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Rush hour traffic on Spadina Avenue in Toronto on Nov. 29, 2013.

Deborah Baic/The Globe and Mail

The economy of the Greater Toronto Area is lagging those of its North American peers, a new reports says.

Declining productivity – a measure of economic output per person – is holding back the region that accounts for 20 per cent of the country's economy, says the study by Toronto Region Board of Trade and the Institute For Competitiveness and Prosperity.

The report appears to contradict Toronto Mayor Rob Ford, who, while campaigning for re-election, has claimed the city is booming. He has pointed to the dozens of cranes, and maintains the tourism sector is busy and unemployment is low.

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But the former business school dean who co-authored the report said Toronto's productivity fell 6 per cent between 2000 and 2010, at the same time that Vancouver, Calgary and a handful of large cities posted gains. Montreal's productivity declined slightly.

"Far be it from me to contradict data at which Mayor Ford is pointing. There are cranes. I can see lots of cranes from my office window, and unemployment has done reasonably well by North American standards," said Roger Martin, chairman of the Institute For Competitiveness. "But to me the real measure of the might of an economy … has to do with, are its people producing a lot of value-added or a little value-added?"

The report finds that while wages have risen slightly, economic prosperity has fallen – a fact Mr. Martin said came as a shock. "We're considerably poorer than we would be, as an economy," he said. "We have fewer tax dollars of revenue and fewer dollars in the pockets of Torontonians compared to … Seattle, Chicago, Boston."

Mr. Martin said although the report drew on data collected in 2010 or 2012, it remains accurate. He said nothing has taken place since then that would halt Toronto's decline. Some of the factors holding back Toronto include:

  • Low investment in transportation infrastructure, leading to clogged highways and long commuting times
  • An education system that is not producing people with the skills needed by businesses
  • Poor access to capital for new companies

Just nine of the 20 biggest business sectors in the Toronto region grew between 2001 and 2012.

Mr. Martin says Canadian companies do not understand – nor invest in – the importance of finding new and better ways to offer their services or make their goods. As a consultant, he has taught companies around the world how to improve their processes. None have been Canadian.

"The U.S. companies say, 'We have to [innovate] or bad things will happen to us.' Canadian companies are more inclined to say if bad things happen to us, that is explainable by outside factors that were beyond our control," he said.

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