The Phillips Report: Gambling On Our Economic Future

When the issue of having a casino in Peterborough comes up in casual conversation, the most common reactions are usually physical, not verbal. Either people's eyes roll or their shoulders shrug. Most often, people are against it or ambivalent to it. Rarely does anyone engage the idea with a sense of excitement or express how important a casino would be for the future of the City.

Those who do articulate their support first argue that it creates jobs and that it is a way to attract more tourists. Both arguments have some merit. Those who are against it see it as having potentially serious social consequences, such as those who will develop a gambling "addiction." This position has some merit, too. There are, however, some facts that need to be considered when considering the reality of a casino.

First, collectively, the patrons of a casino always leave the casino with less money in their pockets than they had when they walked in. "The House" always gets its' cut, which is substantial, and is used to create the jobs at the casino. 

The second fact, that most people choose to ignore, is that what determines the difference between the money one has in their pocket when they enter the casino versus the money they have in their pocket when they leave it is determined by chance—luck—not their natural good fortune or fate. 

The third fact is that there is a considerable financial investment that needs to be made to create a casino.  This is rarely mentioned in casual conversation. It would be interesting to know if people think that this investment could be better used more effectively in creating jobs and economic opportunity in the City.

Finally, and is most concerning, is that most people believe that the only source of economic growth comes into the community from outside it. The casino is coming to us, not being created by us. In effect, there is a general view that our economic development is up to others, outside the community, not ourselves. This view considers marketing Peterborough as the only means of growing the economic opportunity.

It is time that we come to grips with the opportunities for growth that come from within the community. We need to rid ourselves of the myths that constrain us and seek out, and invest in, the opportunities that already exist in our community.

The most generally accepted approach to future growth is to invest in "shot gun marketing"—shooting out the "message" about Peterborough and seeing what it hits, and comes to us. Although there are often comments made about investing in building on what we already have in the community, there is little evidence that there is any significant investment in it. The idea that there are strengths in the community to build on is given lip service, at best.

The "shot gun marketing" approach, ironically, is a lot like a casino. We are investing in activities where the payoff is determined by chance. To even the most ardent casino supporter, it wouldn’t make any sense for a successful local business looking at making a $1 million investment in its growth to spend the $1 million at the casino and expect a better financial return than investing in their business.   

The Peterborough economy—the mix of the private and public sectors—is more diverse today than it has ever been. Unlike the local economy of fifty years ago, we are blessed with an economic foundation that can support a much larger economic structure than we now have. To build this economic structure, we need to find new ways—investing in new ways—to build on our strengths. Making these investments from our community, in our community, is much more likely to lead to meaningful, sustainable economic growth than gambling on others coming to "save" us.

The arguments for and against the casino belies the real issue: how we can best spend public- and private-sector funds to help us meet our economic potential? The investments required for a casino to become a reality here could be better spent investing public and private funds in building on the considerable strengths that already exist in this community.

It is not difficult to determine where the opportunities for growing the existing economy are. In fact, that work has already been done. Obviously, given the discussion we are having about the casino, there are funds to invest. Now it’s about how to spend them.

The sad reality is that the longer we neglect investing in strengthening and growing what we already have here, the more we lose our competitive advantages to other communities that are making investments in strengthening their communities.

The real lesson coming out of the discussion about the casino is that thoughtful and meaningful investments in the existing economic strengths of Peterborough are more likely to pay off than gambling with our hard earned economic resources.    

[Contributed by PtboCanada's Tom Phillips. Ph. D. Phillips is Professor in the business programs at Fleming College and Trent University.]

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The Phillips Report: Peterborough’s Unemployment Rollercoaster

The recent unemployment statistic for the Peterborough area was welcomed news.  The area’s unemployment rates for December had dropped to 7.3%—the lowest level in 27 months. As is typical of the public reaction to such good news, there is little discussion of it. It is like it was meant to be.

When the news of a much higher rate of unemployment in the area hit the streets, it was difficult not to end up in a discussion with someone—anyone—about who was to blame for it. Now that there is good news, no one has been asking who should get the credit. So goes Canadian culture.

In the end, punishment or reward is not the real issue.  The real issue is how to maintain a low level of unemployment. History, however, has some lessons that can help us deal with unemployment—if we’re willing to learn from its lessons.

The general, historical pattern of unemployment in this area is that the unemployment rate falls between May and November each year. The bad news is that it rises between November and May. That means that in the Spring, we will likely be getting news that unemployment is up again. 

