Evidence of meeting #47 for International Trade in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was china.
A recording is available from Parliament.
12:40 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
In terms of R and D intensity, which is our R and D to our GDP, we are below the OECD average.
12:40 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
The OECD average is slightly over two. Ours is around 1.7 or 1.8.
12:40 p.m.
A voice
Finland's is about 4.4.
12:40 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
Yes.
12:40 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Let me give you another example. Japan invests heavily in R and D, but it has a debt of 783 trillion yen. I want to know what the debt ratio is as well, because we as a country—
12:40 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
I wouldn't be able to tell you.
12:40 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
He'll tell you.
12:40 p.m.
Vice-President and Chief Economist, Conference Board of Canada
I know it, but you're mixing apples and oranges here. You're mixing fiscal policy with R and D policies.
12:40 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
I do not mix apples and oranges. I'm an accountant.
Go ahead. You can answer me.
12:40 p.m.
Vice-President and Chief Economist, Conference Board of Canada
First of all, on the Nordic model, the Nordic countries as a whole—and I'll take Norway out, because it's a special case because of oil and gas. They are high tax, high spending, high R and D spending, high productivity economies in Denmark, Sweden, and Finland. I believe the key driver on the R and D side is the fact that they joined the EU and have been exposed to massive new competition within Europe. In those countries, there's almost no protection. As a firm, you either compete or you die, so firms have had to innovate. They've had to invest massively in R and D.
That's why our advice is to create the single Canadian market: to actually allow our firms to compete harder to get to an efficient scale. That's a critical piece, because you can be a high tax, high spending, high productivity economy. It's being done in Ireland, Iceland, and Scandinavia right now.
12:45 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
One thing goes back to your question number three, which has to do with industrial strategy. These countries also have an industrial strategy. We don't.
12:45 p.m.
Liberal
12:45 p.m.
Vice-President and Chief Economist, Conference Board of Canada
Countries don't have a single competitive advantage. Firms have competitive advantages against other firms.
The concept of comparative advantage is a big economic concept and is designed to show the benefits of trade. No one country has a total advantage in anything, except maybe Saudi Arabia in oil.
12:45 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
No, but we have an advantage over something. Do we have skilled labour? Do we have the financial services as our competitive advantage? Manufacturing is not our competitive advantage.
12:45 p.m.
Vice-President and Chief Economist, Conference Board of Canada
Part of our challenge as a country is that we could have an absolute advantage in everything if we chose to make the right investments in people, if we had the infrastructure. We have natural resources, we have smart people, and we do have specialized manufacturing, so we could actually have advantages in all areas.
But if you're comparing us to a country like Japan, Japan has no resources. Japan only has people, so Japan's industrial policy since the end of the Second World War has been all around innovation, R and D, and copying technology from other places, frankly. Back in the fifties, they were very good—
12:45 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
—at doing it better.
12:45 p.m.
Vice-President and Chief Economist, Conference Board of Canada
They've become global leaders on the corporate side.
Japan is also a disaster, though, in terms of public policy. They have massive debt, they have massive fiscal deficits, and they had deflation until last year, which actually discouraged people from consuming.
12:45 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
And they're highly protectionist.
12:45 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
There's another thing I'd like to ask. It's not technology that drives articles; it is business acumen that makes, for example, the United States extremely competitive. How does your body, the Conference Board of Canada, encourage businesses or universities to have better business minds? What sorts of suggestions would you have?
12:45 p.m.
Vice-President and Chief Economist, Conference Board of Canada
Our purpose as an organization is to build leadership for a better Canada. That's a huge mandate. We engage the private sector, public sector, and academia constantly. We have 42 councils where we share best practices in everything from marketing to innovation. We do conferences. The whole being of the Conference Board is to try to find best practices and share them with everybody in a leadership position.
12:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you very much, Ms. Ratansi.
Is there a Bloc member who would like to ask questions?
Monsieur Cardin.
12:45 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Because of globalization and international trade, you really need to focus on innovation to be truly successful. We have no choice in the matter: We're in the value-added and knowledge economy. Given the human resources required to make this sort of thing, one might surmise that it doesn't cost much. That's really very shortsighted. Yet we know full well what things cost when we let our guard down. So we really need to focus on the value-added side.
I'm glad to know that the graduation rate has risen substantially in Canada over recent years. However, this increase is due to the fact that Asian students come to Canada to study. They then go home and take the knowledge they have acquired here with them. China and India will not be the post-Second-World-War Japan, where things played out over almost 40 years. Today, Toyota is leading the pack. China will surge ahead much more quickly as far as training, development and innovation is concerned.
We are diving head first into a fast-paced race to be innovative and creative. This will always be the case. We will never have the luxury of lingering and thinking that we have plenty of time before our competitors outdo us. The race to be innovative will surge ahead and will not stop for anybody. At the end of the day, the major difference will be one of wage and environmental conditions. The climate will be more human and more organic than simply one focused on innovation and creation.
So what will we do? Companies will quite simply invest elsewhere. They'll get richer, and workers here will get poorer. It's not necessarily true when you say that you are helping people here by producing abroad.
12:50 p.m.
Vice-President, Policy, Business and Society, Conference Board of Canada
Training really does become a critical factor in having well-equipped employees. That's a consideration. There are business people and company heads on the lookout for opportunities not only here but elsewhere and they get government assistance to help them find these opportunities. That's another consideration.
Competition is fierce. There's no disagreement there. This will continue to be the way things are, it won't stop. That's why we need to decide how we want to position ourselves in this market. We still haven't gone through that exercise. Business hasn't; government hasn't either. We haven't decided what our future strengths will be. In the past, we sought to compete from a cost standpoint. We know what that leads to. We haven't really thought about how we're going to compete from a value-added perspective. We certainly haven't done this in Canada like some other countries have done.