Canada's traders must change their competitive DNA

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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.

As I discussed in my last blog entry, competitive advantage in the global economy is driven by knowledge, but knowledge that effectively integrates information and intelligence, discovery, know-how and expertise, and business and research networks.

In Canada: A Nation of Traders, that means our enterprises -- small medium and large, and across industry -- must understand how to best leverage international trade, continuously innovate, and manage in increasingly integrated and competitive business environment if they are to profitably grow in the 21st century.

For many exporters, importers and direct investors that means rethinking their international business models. For our governments, that means reworking their trade policy and promotion formulas that have governed Canada's approach to international trade for years. As illustrated in the following diagram, the traditional view of trade has been predominantly linear and uni-dimensional. Trade, for the most part, has been defined in export terms (imports are seen as a drag on the nation's economic output) and direct investment strategies have been largely fragmented between or among markets.

In a world of global supply and value chains, integrated capital markets, advanced information and communication technology systems, and increasingly sophisticated competition from the east and south, the path to commercial success requires owners, managers, and entrepreneurs to adopt a much more comprehensive and multi-dimensional view of trade and investment. For any foreign market:

• What is the export potential?

• What is the sourcing potential?

• Is a direct investment warranted or required?

• How can the foreign market be leveraged to help the enterprise (parent or affiliate) penetrate other foreign markets?

For leading Canadian enterprises with global reach, such as Bombardier or SNC-Lavalin, these questions are now built into the operating DNA of the companies. In developing Canada: A Nation of Traders, the challenge is to get the next tiers of current and would-be exporters, importers, and direct investors to adopt these same practices. The objective again: competitive and sustainable advantage.

In my next blog, I will take a closer look at the multi-dimensional nature of trade and discuss the prevalence and relevance of global value chains (GVCs).