In this issue: How firms learn, a look at Digital Main Street, the painfully slow OECD job recovery, and the link between tuition costs and entrepreneurship.

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How do businesses learn?

“How do companies create new products and services?” A new report from the Brookings Institution explores this question and reveals some useful answers for economic developers and city policy makers.

How Firms Learn: Industry Specific Strategies for Urban Economies contrasts the formal processes through which research institutions (e.g. universities, federal laboratories, independent inventors, and young technology firms) develop scientific breakthroughs and transfer these to companies. The formal transfer of technologies takes place through market mechanisms like licenses, mergers and acquisition, and contracts.

Using academic research and other surveys, How Firms Learn argues that firm inventions are more industry specific than most economic studies propose, coming from a range of sources beyond research institutions. Informal sources include other firms, customers, reverse engineering, the hiring of workers with specific knowledge, and partnerships with suppliers. While economic developers are aware of these informal channels, the report argues that these “nonmarket” innovation channels are more important than has generally been acknowledged in policy and practice in American cities.

While the report looks primarily at the manufacturing and software industries, it highlights that unique innovation pathways exist in other industries. The report categorizes industries into four groups based their use of traditional or non-traditional technology generators and formal or informal channels of technology acquisition.  

Based on these four types, the report shares recommendations to help public and private stakeholders understand innovation at the industry level in their communities so that they can facilitate local economic growth. These recommendations, along with real-world examples, make How Firms Learn a useful read for economic developers and policymakers across the Unites States and beyond.

Frustrated worker using a laptop

The OECD's painfully slow job recovery

In its most recent annual employment assessment, the Organization for Economic Cooperation and Development (OECD) found that job growth in member states has been “painfully slow” since the 2009 global financial crisis. More than three-quarters of the 35 OECD member states are still experiencing high levels of unemployment. Greece, France, Italy, Portugal, and Spain are faring the worst with continuing unemployment rates in the double digits.

This inability of many countries to rebound is attributed to a “low growth trap” involving low levels of investment, weak productivity gains, little job creation, and stagnating wage rates.

For those countries where unemployment rates are back below five percent (such as the United States, Germany, Japan, and Mexico), the OECD expresses concern over the low quality of jobs and high levels of labour market inequality that are fuelling those gains. In some cases, these unemployment figures may also have decreased as a result of discouraged workers giving up on job searches and declaring themselves disabled or retired. A focus on job quality in particular highlights that a higher percentage of young people in OECD countries are neither employed nor in school compared to pre-crisis levels (in some countries, this number has increased significantly).

To counter these trends, the OECD recommends that countries adopt “high-performance work practices” in order to boost productivity. This includes encouraging job rotations, bonus pay, and flexibility in working hours, many practices that some of the world’s leading private companies are starting to implement. The report also recommends prioritizing getting disadvantaged youth into the workforce through a variety of coordinated services such as healthcare, overcoming skills deficits, and reducing social isolation.

Silhouette of a person using a laptop in a cafe

How Toronto is getting main street businesses online

Small businesses can face big challenges when it comes to competing in the digital marketplace. In fact, almost 60% of Canadian businesses don’t have a website at all, and just 13% of Canadian retailers are online (according to 2013 Statistics Canada data).

Potential customers, however, place significant value on the online presence of businesses. A recent CIRA study, for example, found 76% percent of respondents look for product pricing information online. Another study found 80% of respondents would shop more at small businesses if they were easier to find online, with 59% buying from large corporations because they outperform independent businesses on web, mobile, and social platforms.

Recognizing the importance of an online presence for small businesses, the City of Toronto has partnered with the Toronto Association of Business Improvement Areas (an umbrella organization for the city’s 81 Business Improvement Areas) and corporate partners to launch Digital Main Street. The initiative, which seems to be the first of its kind, aims to help main street businesses succeed in the digital world.

Participating businesses go through a Digital Readiness Check to assess their online presence and receive a Digital To-Do List with actions and information to help them improve their digital readiness. Digital Main Street also acts as a platform to connect main street businesses with local vendors, such as retail technology startups. Local technology vendors can sign up to participate in the initiative.

For Business Improvement Area members, Digital Main Street offers a Digital Service Squad that connects main street businesses with George Brown College students and recent graduates who will help businesses meet their digital goals.

Along with Digital Main Street, the BIAcademy offers main street businesses workshops and training through BIAs to build digital skills and the BIA Lab, a retail innovation startup incubator, will support the prototyping, testing and scaling of technologies and services in Toronto’s BIAs.

For economic developers looking to help local businesses succeed online, Digital Main Street provides a template for future initiatives.

Happy female college graduate

Want more entrepreneurs?

Make college cheaper.

