Skip to main content

Jeffrey Simpson: Great pitch from Trudeau at Davos, but why should investors buy it?

That was quite a sales job Prime Minister Justin Trudeau and a gaggle of his ministers performed in Davos, Switzerland, pitching Canada for plutocrats, movie stars, politicos and assorted others who run the world, or would like to run it.

Canada, Mr. Trudeau preened, is full of bustling entrepreneurship, world-class universities, a thriving biotechnology sector, a high-technology hub – just the place for people and companies with lots of money to invest.

Were that it were true, comparatively speaking. You can't knock a leader for a sales job. And you gotta love your country and all that.

Story continues below advertisement

But Canada is not an island. It is one among many countries looking for investment. The Trudeau sales pitch notwithstanding, just where and how does Canada have a comparative advantage?

Certainly not in getting things done in the entire natural resources sector, which used to be a huge comparative advantage and 10 per cent of the Canadian economy. Everywhere, projects are stalled (or being cancelled) not only by poor market conditions but also by laborious regulatory procedures, political resistance, aboriginal claims, court rulings and hard-line environmentalists.

A lot of companies have already gone home or put projects on long-term hold, so difficult is the Canadian environment. The federal government is not making things any better with confusing statements about whether it wants development or doesn't, and on what terms.

But forget natural resources. They are apparently so yesterday in this "new" economy of knowledge workers and technology. If you were an investor of the kind Mr. Trudeau was wooing, what would you find in aggregate terms about Canada?

The World Economic Forum's Global Competitiveness Report for 2015-16 ranks Canada's overall competitiveness 13th among countries surveyed.

The Conference Board of Canada in its recent report, How Canada Performs, assessed Canada's innovation record against 16 peer countries. Canada earned a "C" grade, ninth among 16.

In some areas – venture capital and new entrepreneurial ambition – Canada was improving. But the old bugbears, noted in so many other reports, reappeared: few patents, poor private sector research and development investment, weak labour productivity. (Is Canada going to attract highly skilled people from elsewhere with the Liberals' new marginal tax rates above $200,000, way above those in the United States?)

Story continues below advertisement

Canada's productivity growth – an indispensable requirement for further prosperity – grew from 1998 to 2011 by 1.3 per cent yearly, compared with 2.8 per cent in the United States.

There was a Canadian comparative advantage of fiscal probity and low taxes. But the federal deficit is about to soar, although the debt-to-GDP ratio might remain steady. Over all, provincial government deficits (see Alberta and Newfoundland) and debt (Ontario's debt has roughly doubled in the past 10 years, to about $600-billion) are rising quickly. Combining federal and provincial debt leaves the national ratio at about 60 per cent – better than some countries, but not a huge selling point. The combined debt level is definitely set to rise.

What about the world-class universities the country's chief salesperson trumpeted? Only three – the University of Toronto, the University of British Columbia and McGill – make it into the top 100 in three major international surveys, each using a different methodology. The highest any of these Canadian institutions reached was U of T's 19th-place showing in the Times Higher Education list. Almost all the best universities in the three surveys were U.S. or British. Most Canadian universities in these surveys were second- or third-rate.

In many provinces (with Ontario being the prime example), governments have been deinvesting in higher education, reducing in absolute or real dollar terms the amount transferred to these institutions. Transfers in some provinces now account for less than 50 per cent of universities' budgets.

What about the thriving biotech sector the salesman lauded? Yes, there are many interesting companies, but Canada has been losing its share of international pharmaceutical research. Within Canada, according to the Patent Medicine Review Board, the ratio of research to sales for brand-name pharmaceutical companies has now fallen to a piddling 5 per cent, half the level at the end of the 1990s.

What about Canada's vaunted and beloved health-care system? It ranked 10th or 11th in the latest Commonwealth Fund survey of health-care systems. Medicare comes off with an average score in other surveys, but with higher-than-average costs.

Story continues below advertisement

It's a big world out there. When companies decide about where to put their money, sales pitches yield to facts.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter