regions, programs such as the JPF will only grant the province short-term gains. To make the best use of the Fund, the Institute recommends:

  • Making the operation and evaluation of the Fund transparent.
  • Prioritizing productivity enhancements on the Fund’s scorecard.
  • Opening up the Fund to companies of all sizes.
  • Using the Fund to co-finance employee training.
Topics: Business growth and innovation