This article is part of our “Understand the Risk” series, which looks at business risk with comparative data. Articles in this series cover natural hazards, infrastructure, economic competitiveness, stability and freedom, talent and workforce and health.
Everyone wants to be part of a winner.
Joining a community that is known for economic competitiveness is good for your bottom line and mitigating business risk. Two factors drive economic competitiveness: economic and social policies that provide stability and economic diversity that leads to the clustering effect.
In this edition of our “Understand the Risk” series, we’re taking a closer look at how economic support and economic diversity can help minimize your company’s risk profile.
A business ecosystem built for stability
The Canadian and U.S. economies are intertwined thanks to a robust supply chain supporting manufacturing and distribution of everything from automobiles and electronics to food and beverage products. For companies locating in Canada, this connectivity with the world’s largest economy – and the vast number of consumers, suppliers and manufacturers it represents – means a significant decrease in risk. If your product is good, the market is there.
While the economies are connected, there are a few key economic differences between the two nations. Canada outranks the U.S. in several key economic indicators. These include a AAA credit rating, a lower level of economic inequality and a lower net debt percentage of our GDP.
Canada also has a solid public safety net, including provincially-managed public health insurance programs that guarantee health care for every Canadian citizen, permanent resident and employees with work permits. Public health insurance provides stability for entrepreneurs and innovators to leave full-time employment to pursue new ventures. This freedom has helped create thriving tech startup ecosystems, including Waterloo, with the largest density of startups outside of Silicon Valley.
Economic diversity – locating in a strong cluster – is also a driver of business results and risk mitigation. While the benefits aren’t as immediately apparent as having access to a top university or inexpensive real estate, locating in a cluster has long-term advantages. For example, the Harvard Business Review has argued that clusters help drive innovation, productivity, new business growth and helps businesses within the cluster scale.
Ontario has an exceptionally diverse economy, which helps it weather economic changes, including changing consumer and business demands and supply chain issues. In fact, when we released our “Mapped” series – which ranked North American clusters by location quotient – it was Ontario’s communities that popped up at the top of the list no matter which industry we were focusing on.
Want to learn more right now? We offer in-depth Waterloo Region Risk Profiles for manufacturing and tech. Download yours now: