Canada should strategically focus municipal investments in its hub cities instead of spreading funds across the country on a per-capita basis, according to a new Conference Board report released today.

“Supporting hub cities creates a win-win for all communities and regions across Canada,” said Mario Lefebvre, director, Metropolitan Outlook Service, in a news release. “When the economically leading city in a province prospers, so does the rest of the province as a whole. Economic growth in a provincial or regional hub has a ‘coat-tail effect’ driving an even faster rate of growth in small communities within that province.”

The study identifies eight economically-leading large cities that function as ‘hub cities’ for their province-Vancouver, Calgary and Edmonton, Regina and Saskatoon, Winnipeg, Toronto and Montreal-and a ninth city, Halifax, that functions as a hub city for the Atlantic provinces.

By tracing real gross domestic product (GDP) per capita for each hub city and for other communities within a province or region between 1987 and 2004, the Conference Board’s research found that smaller communities are closing the economic gap with-or converging to-their hub cities in every case. This means that when the economies of hub cities prosper, other cities and towns do so too, growing at an even faster pace than the hub cities themselves.

The research also found that convergence does not operate strongly among communities in different provinces (a major reason being limited labour mobility, an important inter-provincial trade barrier). This means that focusing investments in just a few hub cities will not be enough to boost economic growth nation-wide. A wider program of hub city investment would be more effective in achieving that aim.

“We are not saying that the nine hub cities, representing 46% of Canada’s population, would monopolize funding to municipalities,” said Lefebvre. “We are saying they would receive a share of funding that corresponds to their individual needs. For example, public infrastructure deficits are often concentrated in the larger cities. Funds should be strategically focused to help big cities thrive, because doing so will produce benefits for all Canadians.”