CGE Vol.13 No.7 September 2007
As politicians and public servants return from their holidays, and as citizens redirect their attention from the Harry Potter phenomenon to what they want from government, it is time for some long-term thinking.
High profile mergers and takeovers, the strength of our dollar, concerns about productivity, competitiveness and innovation all call into question Canada’s need for an industrial policy that addresses our ability to compete internationally, to innovate and to maintain a credible number of head offices in Canada.
In the decade since the federal government last addressed this issue, the world has become far more competitive and our economies more integrated. And our productivity per worker compared to the US has declined. All warning signs that policy makers should heed.
Mergers and acquisitions are up. Companies want a piece of Canada. In the first quarter of 2007 alone, there were 500 mergers or acquisitions worth approximately $66 billion – and that was before the BCE sale. Are we hollowing out our corporate sector? What impact will it have on decision-making, corporate services, and research and development activities, which are usually attached to “headquarters” functions, if HQs move out of Canada?
U of Ottawa professor Tom Brzustowski’s research shows that Canada’s prosperity is a function of our ability to innovate and to commercialize the fruits of our research efforts – wealth is created where value is added. In the knowledge economy, value is added when knowledge is embedded in new or improved products, and that is done through investments in public and private sector research and development. In his view, there is too little private sector R&D to sustain the value-added proposition.
In Why Mexicans Do Not Drink Molson, Andrea Mandel-Campbell describes a scenario where our private sector does not have the necessary skills to respond to the competition offered by the new global marketplace: “So far, despite the grand speeches and wads of cash thrown at the problem, nothing seems to be working and many observers are left scratching their heads, wondering why.”
Because of these challenges, the recently released federal government’s Science and Technology Strategy should be required reading for all Canadians. A successful S&T strategy really matters since success leads to a better quality of life by creating new high-paying knowledge economy jobs in the scientific and related sectors. It will also improve the world through scientific discovery while giving Canada and the key sector players a strong voice on the world stage.
The strategy visualizes a plan that is anchored around three key initiatives. The first is to find ways to commercialize current knowledge into practical applications by fostering a more competitive business environment, building more public-private partnerships and making better use of government R&D assistance programs.
The second aspect is to create more knowledge by doing focused research in the national interest, enhancing the value of the three granting councils and finding new ways to conduct research.
The third aspect is to develop and foster the highly skilled people needed to deliver on the first two initiatives. This includes creating more work opportunities for science and technology graduates and increasing the supply of “highly qualified and globally connected graduates that businesses need to succeed in today’s economy.”
While the strategy appears comprehensive, it does not adequately convey the sense of urgency that underlies the current situation. We need stronger and more inspired leadership from our corporate sector. Today. We need more intensive business and management education in the science and technology sector so that we can move ideas from the lab into the marketplace. Business leaders must become relentless in finding and seizing any opportunity to innovate and to add new value in goods and services in every sector of the economy. We also need to attract more venture capitalists and to build a global perspective. Finally, universities, government and business must work better together – with a shared vision but different responsibilities.
It would be useful for parliamentarians to contemplate the potential of the government’s S&T strategy. Since it is short on an implementation plan or a timetable for action, it will be judged for its value as a strategic document that results in tangible action in the private sector and elsewhere in the economy. Given the pace of change taking place around the world, planning documents have a very short shelf life with only limited value. The payoffs go to those countries that act as well as analyze. The key question is whether the leaders in Canada’s economic sector are able to move beyond the problem definition stage to action mode.
David Zussman holds the Jarislowsky Chair in Public Sector Management in the Faculty of Social Sciences and Telfer School of Management at the University of Ottawa. He can be reached at zussman@management.uottawa. The Jarislowsky Chair website is www3.management.uottawa.ca/jarislowsky.
