Small market economies, like Canada's, depend heavily on global trade and investment for their economic strength and the welfare of their citizens. The recent and continuing action of the United States government regarding perceived unfair trade practices by several of its major partners has reintroduced the phrase "global trade wars" into the vocabulary of many politicians, economists and corporate executives.
The whipsawing of the U.S. and global stock markets to the tweets of U.S. President Donald Trump make it difficult for Canada to plot a course that allows our largely cities-based economy to thrive.
One natural reaction is to be optimistic and adopt a "This too will pass" response. Yet, complacency never reassures the public or business leaders searching for a path forward. Here are four actions that can offer some guidance to weather the current storm and build it into opportunity:
- We have a global economy, play the long game;
- The global economy is changing, be the change;
- Rebuild the Canada brand and value proposition to embrace the future; and
- Move targeting of new investors and trade opportunities to utilize new tools like analytics and big data.
Much discussion has been had recently on the "rising wave of protectionism" as countries turn away from globalism to a focus on their domestic economies. First among these is the "America First" mantra of President Trump. This has led to U.S. withdrawal from the Trans Pacific Partnership (TPP), threats to withdraw from the North American Free Trade agreement (NAFTA), imposition of punitive duties on steel and aluminum and an escalating series of potential duties on Chinese products.
Globalization is far from dead. The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) has been approved and is now being implemented. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership was signed by the 11 participating members in March of this year. China is leading the Belt and Road Initiative (BRI) to re-establish the old Asia-Europe Silk Road collaborative and co-operative trading route. The United States has softened or reversed its position on many of the earlier mentioned policies.
Collaboration, cooperation and global supply chains are the long game.
If the world wants innovation and the U.S. wants to turn inwards, it is time to thump our chests as a major supplier of innovation to the supply chains of the world.
Just as entrepreneurs seek out game changing "disruptive innovation," so should economic developers recognize that global economics are entering a new era. National economies are increasingly being driven by the success of their cities. Services are replacing products as the prime output of corporations. Talent is replacing natural resources and subsidies as a key factor in corporate investment decisions. Digitization is becoming the buzz word in the drive to competitiveness.
Amid these trends, we see two different approaches to the development of sustainable economies: the "America First" approach of trying to bring back its manufacturing economy of the 1960s, and the "Made in China 2025" approach of using digitization and technology to build the competitive economy of the next decade.
Recent Canadian policy initiatives (immigration, talent, super clusters, a new agency to market Canada) make it well positioned to capitalize on the latter.
"Innovation" is the buzzword of the day to describe how companies will establish and maintain their competitive edge. Canada is unique in the world with its double-barrel GDP drivers of natural resources and innovation. Unfortunately, outside Canada we are primarily viewed as a resource provider, and the Canadian dollar is often considered as a petrocurrency. It has been difficult to market our innovation capacity, given the reputation of our neighbour to the south.
If the world wants innovation and the U.S. wants to turn inwards, it is time to thump our chests as a major supplier of innovation to the supply chains of the world. Never has there been a better time to rebrand Canada as the model for economic growth in this century.
Canadian technology companies have been developing many of the tools being used by companies to analyze market and customer data to better target potential customers. Major Canadian cities are developing an increasing knowledge of their ecosystems and their strengths. The days of cold calls and seminars to an uncertain audience of foreign investors are over.
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Collectively, Canada's cities provide a compelling case to the investor. It is time that we use the analytic tools being developed for companies to match our urban strengths to the supply chain needs of the corporate investor.
As stated in an article by Scott D. Anthony, "Today's ambiguity brings tomorrow's opportunities. Business leaders equipped to act in the face of uncertainty can build paths to growth that have not yet been imagined. They can own the future, instead of being disrupted by it."
The same is true of the leaders building Canada's urban ecosystems.
Michael Darch speaks and comments on the building of sustainable urban and national economies and was the founding President of the Consider Canada City Alliance.
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