This article was originally published as an Op-Ed in the Hill Times.
Canada’s global reputation for an exceptional quality of life is widely recognized, yet its productivity and competitiveness on the global stage trail behind its counterparts. Recent reports from the OECD and the International Institute for Management Development (IMD) have highlighted a decline in our economic output and efficiency. This trend is underscored by the IMD ranking Canada 15th in the world for competitiveness, out of 64 nations. The IMD’s World Competitiveness Ranking considers a multitude of factors including productivity, efficiency, business legislation, R&D investment, innovation, and the environment, painting a comprehensive picture of our competitive standing.
Persistent productivity challenges pose a significant threat to Canada’s economic future. This not only leads to inflationary trends but also lowers the living standards for Canadians. If living standards continue to decline, what will this mean for Canada’s reputation for having an exceptional quality of life?
Despite historical challenges in Canada’s labor productivity compared to other countries, it is imperative that we reimagine our economic strategy and pioneer innovative methods to surge ahead in the competitive race. While the federal government continues to assess the impactful role competition plays in benefiting Canadian consumers, Canada’s economic strategy must also recognize the critical role of our competitive advantage in the global economy.
At the heart of Canada’s productivity challenge are innovative technologies that are enabling innovations while at the same time disrupting industries faster than economies can adjust. And herein lies the challenge and the opportunity for Canada to accelerate its industrial and competitive strategy. Artificial Intelligence (AI), the pinnacle of modern innovation, has the potential to revolutionize industries across the board. From optimizing manufacturing to enhancing healthcare diagnostics, AI can significantly boost productivity and efficiency. By harnessing the power of data analytics and machine learning, businesses can make informed decisions, streamline operations, and unlock unprecedented growth. Businesses must also integrate sustainable practices at their core to mitigate environmental impacts and ensure long-term viability.
Other key areas that urgently need attention include enhancing R&D investments, reversing a risk-averse business culture towards global markets, and boosting commercialization and market access. Canada’s R&D investment has been on a steady decline, falling to nearly 1.7% of GDP in 2021, compared to the OECD average of over 2.7%. Government R&D investment is vital as it serves as a platform for experimentation and encourages private investment. We must also incentivise Canadian businesses to invest in R&D, understand the significance of innovation, and protect intellectual property. Collaboration between research institutions and businesses can accelerate the application of innovations across our economy.
Furthermore, boosting commercialization and expanding market access are imperative. Canadian businesses need to prioritize both product commercialization and market expansion beyond domestic borders. This necessitates leveraging tax incentives and innovation incentives like the “Patent Box” to support entrepreneurs and small businesses in their scaling journey. Additionally, raising awareness about trade agreements and providing timely market research to businesses is essential. While Canada is privy to some of the most favourable trade agreements in the world, Canadian companies lack awareness of how to leverage them. Recent ICTC research analyzing the impact of CETA on Canadian businesses identifies a concerning reality: despite the agreement being Canada’s most beneficial yet, exports from Canada to the EU have stagnated since ratification, while imports from the EU grew.
In the dynamic landscape of today’s global economy, empowering businesses to enhance their productivity, foster a culture of risk-taking, and optimize commercialization and market access is not just an option—it’s a necessity. It’s the pathway to a more resilient, innovative, and prosperous future for Canadian enterprise. How do we get there? Business capacity building forms the bedrock of this transformation. Businesses need to equip their teams with the technical and business skills required to thrive in a competitive world.
Government undoubtedly has a significant role to play in bolstering a more competitive business climate and steering economic strategy to position Canada for success in the global economy . Building the capacity of businesses to enhance productivity and embrace risk-taking is a collective responsibility. Government, businesses, educational institutions, and industry must work hand in hand. By doing so, we can create an ecosystem where businesses thrive, innovate, and contribute to a more robust and prosperous economy for all.
Namir Anani, P.Eng.
ICTC President & CEO
