The National Basketball Association finals tip off tonight although, in this case, it might be better to call the league the International Basketball Association. That’s because, for the first time ever, a team outside the United States will be represented. The Toronto Raptors will take on the defending champion Golden State Warriors.
There’s a certain poetry to this, since basketball was invented by a Canadian —except that physical education instructor James Naismith came up with the notion of lofting a soccer ball into a peach basket in Springfield, Massachusetts, and not his hometown of Almonte, Ontario. He’ll surely be there in spirit alongside the Raptors’ best-known courtside fan, the Toronto-born rapper Drake.
As is our custom, we use the championship games of our biggest sports leagues as an opportunity to study the economies of the cities represented, to see if there are any lessons we can apply here in this part of Virginia. This is the fifth year in a row the Warriors have made the finals so we’ve had lots of opportunities to write about the economy of the San Francisco Bay Area, which functions as an adjunct of Silicon Valley just to the east. The Bay Area is a classic case of a community that transitioned from the old economy to the new economy. Heck, it now dominates the new economy. The lessons of Silicon Valley are clear: You need a good research university, a tech-savvy workforce and lots of venture capital, and maybe some luck, too. Silicon Valley now stands as a special case all around. A series of start-ups are scheduled to go public this year; one analysis says those public offerings will turn 5,000 tech workers into instant millionaires. Silicon Valley is now so crowded — and so overpriced — that one of its congressmen is trying to export jobs to other parts of the country.
Let’s turn our attention instead to Toronto. The first thing we learn is that Toronto is a lot like the San Francisco Bay Area, just a lot colder.
We spend so much time focused on what’s happening in this country that we overlook what’s happening just across the northern border. A recent study found that the technology sector in Toronto has grown by 50 percent in the past five years and now constitutes the fourth-biggest (but fastest-growing) tech hub in North America — behind only Silicon Valley, Seattle and Washington, D.C. All the big tech companies are there — Apple, Amazon, Facebook, Google, Microsoft, Uber. So are an estimated 5,200 tech start-ups. Toronto was once a stodgy, industrial center of regional importance but now has established itself as a global tech capital, with an expertise in two fields that just happen to be among the fastest-growing: Artificial intelligence and life sciences.
So how did Toronto become so hot — economically speaking, not meteorologically?
We warn you: Some of you won’t like the answer.
Toronto’s economic growth — and transition — has been fueled by the same thing that fuels tech growth everywhere: A large, tech-savvy workforce. So where’d that workforce come from? Well, Toronto has a lot of good universities; Americans just haven’t heard of most of them because they don’t play college football.
Toronto has been growing its tech labor pool another way, though: Immigration.
Canada has always been more welcoming to immigrants than the United States. Since 1900, the highest level of immigration in the United States (on a percentage basis) was still lower than Canada’s lowest level of immigration. Today, immigrants constitute 13.7% of America’s population, still below our historic high of 14.8% in 1890. By contrast, immigrants constitute 21.9% of Canada’s population — and that percentage is expected to increase in coming decades.
Unlike the United States, both Conservative and Liberal Party governments in Canada have promoted immigration — although they’ve promoted it in ways the U.S. wouldn’t recognize. Canada puts a greater emphasis on immigrants with skills, rather than ones with family connections, as the U.S. does. According to the Financial Times, the immigrants admitted into Canada most commonly are developers, computer analysts, university professors and software engineers. A disproportionate number of them have also wound up in Toronto, much to the chagrin of smaller provinces such as Nova Scotia which have asked the government to direct more immigrants their way. The result, according to the Financial Times: “Some 51% of Toronto’s residents were born in another country — more than New York’s 40%.” More importantly, 64% of Toronto adults have a college degree. That’s higher than any metro area in the U.S. By contrast, Silicon Valley is 49%. The Roanoke-New River-Lynchburg region, the figure is 25%. Some parts of rural Virginia are in the single digits. Canada has, quite literally, outsmarted us.
This is highly simplified, but one reason Toronto has eclipsed most American cities is because it’s imported tech talent from all over the world — creating, in effect, an international all-star team of tech talent. President Trump says he’d like to see the U.S. adopt a more skills-based immigration system, but his anti-immigration rhetoric hasn’t softened any. That’s helped Canada in general and Toronto in particular by presenting themselves as a more welcoming location — both in spirit and in practice. Last year, the U.S. turned down 68% of the visa applications it had from foreign tech workers. By contrast, Canada accepted 95% of its applicants. It’s also promised to process their paperwork within two weeks.
Historically speaking, this is a huge turnaround for Canada. Once, it worried about a “brain drain” of Canadian talent to the United States — much as rural Virginia worries about a “brain drain” of young adults. Now, Canadian business leaders say they have more tech jobs available than talent to fill them — and must import workers because there’s not enough native talent to meet the demand. Canada also makes a point of attracting foreign students to its universities, and then tries to persuade them to stay, which solves two problems at once: It creates a more talented workforce and helps offset the country’s aging demographics. We have the same problems, but not the same solutions. The Financial Times quoted Canadian business leaders who were baffled at why the U.S. was letting its foreign students slip away after graduation, but were thrilled at how many were coming north. Trump, it seems, has been very good for the Canadian economy.
So what lessons should we in western Virginia draw from Toronto? They ought to be pretty clear.