The bad news is Canada is losing economic ground in the global economy. The good news is we can hold and expand our ground if we make the right choices now.
Emerging markets, especially in Asia, are leading global economic growth today. By mid-century, these countries will be home to 60 per cent of the globe’s wealth and by some predictions 70 per cent of its trade. Sadly, though, as this transition occurs, Canada’s share of global wealth is declining. According to the International Monetary Fund, since 2001, our ranking among global traders has dropped from sixth to 10th and our share of world markets has fallen more than any Group of 20 member other than the U.K. Alarm bells should be ringing in Canada’s C-suites and on Parliament Hill.
To fulfill our potential in these economies, we need a strategy to boldly embrace these new markets, where the challenges and risks are greater, but so are the opportunities.
We must seize the sizable growth opportunity presented by emerging markets to transform Canada into a key global player. And this means being more assertive in leveraging our comparative advantages.
The first thing we need to understand is that we are no longer competing against global companies, but against entire global value chains. Over the past couple of decades, we at Bombardier have learned first-hand that these global value chains are the new world order of global business. But they are not to be feared – they represent a huge opportunity, not a threat.
These value chains provide a platform for participating and competing in local economies worldwide. They enable us to take advantage of the benefits derived from operating in other jurisdictions, while harnessing and optimizing our strengths in Canada. Put bluntly, participating in global value chains sharpens our competitive edge and expands our access to markets worldwide.
But public policy does matter in this new world order. We need smart and competitive policies that help Canadian businesses develop and engage in global value chains. Policies that not only promote exports, but also spur two-way investment, international research and development partnerships, and strategic sourcing. Policies that enable, if not encourage, participation in international R&D partnerships.
And we need to recognize the new economic policy environment – the rise of the new state capitalism, to quote The Economist – in which Canadian business operates. A recent World Economic Forum report affirmed that both developed and developing countries are pursuing assertive industrial policies to support their domestic manufacturing industries. The increasing use of government intervention to stimulate domestic growth is changing the world’s manufacturing landscape and policies.
While product economics and technology are still important, public policy and nations’ economic strategies constantly intersect and rub shoulders with business interests.
Governments around the world aggressively support their flagship industries. They invest in these sectors and are determined to see their companies achieve international success.
Our governments need to identify and vigorously support strategic sectors that can help drive our country’s growth. We need a co-ordinated economic strategy focused on forward-looking domestic economic policies married with a vigorous and aggressive economic diplomacy that recognizes and responds to this new world order. Without such a strategy, the comparative advantages of Canada’s flagship sectors will be quickly eroded in today’s hyper-competitive global marketplace, which is increasingly characterized by more activist government action by our competitors.
The federal government has embraced trade diversification, especially in emerging markets, to a degree that is quite unprecedented in our history. To yield maximum economic benefits, this agenda needs to be complemented by robust economic policies at home that enhance our competitiveness abroad.
Delivering successful infrastructure projects at home also builds our reputation abroad. I believe we can do a better job of leveraging public infrastructure investment in Canada to prop up innovation and manufacturing capabilities. There is no doubt that these reference projects serve as potent international calling cards. A perceived failure to succeed at home adversely affects your credibility abroad.
In short, to succeed in emerging markets, Canada needs an aggressive trade agenda, coupled with assertive economic diplomacy, that helps push open the door to these markets. It needs to be underpinned by policies to encourage and enable Canadian businesses to compete in global value chains.
I believe businesses and other stakeholders are eager to be part of a consultative culture with government to build robust national economic policies and strategies for these markets. It is time to join forces and, together, to take the steps to start gaining global economic ground.
Canada’s future prosperity depends on it.
Pierre Beaudoin is president and chief executive officer of Bombardier Inc.
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