Canada Can Generate Billions Of Dollars By Tapping Into Inclusive Business Models

From Industry to Academia to the Bank of Canada, there’s been no shortage of concerned stakeholders ringing alarm bells over Canada's sputtering productivity. I did so recently in a Hill Times piece calling for more free trade as a remedy, and I’ve seen other good ideas worth exploring in various op-eds since. In the spirit of being solutions oriented while hoping that policy makers are tuning in, I’d like to suggest another component to our productivity strategy: using Inclusive Business Models (IBs) to generate economic growth.

Inclusive What Now?

Inclusive business models integrate underserved communities into the value chain in ways that benefit both businesses and the community, from engaging more local small businesses for procurement, to providing more affordable offerings to the customers they serve. Done right, they generate community wealth without the need for big taxpayer funding from government. A win-win-win for our economy, our communities and government coffers alike.

Across North America, inclusive business models have been used in various forms, and it’s common to hear of success stories made possible through Social Enterprises, B Corporations (Benefit Corporations), Cooperatives, MicroFinance Institutions and Anchor Institution Strategies. Each addresses different aspects of social and economic development, but I believe strong focus should be placed on the latter considering the comprehensive benefits they bring.

Focusing on Anchor Institution Strategies

There are four key elements to a successful anchor institution strategy:

• Local Procurement: Anchor institutions prioritize filling their supply chains through purchasing goods and services from local businesses, thereby stimulating the local economy.

• Workforce Development: Initiatives often include training programs to equip near-by residents with skills needed by the anchor institutions, leading to jobs being filled locally.

• Partnerships and Collaboration: Successful strategies typically involve collaboration with multiple anchor institutions, community stakeholders and government(s).

• Community Investment: Investments in local infrastructure, housing, and commercial projects enhance community well-being and economic stability.

A North American analysis demonstrates how these elements contribute to economic success:

1. Cleveland’s Greater University Circle Initiative (GUCI)

Launched in 2005, the Greater University Circle Initiative (GUCI) in Cleveland, Ohio, is a collaborative effort among the Cleveland Clinic, University Hospitals, and Case Western Reserve University. The initiative focuses on community wealth building through local procurement, workforce development, and real estate investment. Since inception, GUCI has facilitated nearly $400 million in local procurement and created over 1800 jobs, significantly boosting local revenue and economic stability for residents.

2. Detroit’s Midtown Anchor Strategy

Detroit's Midtown area has benefited from a focused anchor strategy involving Wayne State University, the Detroit Medical Center, and Henry Ford Health System. These institutions have collaborated on projects to revitalize the neighborhood, improve safety, and attract new businesses. Since 2010, the Midtown Anchor Strategy has facilitated at least $16.5 million in procurement spending with local businesses, or about 1% of the $1.6 billion the Midtown Anchors spend annually on their supply chain. The area's property values have also increased by more than 20%, reflecting an improved economic ecosystem.

3. Philadelphia’s University City District (UCD)

The University City District (UCD) in Philadelphia is a partnership between the University of Pennsylvania, Drexel University, and local hospitals focused on public space improvement, job creation, and economic development. It’s been instrumental in generating nearly $2 billion in investments since its establishment in 1997. Further, the district has seen a 30% increase in commercial real estate value and the creation of thousands of new jobs, bolstering local revenue.

There are other examples too.

No Need to Reinvent the Wheel

Our economic challenges are numerous, exacerbated by world events over which we have little control. But where we can have an impact, we must seize every opportunity to strengthen our economy. As chair of policy & advocacy at the Scarborough Business Association I’ve been pushing The University of Toronto Scarborough, The Toronto Zoo, Centennial College and others toward a Scarborough Anchor Institution Strategy that would see 1%, or about $2 million of procurement spending by the aforementioned fulfilled through Scarborough small and medium enterprises. And if our partners in government are willing to assist in the process, we can make the strategy a Canadian success story before long.

I hope so. I don’t want us to end up like Greece.