Bay Street, in Toronto, is the heart of the Canadian financial system, where banks, brokerage houses, other financial firms, and the Toronto Stock Exchange are all located.What is the reason for Toronto's comparative advantage in the financial market?
A)the development of superior information technology
B)an abundant supply of skilled labour
C)Toronto has a central location in the country
D)external economies

Question

Quizplus · Accepted Answer

Toronto benefits from external economies in the financial industry as firms tend to cluster together in order to share resources and benefit from a larger pool of skilled workers and knowledge spillovers. This creates a self-reinforcing cycle that attracts even more firms to the area, further enhancing the agglomeration effects. This is supported by studies which have shown that cities with larger financial sectors tend to have higher levels of productivity and growth, and Toronto's financial district is one of the largest in the world. While factors such as information technology and skilled labour are also important, they are not sufficient on their own to explain Toronto's comparative advantage in finance.

Bay Street, in Toronto, Is the Heart of the Canadian