Moving beyond exports to a regional knowledge economy can benefit people on both sides of the border

A little more than a decade ago, a group of business leaders, academics, and former government officials convened at Pugwash, Nova Scotia's renowned Thinkers' Lodge to consider why Atlantic Canada and northern New England have, for generations, lagged other regions of our respective countries in virtually every economic category.

We considered our histories, politics, geography, assets, challenges, triumphs, and failures. We looked at what we do well, what we could better, and what we should aspire to achieve.

In the end, we concluded that our region of the continent, which we called "Atlantica," enjoys enormous potential to succeed economically, but that the potential would only be realized if we enhanced the connections and reduced the impediments that impact cross-border trade and investment. We recognized that the border between our countries would remain a reality, but we envisioned one that permitted more efficient transport and the freer flow of goods and people.

So we advocated for better ports and better co-ordination between them. We pushed for the construction of safer and wider roads that link population centers. We encouraged air carriers to explore new routes between such places as Halifax and Bangor, and Portland and Montreal.

Above all, we encouraged each other—and anyone else who would listen—to think about the states and provinces within the Atlantica region as part of something that conceptually transcended national boundaries. We also began to consider how, if the border was less of an impediment to the movement of people and goods, we could unlock the economic potential of a historically "have-not" region by working together.

More than a decade has passed, and much has been said and done to advance the notion of a cross-border region whose economies are linked, and whose assets might take their place among the best the world has to offer. But it's clear that more needs to be done, and it's equally clear that we need our vision of the region to evolve.

Of course, it must be said that we're not working (or thinking) in a vacuum. Even as we advocated for better connectivity and the reduction of barriers to trade and the movement of goods, during the intervening years the world turned upside down in ways that directly affected the vision and realization of a cross-border economic region.

Among its many impacts, the tragedy of September 11, 2001 resulted in impediments to the flow of goods and people across borders around the world in the name of security. And the border between the United States and Canada is no exception. New technologies and procedures were developed and imposed at border crossings. The United States' Western Hemisphere Travel Initiative now requires enhanced and more costly documentation in order to travel between our countries. In general, people can no longer cross the border in the same relatively casual sense as they did a generation ago. Times have changed.

Yet even as the vision of a more unified regional economy must be re-focused to accommodate new security realities, it is essential that we take the Atlantica concept far beyond the movement of goods and the so-called export economy.

The export economy and the cross-border integrated supply-chain remain vital. But in the current global environment, characterized by a weak U.S. dollar, structural weakness in the U.S. economy, the relative strength of the Canadian dollar, and the stability of the Canadian economy—combined with the rise of such large and emerging consumer nations as China and India—an economic strategy that depends too heavily on the standard "Exporter A sells widget to Buyer B" protocol or "operating system" is a recipe for stagnation.

The operating system that has so far characterized the economic relationship between Atlantic Canada and northern New England is something we'll call "Atlantica 1.0."

An export-driven operating system has served Canada and the United States very well indeed. When exchange rates were favourable, it served Atlantic Canada especially well. Millions of buyers in New England have been only too happy to purchase Atlantic Canada's products and commodities at excellent prices for many years.

The problem now, of course, is that the American consumer's buying power is diminished, goods produced in Canada are relatively more expensive, and there are now numerous global competitors producing competitive goods to sell to Americans at prices lower than Atlantic Canadians can offer.

With this state of affairs likely to continue for the foreseeable future, a new regional economic vision that less reflects the Atlantica 1.0 model of goods and commodities, and instead leverages assets and linkages involving intellectual property and innovation—an "Atlantica 2.0" model—may hold more potential.

Despite the current weakness in the U.S. economy, it's important to note that in every field—from the oceans to outer space, alternative energy to homeland security, medical devices to agriculture—research, development, and commercialization in the United States continues unabated. Given the longstanding relationships that exist between Canadian and American counterparts in virtually ever industry, America's technology prowess should be regarded as the nation's most attractive immediate and long-term economic opportunity as far as Canada is concerned.

The U.S.'s leading technology companies are nimble and ambitious. American universities and incubators are hotbeds of creativity and relentless producers of patents, applications, and advances. The quest for individual success and achievement drives the U.S. economy. There is no weakness in America's entrepreneurial DNA.

Atlantic Canada has much to contribute to every one of the aforementioned scientific and commercial disciplines, and the good news is that ongoing co-operation between Canadian and American researchers and entrepreneurs is less dependent upon foreign exchange than upon clearly identifiable and articulated value propositions.

Canadian scientific and applied expertise is well regarded in the United States, and Canada enjoys a very positive image in technology circles. Since research and development is all about collaboration and partnering for excellence, there is much less friction in technology communities than there is acrimony between manufacturers and processors of commodities.

While exports and joint production remain vital and eminently worthy of support, the world is changing. Particularly in the current environment of "Buy America" and other protectionist impulses, our relationships must adapt and evolve to meet emerging conditions and challenges.

If Atlantica 1.0 was built on an export and joint production model, Atlantica 2.0 can be an operating system focused on areas in which Canadian and American technical and scientific comparative advantages can be married and leveraged for global success. Atlantic Canadians and New Englanders should aggressively inventory their best-in-class intellectual and technology-driven assets and go about the business of identifying partners with complementary skills, technologies, research interests, and aspirations.

The economic crisis notwithstanding, America's technology capabilities and intellectual capital remain undiminished, and Atlantic Canada can profit by pursuing "soft" cross-border partnerships with the same vigor it has pursued quantifiable export sales and manufacturing efficiencies.

Indeed, if all of us in the Atlantica region pursue cross-border technology, research, and commercialization partnerships with the focus that we have put on the export economy, a decade from now we will look back on this period as the beginning of the era in which a region was not merely born, but truly came of age.

Perry B. Newman is the president of Atlantica Group LLC, an international business development and consulting firm based in Portland, Maine.