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Montréal: An economic engine that needs to get back on track

November 10, 2014

Is Montréal a millstone or a driving force for the Quebec economy? In a report released today, the Institut du Québec (IdQ) gives a clear-cut and irrefutable answer to this question: Montréal is a powerful economic engine, but its current performance is lagging and the whole of Québec is suffering as a result.

For openers, the report titled Montréal: Millstone or Driving Force? reveals that Montréal’s contribution to the Quebec economy exceeds its demographic weight. In 2013, for example, the Greater Montréal Area (GMA) with 49 per cent of the Quebec population accounted for more than 53 per cent of the province’s GDP, more than 50 per cent of personal income taxes paid, 75 per cent of the patent applications submitted, and 53 per cent of direct foreign investment.

The IdQ report shows statistically that in addition to these direct contributions, Montréal’s economic performance boosts the rest of Quebec so that its economic performance eventually catches up with Montréal’s over time. This is the “locomotive effect” of Quebec’s economic metropolis on the province’s other regions.

However, the GMA performs relatively poorly compared with Canada’s other large urban centres in terms of economic growth, population increase, unemployment rate, per capita income and percentage of university degrees obtained. In fact, if Montréal had simply experienced the average economic growth in Canada over the past 25 years, the Quebec economy would have thrived much more – up to $2,780 more in per capita GDP, even outside the large urban centres.

“There’s both good news and bad in this report,” explains IdQ president Raymond Bachand, “but the bottom line is that a paradigm shift is needed. The analysis shows that the GMA is a tremendous asset for Quebec and is actually the second most powerful economic engine in Canada after the Calgary area. On the other hand, Montréal is dragging its heels in several key areas of economic health. That’s why there needs to be a change of direction to allow Montréal to play its proper role – and this change of direction starts by rejecting blanket policies that indiscriminately dole out support for everything and everyone with no consideration for the relative importance of Quebec’s economic sectors and the province’s economic priorities.”

Concretely, the report suggests that the Quebec government:

Given that Montréal cannot realistically hope for any new financial largesse from Quebec City due to current budget cutbacks, today’s report recommends that the GMA:

“Amidst the current belt-tightening in public spending, government assistance to businesses should be managed more strictly,” says IdQ research director Robert Gagné. “This means channeling resources to target strategic needs rather than taking a blanket approach. Public funds need to be administered more productively – and we firmly believe that this can be done.” 

“Apart from its purely economic thrust, the ldQ report also contains an important political message: the GMA and the rest of Quebec are not necessarily participants in a zero-sum game – in other words, when Montréal does well, so does all of Quebec”, adds IdQ director Mia Homsy. “That’s a very positive message – and that’s why it’s totally in the interest of the powers-that-be in the GMA and the rest of Quebec to join forces for the economic advancement of all Quebecers.”

“The diagnosis is candid. The analysis is thorough. The time to act is now.” 

 

About the Institut du Québec

The result of a partnership between The Conference Board of Canada and HEC Montréal, the Institut du Québec (IdQ) focuses its research and reports on the socioeconomic challenges facing Quebec. The Institute provides tools to both the public and private sector to help them make intelligent decisions towards building a more dynamic, competitive and prosperous society.


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