Regional Growth and Northeastern Ontario Development: An Analysis of Factor Costs in Manufacturing Activity

Abstract

Regional growth literature indicates that the relations between the core and the peripheral regions, and the process by which growth is transmitted between regions are of prime importance in discussing growth disparities. Northeastern Ontario is a peripheral region, economically subordinate to the Ontario core region, and exhibits adverse growth conditions. Diversification of the region's resource dependent economy has been called for by many groups but has been hindered by the perception of higher manufacturing production costs. However, these costs have not been investigated. In this thesis, Northeastern Ontario centers' factor costs in manufacturing are compared with core centers' costs by utilizing a cost accounting method. The results indicate that some Northeastern locations may be cost attractive locations. However, low costs derived for Toronto would indicate continued manufacturing concentration in the principle centers of the core region. When costs are calculated for hypothetical firms, the importance of the factor requirement structure is indicated in determining location. Northeastern locations would be attractive to firms with large land, and low labour requirements. If future analyses verify these results, alternative explanations of the development problem of the Northeast should be explored.