An indicator of the health of the local economy will be, in part, the degree to which unemployment increases between now and May. If it goes back to a level over 10%, as it was in 2010, the economy will, once again, not be doing well. Any level under 10%, the news is good—in relative terms.

The volatility of unemployment is a problem in itself. If there were ways for us to creatively develop what economists call "countercyclical" activities that would reduce the swings in unemployment over a year, the stability that would come with it could, in itself, promote economic growth.

It seems rather obvious that the May-to-November decrease and November-to-May increase pattern has systemic roots. That is, there is something about economic activity in the area, as a whole, that leads to these results. The seasonality of a lot of activities related to the weather—from construction to tourism—clearly has an impact. 

However, with dismally poor performance in productivity across Canada—including our area—there must be something we can do to treat the historical pattern as an opportunity to provide a meaningful experience for the larger group of unemployed in the November-to-May period. This would have the potential to improve their productivity and future employment prospects.

There are a number of activities that could be developed to address the lethargy of the November-to-May phenomena. To address how to do this, however, requires that we consider activities that are non-traditional, in one degree or another. 

For instance, providing incentives for businesses and other organizations to offer employment opportunities— even if they were in short-term contracts that could possibly lead to full-time employment—could contribute positively to the Winter/Spring malaise. This could be addressed by any, or all, levels of government, and perhaps even by private- and public-sector organizations in their planning of activities over a year.

There could be, with some creative program timing and content, education and training opportunities offered locally that would cater to those who most often experience unemployment during this period. This kind of programming could improve their prospects for future, long-term employment, make them more productive when they are employed, and could be taken as credit toward recognized certificates, diplomas, or degrees.  This would require some non-traditional scheduling, programming, and methods for delivering educational and training opportunities that fit the realities of the local unemployment cycle.

I am not aware of there being concerted effort—across all sectors—to address economic realities of the employment cycle in the area. However, with a collective willingness—socially, politically, and organizationally—we can address this issue and turn the unemployment rollercoaster into a smoother, more pleasant ride.

[Contributed by PtboCanada's Tom Phillips Ph. D. Phillips is Economist & Sustainability Director - Greater Ptbo Innovation Cluster.]

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Water Is Peterborough's Greatest Economic Opportunity In Decades

In times of economic turmoil, the tendency is often to look for ways to entrench and wait out the storm. However, this belies the fact that in tumultuous times great opportunities often emerge. Joseph Schumpeter, the late Harvard economist, claimed that times like these possess forces for "creative destruction." It is from the "creative" nature of economic change that opportunities arise. One such opportunity for the future of the Peterborough-area economy is emerging.

There is no doubt that the public sector has targeted water as a primary infrastructure and public health challenge. Over the past decade, the emphasis has changed from supplying water (e.g., transmitting large quantities of water) to one of water quality. Water quality is emerging as the fastest growing global issue of our time. 

Fortunately, it is in the area of water quality that the region has existing expertise. The recent Ontario Speech from the Throne (March 8, 2010) spoke directly to developing "clean-water" organizations in the private and public sectors. This is clear recognition of water as a public policy challenge and the growth that will be supported through public funding.

In 2010, the GPAEDC and Greater Peterborough Innovation Cluster released a major study that mapped and analyzed the energy and water sectors in the area. In the water field, there are fourteen active and five interested Peterborough-area firms in the water supply chain. It is a good sign that all segments of the supply chain are currently populated by Peterborough-area firms. 

Photo: Evan HoltIn addition to private sector firms, the water related research Fleming College (the Centre for Alternative Wastewater Treatment) and Trent University (the Trent Water Quality Centre) make the sector in our region that much stronger. 

All indications are that Peterborough could—should it act quickly and in a concerted way—become a global centre in the field. The challenge comes not from just growing locally, or attracting those from outside, but from combining existing technologies and expertise to better position it for future growth.

Thankfully we are not beginning from scratch. Along with existing businesses in the field, there is a high level of academic involvement in research centres and programs being offered at Trent University (10 centres/programs) and Fleming College (10 centres/programs) that are related to water. 

In each centre and program has faculty, research and students attached to them.  They represent a very significant resource—particularly human—in the field.  Combining these centres and programs with the private-sector activity that has been identified reveals a strong foundation upon which to build a comprehensive water cluster in the region.

