It is a truth universally acknowledged that the global economic centre of gravity is steadily shifting eastward.
China and India have reached a tipping point in their domestic growth, which means, in the best of circumstances, U.S. economic power will remain in relative decline for the rest of our lifetimes. By 2050, China and India are set to be the No. 1 and No. 3 economies in the world by GDP, and together will be larger than the G7 combined.
Moreover, the emerging patterns of global trade, travel and investment are increasingly multidirectional - from China to Africa, Brazil to India and no longer guaranteed to flow through the once dominant hubs of Europe and the United States.
Amid this change, Canadians are alert to unavoidable new facts: We will have a thicker U.S. border (including a thicker carbon border) and the real growth of this century will lie elsewhere. We also see that the backbone industries of our economy, from energy to automotive, manufacturing to forestry, are in the midst of worldwide restructuring, intensified by financial crisis and the imperatives of climate change.
The hard truth is the underpinning of prosperity we've enjoyed over the past half century, based on selling cars and resources to our nearest neighbour, is now looking precarious. Given the postcrisis fundamentals, U.S. growth in perpetuity, and our easy access to it, is now far from guaranteed.
Why is diversification so important?
As Canadians, we need to diversify our trade and corporate strategies, not just to hedge our American bets, but to learn. It will be the fast-growth economies, largely unencumbered by legacy operating models and driven by the focus of necessity, which will be at the forefront of creating innovative, sustainable solutions to the big collective action problems of our times, from energy, water and agriculture to the challenge of bringing the bottom billion, the poorest segment, into the global economy.
They will become dominant sources of talent and innovation - the real drivers of 21st-century prosperity. We need to be engaged with these markets and with their best talent right now in order to innovate alongside them in the years ahead. Our competitors are cued up with active strategies and we risk losing out if we do not act quickly and with focus.
Is this crisis a unique opportunity for Canada?
The current crisis provides Canada two important advantages - one structural regarding who we are; the other positional regarding who we are not.
The structural advantage is we have a good story for the times. Canada's relative financial stability amidst crisis, our advanced resource markets, quiet excellence in many of the emerging 21st-century technology areas, from clean tech to agriculture, in addition to the advantage that comes from our diversity, make for a compelling story that, if marketed well, will find ready global audiences.
The positional advantage is that even in the age of President Barack Obama, the United States is perceptibly retreating into itself with increasingly restrictive positions on trade and immigration. The rest of the world has taken notice. Canada can seize the moment as a stable, friendlier landing spot both for global trade and for talent, looking not just for smart ways to get into the NAFTA market with potential back-door access to stimulus spending, but also for smart partners to trade with third countries.
Being a destination and source of trade with India is essential - but better still, we need to be part of India's strategy for Brazil. Innovative trade and corporate strategies should be focused on building these trade triangles.
Where should we focus?
An effective diversification strategy requires focusing even greater corporate and public diplomatic resources on three key markets: Latin America, China and India. Latin America, anchored by Brazil, is a growing, diverse and long underappreciated market, right on our doorstep. China is an imperative - as it is for every country on the planet - and a market where we are actually losing diplomatic ground relative to our peers.
India, amongst the three, shows the most promise. With 66 per cent of its population under the age of 35, it is set to reap an unprecedented 40-year demographic dividend similar to those enjoyed by industrializing Europe and the Far Eastern "tiger" states at the peak of their growth. It will grow rich before it grows old.
Notoriously short of hard infrastructure (it's investing a half-trillion U.S. dollars in the next five years), it is long on soft infrastructure - the creative, entrepreneurial talent that produce "option value" for future industries. Its democracy, once considered an economic liability, has shown itself remarkably resilient to all manner of internal and external crises and has produced a sustainable and widely held consensus on the need for reform and growth.
Critically, this growth is not driven by the state or by exports, but by the collective energies of tens of millions of entrepreneurs and would-be entrepreneurs. Despite a vibrant immigrant community here, India has never been high up on the Canadian corporate and political agenda, nor are we a high priority for India. We need to change this. Canadian companies need to be part of this growth.
To send the right signal to corporate India, Canadian business needs to take the lead and support the call for a "comprehensive economic partnership agreement" - a pathway to free trade. We should start simply by focusing on free trade in services and leave the other more contentious issue like agriculture off the table.
How should we start?
We are late to the party in these emerging markets. To jump ahead in the queue, Canada needs to get ahead of its peers with a co-ordinated public diplomacy strategy enabling us to tell a compelling 21st-century Canadian story, streamlining the cacophony of messages from our various levels of governments.
We need to build on our weapons of mass attraction: our immigration system, cultural production and higher education. This means focusing on both short-term and long-term initiatives to improve our brand awareness and loyalty amongst new leaders who know little about us, focusing on key symbolic wins in each of these countries. Not just by championing the champions, by cleverly touting the successes of our flag-carriers (we could do worse than persuade Research In Motion to embed Canadian flag logos onto BlackBerrys sold in Asia), but by engaging the next generation of public and corporate leadership in these countries into a long-term relationship with Canada and Canadian companies.
Canadian universities are key, underleveraged resources in these markets, largely because they remain either unknown or poorly marketed as, unlike institutions in the United States, Britain or Australia, we do not sell brand Canada or even co-ordinate our strategies. As a result, we currently attract about 2 per cent of Indian students studying abroad. Creative changes to our immigration system to strategically recruit top talent might also be a good start, marketing short pathways to citizenship for top graduates of ranked schools and for talent working for listed companies or studying in leading U.S. graduate programs.
Business cannot leave this to government alone. It needs to both participate in this co-ordinated strategy and make the tough resource commitments to build better bridges for talent and investment in order to realize the potential of these markets. We need to travel more and build the travel infrastructure to encourage people to flow in both directions, which in turn builds relationship capital and market knowledge and provides us with the investment edge on our peers. These markets are often status conscious and expect to see our most senior leaders. It's time to make the trip.
What is the biggest challenge?
In a word: complacency, particularly when the economy recovers and oil prices head north. Continuing as before and not acting on the signals of this global economic realignment is both easy and perilous. Rest assured, our path to prosperity in the next 50 years may not be as easy as our last. For the sake of our kids, we need to act today.
We can take comfort that we've been here before in our history, including having deftly shifted, through necessity, away from British mercantilism when the global trade winds favoured the rising United States.
In the best tradition of previous generations who acted on imperatives of their times, we should lean forward, not back, and pivot on our strengths.
Rana Sarkar is the president and executive director of the Canada-India Business Council.