Canada: Still at the crossroads
In 1991, Michael Porter and his Monitor colleagues released Canada at the crossroads: The reality of a new competitive environment. This seminal report evaluated Canada’s competitiveness along several dimensions and highlighted worrisome trends that threatened the country’s future prosperity. The report also offered three main recommendations to make Canada more competitive on the global state: adopt global strategies, develop our people, and invest in innovation and business sophistication.
In Deloitte’s 2017 report Canada at a new crossroads: 25 years later, we aimed to discover how far we’ve come as a nation since the original report. Over the course of our research it became abundantly clear that Canada hasn’t made nearly enough progress in terms of competitiveness. In fact, many of the original 1991 recommendations still hold true today―a generation later.
- Canada has fallen behind other developed economies in terms of our foreign market share, the extent of our market dominance and the breadth of our presence in the global value chain;
- Where once our well-educated workforce was a key competitive advantage, today indicators for specialized education and skills development suggest the Canadian labour force is at risk of falling further behind;
- Canada’s investment in innovation and advanced technological products still lags that of other developed economies, and we are falling behind in developing sophisticated, differentiated products required for resilient participation in the world market.
The fact is, even if Canada had successfully implemented all the recommendations of the 1991 Canada at the crossroads report, the country would still face a highly uncertain future. In a forgiving environment, Canada might well be able to stay the current course and achieve modest growth. But we don’t live in a forgiving environment. The rate of long-term global economic growth is unpredictable. We can’t predict the pace and scope of technological disruption—we just know it is inevitable.
When faced with uncertainty, business leaders, policymakers and other individuals tend to deal with it in one of two ways. Some deny uncertainty exists and make plans as if they know what the future holds. Others become paralyzed and unable to make any decisions at all. But there’s a third way: we can imagine different possible futures and ask what each might mean to Canadians and Canada’s prosperity overall. Canada at the new crossroads: 25 years later does exactly this, extrapolating four plausible global economic futures and their potential impact on Canada:
- Closed nationalism: A future of protectionist economies where technological disruptions are isolated amidst reduced trade
- Supportive disruption: A future of robust economic growth and rapid accumulation of wealth, coupled with government’s ability to distribute wealth and retrain people
- Fragmented decline: As emerging technologies fail to become pervasive, the international consensus on liberal trade erodes and the world’s economies experience an uneven slowdown
- Open growth: A world where high economic growth is driven by a burgeoning middle class in the developing world and increased trade flows globally.
Four possible future scenarios for the global economy
Source: Deloitte analysis.
To ensure Canada can be competitive in each of these potential futures, Canadian business leaders and policymakers must ask vexing questions about our country’s priorities, the tradeoffs we’re willing to make, and even our identity as a society. And then they must engage in courageous dialogue about the actions we must take today as a nation to improve our ability to compete in an uncertain future.
At Deloitte, we’re committed to asking the tough questions that will help define our way forward. Please join us in this and continue to follow our work as we embark on this journey.
Why does Canada need to be bold now?