As much as the analysis of the private- and public-sector strengths that exist in the area's water sector, it is clear that it is made up of several successful, but rather isolated elements—there are few interconnections across the sector. With the considerable technological capacities, and high-level expertise, and a growing market, it is apparent that the region's water sector is less than the sum of its parts. That is, it is possible for the region to take a stronger position in the water sector if it were able to better utilize its existing technologies and expertise. 

To shift the situation to one where the whole is greater than the sum of its parts, the water sector resources available in the region must be combined in such a way to improve its overall productivity and innovativeness to better position it to grow in this burgeoning, national and international market.

The greatest challenge is not in getting skilled people or technologies in place. The challenge is to create an organizational structure that can help the relatively isolated organizations identify and create new collaborations that can strength the region’s place in the national and global water market. In effect, we need to create an organization that can provide the overarching, coordinating services that were once provided by the "umbrella" organization of a multi-divisional corporation. 

When new market opportunities arise, there needs to be an organizational mechanism by which the existing technologies and expertise can be assessed relative to the opportunity. Should the technologies and expertise exist, a new business entity must be created to exploit it. 

In the past, when a large corporation was faced with a new market opportunity, it would pursue it by re-combining its existing expertise and technologies by simply creating a new division. Our current circumstances call for the creation of innovative business partnerships across—not within—organizations (e.g., joint ventures, strategic alliances) that promote growth, jobs, and the creation of wealth in the region.

There is absolutely no doubt that water will be a global issue in the twenty-first century. It will be a thriving international business sector. For Peterborough, taking a key role in that growing sector is an opportunity that we either proactively move on soon or lose to a less well equipped, but more organized community.

Opportunities like this do not present themselves often. We must seize the day.

[Contributed by PtboCanada's Tom Phillips Ph. D. Phillips is Economist & Sustainability Director - Greater Ptbo Innovation Cluster.]

****[UPDATE BY TOM PHILLIPS: Here's Dan Taylor, President & CEO of the Greater Peterborough Innovation Cluster, speaking about the potential for a Water Cluster in the Peterborough Region]

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The Truth About Why Closing PCVS Would Be A Huge Blow To Our Community

THE PHILLIPS REPORTOnce again the public, and private, discussions about the closing of a Peterborough high school have sunk into anecdote and vitriol. Virtually all of the discussion surrounds loyalties—neighbourhood, school, alumni—or mythical nostalgia. As the final decision by the publically elected Board at the Kawartha Pine Ridge District School Board (KPRDSB) approaches, it is time to refocus the discussion on financial and economic realities.
Before addressing these issues, it is important consider the role of the Board and the role of its senior management. The Board is elected to see that the KPRDSB has the strategies, policies, facilities, finances, and administration are in place so that the organization—overseen by the senior managers it employs—can provide the best education possible given the resources. Importantly, the Board is responsible to its funders—property taxpayers (residential and business) in Peterborough and the taxpayers of Ontario. The Board’s senior administration must take these resources and deliver the required educational services. There is a clear distinction between the role of the publically elected Board and the role of the administrative staff it employs.
The Board now finds itself in a position where the facts show that there is declining enrolment in Peterborough high schools and more schools than are necessary to deliver its educational services. With very similar education services being delivered at the existing schools for several decades, it is difficult to argue that one fewer high school would put the Board in a position where it would be unable to fulfill its mandate.
In financial terms, declining high school enrolment and an abundance of property and facilities puts the Board in a position where it has the opportunity to consolidate its operations, sell some valuable property, and use the funds to deliver educational services, and, perhaps, provide taxpayers with some relief from ever-increasing educational property taxes.
After the contentious review process was completed, I was pleased to see that the Board added its offices to be part of the mix. With little commercial land available in the industrial parks in the City, the Board could sell its property (a value in the millions of dollars) in the industrial park and consolidate its operations in an existing high school. This is a creative response to a complex decision. However, after this creative financial option was offered by the Board, the pubic debate became increasingly entrenched in anything but the financial, economic, and administrative realities.
In economic terms, the issue centers on the future of PCVS. Beyond the issues of its property value (which is the lowest—according to Board’s own property evaluations—of all the properties being considered, and the least likely to lower education property taxes), the significance of the school in terms of its value to the community and its role in economic development were practically ignored. Many of the initiatives to renew and expand the infrastructures of the downtowns of Ontario communities are to increase, not decrease, the downtown’s population density. More importantly, a high school in the downtown represents a source of current and future creative talent.
Just over 100 kilometres from downtown Peterborough, at the University of Toronto, is an internationally recognized leader in economic development—Richard Florida. His research describes the significance of the "creative class" and its ability to interact at a social level in city cores as a key contributor to local economic growth. Even with him being an advisor on economic growth to the British Prime Minister, David Cameron, it seems as though his message is more readily heard further away, rather than closer to home.
There is little doubt that a downtown high school contributes in many ways to the economic development of a city. I have yet to come across any evidence, from Richard Florida’s point of view, or any other approach to economic development that would suggest that removing a downtown school would contribute to a community’s economic development in a positive way.
Basically, as much as there are compelling, anecdotal and nostalgic arguments to close PCVS, there is little substance—financial, economic, or administrative—to the arguments. This must be recognized as the Board’s takes its decision.
Earlier this year, I was given the opportunity to present this case in a ten minute presentation to the KPRDSB’s Accommodation Review Committee (ARC). After that presentation, I was given some feedback from a member of the committee that my presentation would have had more credibility if I had not been, "clearly," a PCVS alumnus and supporter.

