It's time to build a Canadian economy geared to the intelligent future. The best part is you can do it anywhere

by Jim Meek

Jim McNiven knows why Canada is falling behind the rest of the world in the knowledge economy. The former deputy minister of development for Nova Scotia can also chart Atlantic Canada's course to a more glorious future. These bold claims are mine, not his, so let me start out by establishing McNiven's credentials.

A one-time dean of the faculty of management at Dalhousie University, McNiven has co-authored three major papers on Atlantic Canada's international competitiveness. He is, in fact, that rarest of species in this region: an innovative thinker who cares enough about progress that he will trade his ideas in the public marketplace.

For 30 years now, McNiven has been telling us that the nation and the region risk becoming victims of their resource wealth. In brief, Canada has done all too well selling "hogs and logs" and other resources with no link to the knowledge economy. As a result, we built an illusory success in the 1990s based on the then-cheap Canadian dollar and abundant exports of oil, gas, trees, and critters that squeal and grunt. While this enabled the Martin-Chrétien Liberals to pay down debt and claim multibillion-dollar trade surpluses, Canada's manufacturing sector went into serious decline.

Here's one measure of our retreat toward a 19th-century resource-based economic model. In 2000, less than half of Canada's exports were composed of unprocessed or lightly processed resources. By 2008, almost two-thirds of our exports were in this category. Irving Oil's midsummer announcement that it was scrapping plans to build a second refinery at Saint John neatly dovetails with this trend.

Irving's decision was a prudent one, based in its understanding of ongoing weak demand for gasoline south of the border. Still, it illustrates McNiven's view that Canada continues to slip-slide backward toward the 19th century when it comes to getting smart about growth.

Here's another measure of Canada's weakening competitive position. The Finns spend 3.5% of their gross domestic product (GDP) on research and development. Canada's struggling to spend 2% GDP on R&D but has yet to hit the mark. I don't even want to talk here about how Atlantic Canada trails the rest of the nation in the commercialization of research.

I phoned McNiven this summer to figure out who was right about the end of the recession-our gloomy finance minister, Jim Flaherty, or our upbeat central banker, Mark Carney. By the end of the interview I realized my initial question didn't matter as much as McNiven's longer-term view.

This takes me back to his central argument; namely, that Canada is getting stupider while the rest of the world gets smarter. Fortunately, McNiven has some ideas on how to improve our national IQ.

First, start treating resource wealth as if it were not there. "Anything you get out of the resource sector is strictly a bonus," he says. "Don't build an economy around it." Second, stop fighting the wars of the 1950s by pouring billions into the car industry and designing public policy around oil and gas exports. Why, McNiven wondered, did Ottawa work itself into a blinding frenzy over GM yet pay scant notice—initially, at least—to the proposed sale of Nortel's valuable wireless assets to European interests?

Third, Canada should foster the kind of manufacturing and overall economic activity that will survive in high-wage economies. McNiven is referring here to technology-based, knowledge-intensive manufacturing in such sectors as aerospace and high-tech.

Asked what Atlantic Canada should do to secure its future, McNiven recalled a line written by the late Globe and Mail columnist George Bain. At the time, in 1989, Ottawa and Montreal were fighting to host the new Canadian Space Agency. "Why not Mahone Bay?" Bain asked. "It's no further from the moon than anyplace else."

For McNiven, that logic applies today. When it comes to smart manufacturing and the commercialization of research, geography doesn't matter. "If you want to design and manufacture high-tech mountain gear, we [in Atlantic Canada] have as good a chance as anyone else of succeeding. It all depends if we want to pursue the knowledge economy or go on digging coal and looking for oil and gas."

In short, the new century beckons. Let's not lose ourselves in the last one.

Jim Meek is a freelance writer and consultant with Bristol. He can be reached at jmeek@bristolgroup.ca.