There are lots of things to take away from this just-released Brookings Institute report on trade between cities in Canada, the U.S. and Mexico, but here's the one that stands out: It is about cities.
Cities are where things are happening economics-wise, and cities are where there is going to be a lot more happening. That the Brookings Institution (which sponsored the study by economists Joseph Parilla and Alan Berube) is starting to compile data on metro areas is an acknowledgment of that – and hopefully the start of a lot more city-focused economic information to come.
The authors found that the largest cities in the three countries accounted for 77 per cent of the total population, but 86 per cent of those countries' combined gross domestic product. That gives you a pretty clear idea of the economic might of metropolitan areas. In any of the countries – and notably in Canada – economic activity is not happening at any great pace in rural areas; the concentration of power in cities is only going to expand.
The report also includes some figures that give an idea of just how much trade happens between metro areas within North America. The study found that U.S. metro areas traded $512-billion in goods with Canadian and Mexican metro areas in 2012. Canadian cities (the two highlighted in the study are Toronto and Montreal) do not tend to trade directly with Mexican cities, but there are strong relationships between those areas and centres such as Chicago, Houston and Los Angeles, which act as intermediaries between the Canadian centres and Mexican cities.
So what is the takeaway? Well, personally I am just giving thanks to finally get some data on the economic areas that matter. Cities are tomorrow's – and even today's – powerhouses in terms of economic activity. Most Canadian and U.S. data sets give us great information on trade by province or state, but frankly, that is more like a courtesy than particularly useful information.
In a broader sense, the Brookings Institution has a whole slew of recommendations on ways to enhance the nascent trade relationships, ranging from streamlining regulations and paperwork through to increasing networking opportunities between leaders in the various metro areas.
It is an increasingly global world, and an increasingly urban world. So yes, let's set up up the frameworks we need and make the most of what are already solid connections. In coming years we are going to be talking about how to give cities more decision-making power and more power over tax revenue than they have at present; it is best to start making the case with data now.
Linda Nazareth is a Senior Fellow at the Macdonald-Laurier Institute. Her book Economorphics: The Trends Changing Today into Tomorrow will be published by Relentless Press in January, 2014. www.economorphics.com