On that point, I need to set the record straight. I did graduate from PCVS.  However, I disliked high school immensely. In hindsight, my five years of high school were insignificant given my subsequent academic pursuits. The fact that those five years were spent at PCVS has nothing to with the case I am making. My position comes from my community and professional perspective, not a nostalgic view.  I trust that the Board’s decision will be made in the same spirit.


[Contributed by PtboCanada's Tom Phillips Ph. D. Phillips is Economist & Sustainability Director - Greater Ptbo Innovation Cluster.]

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Why Peterborough's Unemployment Rate Is So High In Global Context (And What Can Be Done About It)

THE PHILLIPS REPORTWith all the bad news coming out of the US, Europe, and international financial markets, the most common topic of discussion locally is unemployment. Locally, there is no doubt that the number of those without work has grown since the beginning of the international financial crisis in the fall of 2008.

The data is clear. The number of people unemployed in the Peterborough area doubled between November 2008 and May 2009—from 2,800 to 5,600. Thankfully, the number of unemployed has increased more modestly since May 2009. It now stands at 6,900. The good news is that even through the economic downturn, unemployment in Peterborough historically falls between May and November each year.

Several attempts have been made to understand the numbers. In many cases, more questions have emerged than answers. The Statistics Canada area is larger than the City but not, in terms of population, but not as large as the County and City combined. So what does it really mean for the City? How is unemployment measured and is the collection of the data accurate? As interesting as these issues may be, they provide little insight into the greater jobs challenge Peterborough is facing.

Economists are notorious for making predictions, so I am going to avoid making them. There are, however, economic forces that have a direct effect on the local economy and push it in one direction or another.  Where they will lead us, exactly, cannot be determined. Many of these forces are beyond the control of businesses—big or small—or local, provincial, or federal governments. Like it or not, the international financial crisis that began in 2008, the sovereign debt issues in Europe, and the debt ceiling debacle in Washington all have an influence—and not always in a small way—on our local economy.

Peterborough is a much more diverse economy than it was when it felt the effects of economic recessions in the 1970s and 1980s. This diversity in both the private and public sectors has given it a strong foundation upon which to build. To build on that foundation requires customers: local, national and international. Our industrial sector very likely serves more customers internationally than Peterborough businesses ever have, but the global economic environment is not doing so well, and, therefore, we’re not doing so well either.

The US is, in many ways, weak. Economic fragility and instability always leads to short-sighted decisions and more emphasis on maintaining themselves than on growth. These realities in the US inevitably have a negative impact on business here.

Last week the exchange rate was $1.06 US for $1 Canadian. That represents more than a 50 percent increase from when a Canadian dollar cost 70 US cents, not many years ago. That means a product made in Peterborough and sold for $100 Canadian cost the US customer $70 US a few years ago. Last week that same item would have cost the US customer $107 US. This clearly puts pressure on local businesses selling in the US to cut costs, and most importantly, become more productive to remain competitive.

These factors, relatively close to home, are combined with instability Europe to create a dismal view of prospects for economic growth and more jobs any time soon. The likelihood of what has been recently called "a double dip recession" is growing by the day.

The good news is that the Peterborough economy is international in scope. The bad news is that the international economy is generally not doing as well as the Canadian economy. Unfortunately, the standard of living to which we have become accustomed requires us to be a small part of a very large global marketplace.

As much as governments are the easiest to blame when an economic downturn occurs, all levels of government—municipal, provincial, and federal—have done exactly what was required to keep the local economy from suffering too greatly when the first downturn occurred almost three years ago. However, as we have seen from the recent disaster in Washington, there is a limit to what governments can do. If we are to lay blame it is not with government.

With the realities we are facing it is a waste of time to endlessly analyze what could have been done. The obvious question now is: What can be done?  Unfortunately, little can be done in the short-term since the negative forces are far beyond the ability of us, or our business and government leaders, to control, or even influence. Some measures can be taken to minimize the most serious consequences of this economic environment. The more important question is: What can be done now to be better prepared for the inevitable recovery?

In the private sector, this is a time to invest in new ways of doing business so that they are more productive and efficient when markets begin to recover. These necessary investments are much more than just technological. New organizational processes and partnership need to be explored, evaluated, and acted upon. The economy that will eventually emerge will not be the one that we enjoyed before November 2008. It will be much more competitive. We must be prepared for that inevitability.

In the public sector, the infrastructure—physical and human—must be put in place for the recovery. All levels of government should be commended on the initiatives that they have undertaken to improve the economic foundations of the area. There is no doubt that the physical infrastructure is being improved and expanded.  Educational opportunities and new facilities at both Trent and Fleming have expanded, and the recent announcement concerning skills training at Fleming will ensure that skilled people will be ready when the recovery comes.

The more difficult question is: What can the unemployed do? Even though there are examples of well-educated people who are unemployed, the truth is that those with higher levels of education have greater job stability and significantly higher incomes, overall. With the competitive pressures growing for business, those who will be first employed when the recovery arrives will be those who can contribute most to the future success of the business—the ones with the greatest productive and creative potential. 

With few opportunities to gain experience during the economic downturn, the only way to improve ones’ productive potential is through education. With the government investments that have been made to expand both Trent and Fleming, the opportunities to improve ones' productive potential are right here in Peterborough.

From a community-wide point of view, this unexpected economic downturn can lead to even greater prosperity when it ends if we treat it as an opportunity. Businesses, governments, and people have to do whatever they can to lay a broader and stronger foundation upon with to build a stronger, more innovative, and more creative local economy than we had before the downturn. Every aspect of our community— for-profit, not-for-profit, charitable—needs to look to how they can better serve a growing community once the economic tide has turned.
We need to return to the natural tendency to lay blame for the current economic instability and the current level of unemployment. As I have said, we cannot blame our governments for doing too little. There is only so much they can do. And it is not local businesses' fault. They surely don’t like the current conditions, so why would they create them. Something has happened in Peterborough that goes far deeper than the actions (or inaction) of business or government. 

The real culprits in this economic disaster are those who preach and practice out-dated and consistently unsuccessful approaches to how economies should, rather than really do, work. At the heart of the financial disaster beginning in 2008 are the same failed ideas that led to the Great Depression and every financially-driven economic downturn since then. It comes down to, like it or not, the ideas that underlie the actions of business—particularly finance.

At the heart of these ideas is the nineteenth century notion that all consumers and all businesses—as isolated, individual entities—following their own motivations will lead to socially beneficial results. No other way of doing things, according to this philosophy, could do better for society. This is the philosophy that is at the heart of mainstream economics. Of course, it has been, and will continue to be, proven not to lead to socially beneficial results. The theory and the facts simply don’t match. It is amazing that we now find ourselves appealing for remedies for our current economic disease from the very people, and their unwavering ideas, that made us sick in the first place.

It is ironic that those preaching the pro-individual, anti-social dogma cherish competition because of its ruthless punishment for those who fail in the marketplace, but they are not willing to live by the same rules themselves. Not one of the US business leaders who, beyond a shadow of a doubt, contributed to the global crisis, have been made accountable for their actions—and accountable to society, not just their shareholders.

More disturbing, especially in a time of high unemployment, are the cases of those who preach the failed ideas and praise the rigors of competition and accountability but do so from behind guarantees of lifetime job security. Why should we expect positive change when there are no incentives to get it right for society?  Those who are in a position to influence the economy but get it wrong are unaccountable and keep their jobs. Those who trust those in positions of influence, pay the price.

