Tyler Mordy, president and chief investment officer of Forstrong Global Asset Management.
What makes a great city? Not just a liveable one, but one that people truly admire, learn from and attempt to replicate.
The best cities have a strong connection to the rest of the world. They have a keen understanding of global trends and are able to adapt and thrive through changing landscapes.
This is becoming difficult to ignore. In a rapidly globalizing and interconnected world, the main economic factors of cities are increasingly guided by macroeconomic (or “big picture”) trends.
For example, our city has been significantly impacted by a variety of international developments in recent years: the global financial crisis of 2008-2009, a slumping Canadian dollar and a moderation of oil and commodity prices.
Of course, these are not home grown issues. Rather, they are deeply rooted in structural shifts in the global economy.
Looking ahead, several challenges remain. Each of these requires an understanding of global trends to provide a solution. For example, the fall in commodity prices has deep causality overseas. To understand why, one need not look further than China — a country whose labor force grew by 200 million people in the ten years spanning 2002 through 2011 (for perspective, the US labour force is just 158 million). Unsurprisingly, commodity prices soared as China built roads, bridges and entire cities.
The response in Canada’s commodity sector was predictable. Rising demand amidst constrained supply in the early 2000s was met with an enormous surge in capital spending. This increase in supply will keep a ceiling on prices for years.
Or consider another macro development. Canada’s housing boom has been encouraged by an epic rise in consumer leverage (Canadian household debt just cracked the two-trillion-dollar ceiling, representing liabilities of 100.5% of GDP). This will be a multi-year headwind for future growth.
With the above knowledge, we can collectively start to work toward solutions. Both Canada and Kelowna need to rebalance growth drivers away from commodities and housing construction (and the attendant rise in household debt) towards a more sustainable growth path based on a diversified economy.
In Kelowna, new sector leadership is already underway. Notably, the tech sector has been steadily gaining a larger share of economic output (with Kelowna being recently named as one of Canada’s top 3 tech hubs).
Photo: Contributed
This is not a coincidence. Post-financial crisis periods, where growth is sluggish (like it is today), tend to be important eras of innovation. Hardship reveals what is and isn’t working. Consider the 1870s and 1930s — both slow-growth decades following bursting credit bubbles. Each crisis spurred a period of incredible inventiveness, both in terms of new technologies and the ability to make use of them in productive systems (a huge spike in patented technologies was witnessed during both decades). The same phenomenon is repeating today.
But the tech sector alone cannot be relied upon alone for future growth. Other industry must also step in. The good news is Kelowna has all the ingredients to make this a reality. Local entrepreneurship is the lifeblood of our economy (our city was recently named the top entrepreneurial Canadian city).
Many corporations, with strong connections to global business, are also setting up shop here (attracted by a more balanced lifestyle and an international airport). And, crucially, we have world-class education institutions that can drive innovation in the private sector.
All of the above can lead to a key indicator of great cities: a strong middle class. A more egalitarian income distribution results in not only a more stable, equitable city but also generates greater prosperity over the long run. A robust middle class invests in their community and, importantly, their children — who then become leaders and entrepreneurs of tomorrow.
I’m excited about Kelowna’s future. I imagine a world-class city that builds on its natural advantages and embarks upon a sustainable growth path — one that develops smart infrastructure that harmoniously blends with the city’s natural beauty, and creates strong community spirit through leadership in global awareness. For Kelowna in 2017, this is our time.
What kind of community do we aspire to be? Tyler Mordy’s insights are part of a made-in-Kelowna community vision that will guide the future of Kelowna over the next 25 years. Share your vision, shape the future at imagine.kelowna.ca
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