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Within Canada, the economic vitality of those areas outside of major urban areas is of increasing concern. Without the large population bases that drive service sector employment, these areas have tended to rely more on resource oriented primary industry, manufacturing and producer services employment (Sorensen and de Peuter, 2005). However, outside of the oil and gas sector, it is precisely these areas of employment that have been particularly subject to global competition and have come under increasing pressure in recent times.  The  drive  to  become  more  efficient and thus remain competitive has often meant the relocation of business activity to "low-wage" areas of the world or the replacement of workers with automated machinery. This poses a threat to the economic viability of many rural areas in Canada (Senate of Canada, 2008).

Many studies conducted at the community level have found that the region within which a community is located has an important influence on that community's viability and sustainability (Alasia, forthcoming; Mwansa and Bollman, 2005). Alasia et al. (2008) used a number of socio-economic characteristics to assess the vulnerability of individual communities throughout Canada to both population and employment decline. The analysis found that the most vulnerable communities in Canada were generally found in those regions that were distant from urban centres and had a greater proportion of employment opportunities in traditional sectors such as agriculture, forestry and labour-intensive manufacturing.

This situation has reached the attention of senior policy makers. The Canadian government's regional development agencies such as the Atlantic Canada Opportunities Agency, Western Economic Diversification Canada and the Federal Economic Development Initiative for Northern Ontario provide a range of programs to support regional and rural development. A variety of novel policy approaches have been developed including support for innovation and commercialization and community capacity building (for a comprehensive overview of rural and regional development policies and programs, see Goldenberg, 2008).

There is, however, another side to rural communities. There are rural communities in Canada that act as regional service centres. These are usually larger communities (but still below the 10,000 population threshold for a larger urban centre) that provide a range of services for the surrounding rural and small town (RST) businesses and population. In this regard they actually exploit their remoteness from urban centres in that the services offered by the nearest larger urban centre are simply too far away for people in the area to use on a regular basis. This range of services often translates into a variety of employment opportunities in these centres.

In light of this situation, it is important to measure how rural areas of Canada with stronger links to urban centres compare to those with weaker links in terms of the number and size of firms (as measured by the number of employees) that are present and how these numbers relate to the population within these areas. Further, the industry sector that these firms operate in could be significant. In particular, a larger share of firms in the services sector could be indicative of a rural town acting as a regional service centre for the surrounding population.

Using Statistics Canada's Business Register (Box 1), this paper investigates the pattern of business establishments in each of the different census metropolitan and census agglomeration influenced zones (MIZs) (Box 2) across rural Canada. Based on commuting flows, the MIZ categories provide a measure of the social and economic linkages that exists between urban centres and a particular area. By extension, those areas with a lower degree of linkage have less support from urban centres in terms of employment opportunities and have to rely more on local business establishments to maintain their economic viability.