William Polushin is founding director of the Program for International Competitiveness at the Desautels Faculty of Management, McGill University, and President of AMAXIS, an international business and operational development services firm.
In my inaugural post about competing to win in the global economy, the enterprise was identified as the engine of wealth creation in market-oriented economies such as Canada, the United States, the European Union, or Japan. When I refer to winning, my metric is simple -- sustainable and profitable sales growth.
As indicated in the Compete to Win report released by the Ministers of Industry and Finance in 2008, raising Canada's overall economic performance through greater competition will provide Canadians with a higher standard of living. In a world that is being reshaped by technology, globalization, demographic shifts, evolving labour markets, and the economic rise of Brazil, Russia, India and China and other "emerging markets" on the world stage, though, the competitive dynamics driving industry is changing and changing quickly.
If a particular enterprise -- whether it is a small distributor of compact fluorescent lamps in Quebec, or a mid-size construction contractor in Manitoba, or an industry-leading manufacturer of digital projection systems in Ontario -- does not possess the necessary knowledge or capacity to compete at a level that is dictated by world markets, it will not realize sustainable sales and profit growth. The result: diminished or negative job and wealth-creating capacity and, with that, limited contributions to national prosperity.
As a resource-rich nation, Canada's capacity to supply the world with mineral wealth is not a concern. In 2010, three of our top four merchandise exports were crude oil, petroleum gases, and gold -- accounting for $84.1-billion out of a total $474.6-billion (goods and services) in export revenues. We have proven to be very adept hewers of wood and drawers of water over the years, and there is no reason to believe that we will not continue to be a net supplier of commodities to the world for the foreseeable future.
What is of concern is the degree to which our exports are concentrated in the hands of so few, and the capacity of our value-added industries to compete at a global level. This goes to the heart of the trading nation versus a nation of traders. According to Statistics Canada, 50 exporting enterprises accounted for 48.8 per cent of total exports in 2007 (the latest year for which this information was available). Coincidentally, this is the same year that China overtook Canada as the number one supplier to the United States.
In my next post, I will build on this analysis by taking a more detailed look at Canada's export position and performance.