It’s a simple idea that was recently investigated in a working paper by Harvard Business School economist Gareth Olds.

According to Olds, fewer American parents take the plunge into entrepreneurship when college tuitions rise. Olds found that a 10% increase in the average price of in-state college tuition corresponds with a 13.9% decrease in the number of parents with college-age children who become self-employed. The effect is strongest for parents with multiple children and holds up even after controlling for factors such as state economic conditions.

At the same time, Millennials (i.e. students and young professionals) are facing significant financial challenges that may be making it more difficult for them to start their own businesses. Based on a Wall Street Journal analysis of Federal Reserve Data, the share of people under 30 who own a business has fallen by 65% since the 1980s and is now at a quarter-century low. As John Lettieri, co­-founder of the Economic Innovation Group, testified in July of this year before the U.S. Senate, "Millennials are on track to be the least entrepreneurial generation in recent history”.

Olds’ research has significant policy implications. Cheaper tuition could give more students access to education, but also it would free more parents to take risks by launching new companies. Ultimately, people are much more willing to take an entrepreneurial risk when they have some sense of financial security and stability.


Resource Review

Summer Reading: Seveneves

Every year, This is Not a Newsletter takes a break from all the heavy research and the weighty economic development tomes and recommends one novel for summer reading. Of course, this annual “beach book” still has an economic development connection, but we aim to find a story that’s perfect for a lazy afternoon in the sun…This year, we’re pushing Seveneves, an apocalyptic science thriller by American writer Neal Stephenson. Earlier this year, billionaire tech guru Bill Gates released a list of “5 Books to Read This Summer” and he’s on the same wavelength as we are, with Seveneves as his #1 suggestion.

Now, a word of warning – Neil Stephenson likes to write long books. Clocking in at just under 900 pages, Seveneves starts out as The Martian on steroids, tracking the work of a small crew working in and around the International Space Station. As the story unfolds, the moon is shattered by an unknown astronomical event, breaking into seven large pieces. Back on earth, TV scientist “Doc” Dubois Harris (a Neil deGrasse Tyson figure) realizes that continued collisions of the fragments will create an ever-increasing cloud of debris growing at an exponential rate.  Within 10 years, this process will create a “Hard Rain” – a series of meteor storms that will destroy all life on earth. Cue the scientists and astronauts as the planet (more or less) unites to find a way to preserve the human species in the face of total annihilation.

The first two-thirds of the novel recount the dirty, desperate, heroic efforts to carve out a space for human life in high orbit. And to Stephenson’s credit, this is no trite space fantasy. In novelist Andy Weir’s The Martian, astronaut Mark Watney decides he will have to “science the sh*t out of this” to survive alone on Mars for a few hundred days. Stephenson’s crew have a decade to figure out how to get humans to survive at least 5,000 years in space, and then re-seed a sterile planet before they can come home, all using today’s technology. The final third of the book jumps forward in time 5,000 years, and follows our genetically-modified descendants as they seek to repopulate the Earth. It’s a disconcerting jump, made even stranger by Stephenson’s attempt to summarize 5,000 years of scientific, technological and evolutionary history in the books’ final 200 pages. At times, it’s a bit like reading an encyclopedia cover to cover, though Stephenson powers through to deliver a compelling ending.

It’s an amazing tour de force of hard science fiction, and incredibly entertaining, particularly as the large cast of characters try to navigate the intense end-of-the-world politics that emerge. If you’ve ever tried to steer an economic development project through a hostile City Council, imagine brokering a deal involving – well – everyone on the planet. Don’t let the size and scale of the book intimidate you…Seveneves is a very accessible, very human novel that ultimately succeeds in showing how we succeed most when we collaborate and cooperate best. You can pick up a copy here.


Out & About


Brock Dickinson will be speaking to the University of Waterloo's Master of Applied Environmental Studies (MAES) in Local Economic Development class in Waterloo, ON, on September 13th. 

Brock Dickinson will be teaching at the University of Waterloo and the Economic Developers Association of Canada (EDAC)'s Certificate in Economic Development seminar on Performance Measurement in Economic Development in Halifax, NS, from September 19th-20th. 


Brock Dickinson will be speaking on the Evolution of Economic Development in Peterborough, ON, on October 18th. 


Brock Dickinson will be teaching at the University of Waterloo and EDAC's Certificate in Economic Development Year 3 program taking place in Kitchener, ON, from November 1st-4th. 


Survey Invitation

Have you taken the survey on the establishment of a pan-Canadian, grassroots workforce development forum? Share your thoughts on a Canadian Workforce Development Forum.

MDB Insight Employment Development Map July 2016

Employment Development Index

July 2016

Our Employment Development Index is a visual representation of changes in regional employment figures over time. Visit the Employment Development Index archives for previous editions.


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