In times of crisis, it is much easier to find and focus on the true heart of the matter. We are in an era of unemployment and deficits—deficits of many different kinds. The most serious deficit we now face is the deficit of economic ideas that are relevant to our time—not the nineteenth century—and the deficit of will to rid us of the root cause of economic disaster and the unemployment that comes with it.  

[Contributed by PtboCanada's Tom Phillips Ph. D.]

[Editor's Note: Phillips is Economist & Sustainability Director - Greater Ptbo Innovation Cluster. This is his 4th column for Click here to read his first column for us on Peterborough's "Creative Class", here to read his second column "Growing Peterborough From 'The Inside-Out'", and here to read his third on Peterborough's astonishing record of success in lacrosse.]

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Tom Phillips On Peterborough's Astonishing Record Of Success In Lacrosse By Our Homegrown Players

Photo: Evan Holt

Last Friday I had the pleasure of *reuniting with many of my very accomplished lacrosse friends for the celebration of the area’s first Minto Cup, in 1961. Several members of that team turned out for the Merit Precision Juniors’ last game of the season, and the events to recognize the 1961 team’s accomplishment.

On Saturday a larger group of junior lacrosse alumni got together for golf and dinner. It was an opportunity to catch up with old friends, but more importantly, it was a time to celebrate an astonishing record of success by homegrown Peterborough players at the very highest levels of the game.

Since the 1961 Minto Cup win, Peterborough Juniors have won the Cup 12 times—the most of any other lacrosse community in the country. Along with the 13 Mann Cups won by the Seniors’ (the first being in 1951), and a national championship in a short-lived semi-professional league in 1969, Peterborough has 26 national lacrosse championships in 60 years. More astonishingly, the vast majority of the players on these 26 teams are Peterborough born-and-raised.

However, it is not the fact that we are all from Peterborough that has bound us together so strongly over the years; it is the winning tradition that has. Even the youngest of the alumni attending the weekend’s homecoming events could recite the accomplishments of the oldest players there. It is in the mutual and often unspoken respect for success at the highest levels in the game that is the greatest reward that comes from being involved in lacrosse in Peterborough.

It is one thing to win a national championship in any sport in a big-city arena filled with adoring fans; it is quite another to win a national championship at home, alongside your life-long peers and in front of a crowd of people who you have a personal connection with in one form or another.

Like the storied professional franchises in hockey and baseball—the Montreal Canadiens and the New York Yankees—it is not enough to just make the team. The only measure of success is in reaching the ultimate goal. Every year without a Minto or Mann Cup won by Peterborough is considered a disappointing year by our lacrosse community. It is the winning tradition as it is carried and told by those who have experienced it that sets the tone for every season.

As is so often the case in Canadian culture, where success is seen as less important than participation, lacrosse in Peterborough has never received the degree of respect that matches its success. Thankfully, the real success for those involved is more intimate than public. It comes in self-gratification in being the very best at what you are passionate about, and the ability to share that success with those who understand it best.

Photo: Stewart Stick

The Juniors’ have begun the playoffs with a better team than they have had in a few years, and the Seniors’ seem destined to defend the Mann Cup in the West this September. With these teams, new chapters in the history of Peterborough lacrosse will be written, and no one will be more proud of them should they bring the Cups home than those who most cherish our winning tradition.


*Tom Phillips, a Peterborough native, was a trainer with the 1972 and 1973 Minto Cup teams (that was inducted into the Canadian Lacrosse Hall of Fame in 2010), and involved with several other championship teams. He is currently a member of the Board of the Peterborough Merit Precision Junior ‘A’ Lakers.


[Contributed by PtboCanada's Tom Phillips Ph. D.]

[Editor's Note: This is Tom's third column for He is Economist & Sustainability Director - Greater Ptbo Innovation Cluster. Click here to read his first column for us on Peterborough's "Creative Class", and here to read his second column "Growing Peterborough From 'The Inside-Out'"]

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Growing Peterborough from the "Inside-Out"

Photo: Evan HoltThe commonly accepted view of economic development is to concentrate on convincing businesses to relocate to our community. Of course, unless the business is new, or an existing business expanding to this community, our gain would be another community’s loss. In the greater scheme of things, this does little to grow the economy as a whole.  

I call this traditional view of local economic development "outside-in" development. This approach has, in varying degrees, been successful. However, in some communities, it is clear that another form of economic development is emerging: "inside-out" development.

"Inside-out" development is characterized by innovations initiated by a community’s existing technologies and talented people being pushed out to external, national and international markets.

