A decade of growth: The emerging geography of the new economy

Canada's high-tech revolution is disproportionately a "big city" phenomenon, according to a new study. During the 1990s, Ottawa cemented its position as a high-tech city. But Toronto was the true employment centre for firms in information and communications technology (ICT) industries. Calgary and Montréal enjoyed strong employment gains in research and development-intensive science industries.

During the 1990s, employment growth in Canada was fuelled by job gains in the technology sector. One out of every six jobs created during the decade was in the ICT sector. In Canada's largest cities, ICT industries accounted for 4 out of every 10 new jobs.

ICT firms important engine of job creation in large centres

In 1990, Canada's largest cities, those with over a million people, were home to about 63% of Canada's ICT workforce. ICT employment growth in these cities was rapid. By 2000, the largest cities accounted for almost 70% of ICT employment.

In contrast, the share of total employment in these largest centres stood at just under 45% in 1990 and 43% in 2000.

Not only were large cities a magnet for firms in the ICT sector, but these companies were an important source of employment creation in large centres.

During the 1990s, 4 out of 10 new jobs in large cities were created by businesses in the ICT sector. The contribution of such industries to local employment growth in these large cities cannot be overstated. These centres experienced lacklustre growth in total employment through the 1990s - an average increase of 8.2% compared with the national rate of 12.2%.

The growth of ICT industries in large cities is consistent with the general tendency for firms in new industries to locate in cities with larger populations. However, the size of the local economy is not the only factor that has a positive influence on the location decisions of ICT firms. The level of industrial diversity in a local economy also has an impact.

After controlling for differences in the size of local economies, cities with more diverse economies are the ones with larger shares of their local employment base in ICT industries. This suggests that new economy industries are drawn to large, diverse cities because these centres provide them with the wide variety of services and specialised labour that they require to grow.

Ottawa cemented its position as a high-tech city during the 1990s

During the 1990s, Ottawa cemented its position as a high-tech city. However, Toronto was the true employment centre for firms in ICT industries.

In 2000, Ottawa led all other Canadian cities in terms of the percentage of its local workforce that was employed in the ICT sector. But Toronto's ICT workforce was four times the size of Ottawa's, and Toronto experienced faster ICT employment growth over the course of the decade.

ICT industries accounted for 9% of Ottawa's employed labour force in 2000, the largest share of all of Canada's urban centres. Yet, in absolute terms Toronto's ICT sector was much larger. Toronto was home to about 200,000 ICT workers, compared to just under 50,000 in Ottawa.

Montréal had the second largest ICT workforce in Canada, but at just under 90,000 workers, its local ICT sector was less than half the size of Toronto's.

Montréal, Calgary enjoyed largest job gains in science industries

ICT industries are not the only source of industrial innovation. Science-based industries contribute to economic growth via large investments in research and development and skilled workers.

This science group takes in a diverse range of production environments, from heavy manufacturing industries such as aircraft manufacturing, industrial chemicals and pharmaceuticals, to professional services such as architecture and engineering.

Calgary and Montréal enjoyed the largest employment gains in science industries. Between 1990 and 2000, Calgary increased the size of its science-based workforce by 18,000 workers, while Montréal's science sector grew by about 12,000 workers.

This report examines the geographic structure of Canada's high-tech landscape from 1990 to 2000 - a period of rapid growth in technology markets. Despite the restructuring of technology industries in the post-2000 period, these long-run employment gains remain largely intact.

The third research paper from the Canadian economy in transition series, A decade of growth: The emerging geography of new economy industries in the 1990s (11-622-MIE2003003, free) is now available on Statistics Canada's website (http://www.statcan.gc.ca). From the Our products and services page, under Browse our Internet publications, choose Free, then National accounts. For more information on papers related to the growth and development of the new economy, see Economic transitions (http://www.statcan.gc.ca/english/studies/eaupdate/trans.htm).

For more information, or to enquire about the concepts, methods or data quality of this release, contact Mark Brown (613-951-7292) or Guy Gellatly (613-951-3758), Micro-economic Analysis Division.