When the World Economic Forum released its annual Global Competitiveness Report (a ranking of 144 countries based on the soundness of their economies) in April, this country’s finance minister Joe Oliver took it upon himself to brag on the nation’s behalf.
“I am pleased that the Forum has once again recognized Canada’s banking system as the soundest in the world,” he declared in a statement. “Our financial institutions remain well supervised and well capitalized—which instills domestic and foreign investors with confidence in (our) economy.”
Only in Canada, perhaps, would a senior government official blush at being considered a competent caretaker of other people’s money. But, in the eyes of many around the world, that is this country’s single, remaining, indisputable competitive advantage, and has been ever since the financial meltdown of ’08 demolished much of the rest of the global financial system.
What Oliver conveniently failed to mention, however, is that the Forum’s analysis of just about every other metric in the grid that defines “competitiveness” placed Canada on the slow decline with an overall rank of 15, down from 14 last year and 12 in 2011.
Economies that were judged to be more competitive than ours included Taiwan, Qatar, the United States, Finland, Sweden, the Netherlands, the United Kingdom and Germany. Oddly enough, Switzerland (that other great nation of bankers) placed first, and it’s worth noting why.
According to the Forum’s report, “The country’s most notable strengths are related to innovation and labour market efficiency as well as the sophistication of its business sector. Switzerland’s top-notch scientific research institutions, along with other factors, make the country a top innovator.”
In fact, the real reason for the superior competitiveness of the Swiss has to do with a principle we have all but abandoned in Canada: the notion that public and private sectors are not silos, forever apart from one another, but points on a productive continuum of cooperation and collaboration.
In this country, partisan rhetoric has overtaken sensible discussion about the various roles governments and businesses can play together on everything from health care delivery and primary and secondary education planning to road building, bridge maintenance, job training, and science and technology development.
The current wisdom within the nation’s political establishment, cobbled together after many years of naval gazing, holds that governments should take a back seat to the private sector in managing the affairs of the free-market, enterprise state. The public sector is responsible for establishing an attractive environment for business growth and investment (i.e., tax regimes favourable to industry), and that’s about it.
The corollary of this, of course, assumes that the notoriously risk-averse private sector (made even more so by the recent Great Recession) will step up and make the necessary investments in technology and skills development that will produce the productivity improvements that enhance a nation’s overall competitiveness. Guess what? They won’t, or, at least, they haven’t.
Last year, the Science, Technology and Innovation Council (STIC), a creature of the current federal government, stipulated that Canada’s gross domestic expenditures on R&D (GERD) had dropped from a peak in 2008 “when measured in relation to gross domestic product (GDP).”
Meanwhile, it observed, “the GERD and GERD intensity of most other countries have been increasing. Canada’s declining GERD intensity has pushed its rank down from 16th position in 2006 to 17th in 2008 and to 23rd in 2011 (among 41 economies).”
Ironically, perhaps, this government organization also acknowledged that the challenge of building a broadly competitive economy is shared, a task in which “all participants in our science, technology and innovation ecosystem have a role… driving enhanced performance and lifting Canada into the ranks of the world’s leading innovative economies.”
That’s a start.
Naturally, any finance minister worth his abacus will chortle and crow when his country’s financial apparatus receives a formal thumbs up from so august and credible a body as the World Economic Forum.
So, by all means, Mr. Oliver, take a bow. But as you come up for air, remember that the banking system that survived the crash to emerge as the most competitive on Earth did so thanks to the useful interventions and regulations of government, itself.