Small in population but vast in physical endowments, Canada’s fortunes have long been tied to its natural resources.1 The country’s recent slide into recession, thanks to lagging world oil prices, is a stark reminder of the busts that come with the booms created by the nation’s dependence on its natural endowments.2 A well-known malady of resource-rich nations is the so-called “resource curse,” where the short-term wealth derived from resources inhibits the development of other, more long-running and sustainable sources of wealth-creation and economic development.3 And of course, resource-based economies are perpetually at the mercy of external economic-forces, exposing them to shocks that can quickly turn a boom into a bust. For the past decade or so, Canada’s leadership has created a narrative that its resource-rich west is the primary source of long-run prosperity for the country.4
But, it is clear that the path to sustained prosperity in today’s economy turns on knowledge, innovation, and creativity. These are areas where, according to recent studies, Canada lags behind its international peers.5 As we will see, economic competitiveness and sustained economic growth rests on what we term the 3Ts of economic development: talent, technology, and tolerance.6 Economists widely agree that talent and human capital are key drivers of productivity, innovation, and rising living standards. Technology has long been seen as a key factor in innovation and the wealth of nations. Talent and technology are not just simple stocks or endowments, they flow to the places that are most productive and attractive. Tolerance — openness to people from across the spectrum — is a key factor in attracting talent and technology. Furthermore, these three key factors in economic growth are clustered and concentrated. The world is not flat, it is spiky, with its greatest spikes taking shape around cities and metropolitan areas that cluster and activate the 3Ts together.7
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Look up any Canadian city’s 3T key indicators here (Excel file)