Ontario needs to leverage its strong foundational elements for cluster development and growth by focusing on five key clusters and their subcomponents to ensure they contribute to enhanced productivity and economic activity, says a new report from the Institute for Competitiveness & Prosperity.

Building on the work of the institute and Dr Michael Porter's research into cluster development, the report says all levels of government must participate. It lauds Ontario's "bottom-up approach to invigorating competitiveness" by launching a Cluster Development Seed Fund and the federal government for its new Canadian Cluster Mapping Portal.

By focusing primarily on traded industries in its five most robust clusters (see chart), the province can enhance its economy through clusters and their preponderance of labour market pooling, suppler specialization and knowledge spillovers.

Ontario's strong R&D performance — especially in the higher education sector — is highlighted as a major underlying factor in the province's cluster development to date, but the report notes that recent slippage of business R&D against its US peers is cause for concern.

To achieve better output, the report makes a series of recommendations

• develop a clear and integrated strategy to boost economic development;

• increase productivity-enhancing infrastructure;

• support advanced degree attainment by including real work experience and soft skills development;

• reduce public participation in the venture capital sector and open up the market for specialized private firms;

• encourage cluster collaboration across regions, provinces and borders, looking to Europe for best practices;

• expand the trade commissioners program which could lead to more export activity; and,

• work with marco-regions such as the Great Lakes where most of the province's clustered trading partners are located.

FMI: www.competeprosper.ca.

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