Communities that are best positioned for "inside-out" development must have some particular qualities: They must have a strong and proven technological base, and a critical mass of expertise that is creative, innovative, and forward-looking. 

Photo: Evan Holt

Fortunately, Peterborough has a strong technological base and a critical mass of expertise both in its business community, and in its public institutions—Trent University, Fleming College, the Ontario Ministry of Natural Resources, and the Peterborough Regional Health Centre. The foundations upon which "inside-out" development can be built are in place.

Photo: Evan Holt

There is, however, one critical aspect of "inside-out" development that is missing—organizational innovation.  The nature of the local economy in our time (which is very different than that of the era dominated by GE, Outboard Marine, Westclox, etc.) is that there are many successful organizations busy serving particular niches in the external marketplace. Each one has technologies and expertise that keep it competitive in their field. The focus on their market niche makes it difficult for these organizations to identify new market opportunities. Beyond their own niche, real market opportunities can exist in fields they don’t even consider.

To productively pursue "inside-out" development, we need to consider the economic potential—the community’s economic capacity—through combining the existing technologies and expertise across (rather than just within) organizations. In economic terms, this is achieving economies of scope at the community level. Economies of scope, as opposed to economies of scale, come from using existing inputs (i.e., technologies and expertise) to produce different outputs (i.e., innovative products and services).

The real organizational challenge for "inside-out" development is at the greater community, rather specific organization, level. We need to be able to help existing organizations to better identify opportunities for them to partner with other local organizations to create innovations and enter new, national and international markets.

Those communities that have the foundations necessary to pursue "inside-out" development, and create the community-based institutions necessary to identify and achieve community economies of scope, will be those that will enjoy the rewards of the new era of economic development.

[Contributed by PtboCanada's Tom Phillips Ph. D.]

[Editor's Note: This is Tom's second column for He is Economist & Sustainability Director - Greater Ptbo Innovation Cluster. Click here to read his first column for us on Peterborough's "Creative Class".]

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The Impact Of Peterborough's "Creative Class" On Local Economic Innovation & Growth

On the Gerti's patio. Photo by Evan HoltWith the arrival of spring, people shed their jackets and hats to once again take to the outdoors. In downtown Peterborough, the restaurant patios are busy, the streets are bustling, and "people watching" has returned as a seasonal pastime.

First impressions are that this is simply people enjoying the warmer weather and, perhaps, spending some of their hard earned income in anticipation of an active summer. The reality is that much more is going than meets the eye. The activities that we see are at the heart of the future of the local economy. It is from the interaction of people with diverse backgrounds, experiences and perspectives that economic innovation is begun.

Richard Florida of the Rotman School of Management, at the University of Toronto, and advisor on economic growth to the British Prime Minister, has attributed economic innovation and growth of cities to the role of the "creative class". Florida’s study of seven regions of 100,000 to 250,000 people in Ontario indicates that Peterborough is well positioned when compared to similar communities in terms of the creative class.

From rigorous measures used by Florida, Peterborough placed first in terms of its technological capacity—far ahead of Kingston and Guelph. In terms of the talent necessary to support growth, and cultural diversity and tolerance, Peterborough finished just behind Kingston and Guelph.

It is through venues where people gather together for social purposes rather than just employment that the creative class interacts. It is in places like downtown Peterborough, and the diversity of activities there that new ideas will come from interactions—planned and fortuitous.

Casual observations of the recent buzz downtown shows many young people working and gathering, and interacting with people of many ages and backgrounds. Art and music is thriving here in a way that is the envy of many other communities.

The attachment of young people to venues like those found in downtown Peterborough has positive economic consequences that are often overlooked by those who only see the activities as social, rather than economic.

The Municipal and Provincial governments are doing their part to develop the infrastructure—physical and social—necessary in supporting the activities of the creative class. Every local organization—private, public, and not-for-profit—needs to take into account the significance of supporting the creative class when making decisions that have community impacts beyond that of the organization itself.

Innovation, technologically and organizationally, is a reality even for small communities like Peterborough. It is time that we recognized the nature of economic growth in our time, practice innovation rather than just preaching it, and focus our efforts on promoting sustainable growth by nurturing the creative class.

[Contributed by PtboCanada's Tom Phillips Ph. D.]

[Editor's Note: This is Tom's first column for He is Economist & Sustainability Director - Greater Ptbo Innovation Cluster]

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