THEMES & THOUGHTS | Keys to success in a slow-growing, fast-changing world
Date: Thursday October 13, 2016
At the Canada Growth Summit, business and government leaders identify innovation, investment, infrastructure, immigration — and inclusion—as keys to success. Tom Jenkins sets up the day and later summarizes it for attendees.
Today we had all of Canada here to discuss growth and innovation. We had federal ministers, the Assembly of First Nations’ Chief, private-sector CEOs, deputy ministers, academics, provincial public servants and the Governor General. Quite a collection of Canadians to discuss growth and innovation. Here is a small sampling of things that might be considered themes of the day.
Canada’s growth is slowing. After enjoying 3 per cent for the past three decades, it is forecast that growth will now be less than 2 per cent going forward. This is not a Canadian problem but rather a global problem. The demand slowdown is due to a demographic shift as well as digital impact. We must recognize that Canada is such a small percentage of the global GDP and global population that we must find unique ways to deal with this overall malaise. We are price takers of this global growth slowdown.
An innovative society regards change as a welcome friend to be embraced and not an enemy to be feared. Thoughtful public policy can set this tone properly.
There was a thoughtful discussion about inclusive growth and that the worst aspects of global trade, the demographic shift and the digital impact need to mitigated for society through various measures to stabilize and reassure the middle class of Canada. Otherwise, we may experience a substantial backlash to global trade as we have seen in other countries. That would be unfortunate, as many participants noted that technology will keep enhancing quality of life and that trade will keep creating new opportunities. There was, in fact, a recognition that the pace of this change may be accelerating. It was observed that an innovative society regards change as a welcome friend to be embraced and not an enemy to be feared. Thoughtful public policy can set this tone properly. Without it, the social acceptance of further globalization, digitization and resource development may continue to face resistance. Good policy creates social license that permits growth to occur.
Despite the global growth slowdown, Canada is in demand for closer collaboration by most countries. Canada has an excellent brand that is recognized favourably throughout the world and it has a native diaspora from which it can build global networks.
For growth, we heard overwhelmingly that now is the time to invest in infrastructure to take advantage of the movement between monetary and fiscal policy. We heard that matching infrastructure demand with historically low investment costs would drive productivity-enhancing projects that would provide short-term stimulus and long-term benefits.
We heard that organizing a federal system that would vet and select projects — as well as administer projects for capital and milestone delivery — within an overall mandate for a bold vision for Canada in the next century was needed. There was a suggestion that we needed an infrastructure bank to ensure efficient capital allocation and effective delivery. There was also a recognition of the historic opportunity to do these procurements and drive innovation by adopting similar approaches that the Americans use, such as the SBIR program and the DARPA program.
Innovation was recognized as the Holy Grail of economic growth and one that all nations aspire to. Canada in particular needs to pick up its game versus the United States, with which it has a persistent 30 per cent gap in productivity. That is costing each family in Canada about $11,000 per year.
We learned that to get more productive we need to innovate and that the primary mechanism that forces innovation is competition. We heard that we need to increase competition both at the startups and at large-scale companies in sectors such as telco, transportation and others covered by old legislation that needs to be updated. This is covered by Paul Boothe’s review of the Wilson Report.
Global trade agreements are one way to increase competition in a measured way. We need to do this in a prudent way so that we enhance our national champions and not destroy them in the process. We heard, for example, that establishing a cluster approach to innovation would allow governments at all levels to work together with small startups as well as with our large “anchor tenant” multinationals to achieve stable ecosystems that could compete effectively on a global basis.
Startups now need assistance at the same level of GrowthCos in terms of executive talent and capital, or they will be acquired at only a quarter to a third of their potential compared to the United States startups.
We heard about specific policy ideas around innovation. Startups now need assistance at the same level of GrowthCos in terms of executive talent and capital, or they will be acquired at only a quarter to a third of their potential compared to the United States startups. We heard that these startups do not think big enough to attract the very best in venture capital.
We can make up for this with enlightened immigration policy in which we attract the best and brightest from around the world. We heard from the Governor General that we can enhance our culture by establishing recognition of innovation through the GG Innovation Awards and by teaching students the stories of Canada’s innovative past.
We heard that mature companies must continue to innovate to survive and that we need to think of economic development as a conveyor belt of startups maturing to GrowthCos and then to public companies. Protectionism against global trade would be a mistake and futile in any event.
Overall though, the room was confident that we can define our goals and realize them to achieve growth above 2 per cent. We can do this in an inclusive manner by taking the time to understand what we need to do for women, First Nations and immigrants.