COMPETITIVENESS
Canada's competitive position
| INTERNATIONAL
COMPETITIVENESS Canada's competitive position |
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| Why is this important | Normally professors
don't take a lot of extra time to explain "why" they are teaching a particular
point, it is hoped that the students will understand things in the greater
construct of the course outline. In this case, I want to be clear that
the reason we are taking time to discuss the competitiveness of Canada
is because it directly relates to our ability to live in a country with
a decent economy in the future which can support a lifestyle which we presently
enjoy.
The principal readers of
this book/webpage are students. You are the future leaders of tomorrow.
As management students specifically, you are future business leaders of
the future.
It would be a good thing for you to clearly understand that the Canadian economy is not in too bad shape right now (compared to some countries around the world) but it will not necessarily stay that way. If you want to "live a happy life" in your 40's, 50's and beyond you have to do things in a way which will make your companies, and your economy more competitive so that Canada can continue to be a good place to live in 2020, 2030 and beyond. Just because we have some
nice lakes and rivers and a lot of trees up north
doesn't mean we are going to be OK coasting along - the global economy is becoming very intense in its competitiveness and companies have to be very very diligent in seeking all competitive advantages to
Are you up for the challenge? Tim Richardson June 17th 2005 |
Why
We have competition
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Competition
is the essence of capitalism. (witiger.com/ecommerce/competition.htm)
Companies make a product, and people buy it based
upon their opinion that it is the best price for the best quality they
can get. If a company makes a product at a price which is too high, other
companies will seek a way to undercut them and steal their customers away
- it sounds like it is not very nice, but, that is the real world. With
a world growing smaller due to the pressures of globalization, which is
greatly facilitated by
The original company has the choice of cutting production costs to meet this competition, or using marketing promotion techniques to try to convince their customers to stick to buying the original product at the higher price because of quality reasons or cultural reasons. This is the "arena" of international
competitiveness in the early years of the new millenium and there are a
number of things we need to learn about in order to understand how Canada
and Canadian companies are challenged by the global competitive environment.
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| Canada's
Competitive Advantages |
Note
to readers: obviously when you use a source such as a publication
by a ministry of the national government of a country you are studying,
it is prudent to be diligent about whether the facts, as presented, are
accurate, how are they gathered, and what comparisons can be made to other
sources to validate the conclusions they are advancing.
Various federal government agencies and ministries in Canada talk about stats and facts regarding Canada's competitive advantages. A good source of info is the website of the dept. of Foreign Affairs Canada The pages on this site discuss Canada's competitive advantage in the context of the automotive industry in 2011 http://publications.gc.ca/collections/collection_2011/aecic-faitc/FR5-38-2-2011-eng.pdf
The "markers" by which Canada is measured in this report include Canada's ranking in
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The following
parts of this page deal with how Canada has had various rankings in terms
of international competitiveness according to the IMD
www.imd.org
- the International Institute of Management Development in Lausanne What is significant about these IMD reports over the years is that they get quoted in major newspapers and business media online and offline and therefore the IMD's opinion ends up carrying some weight by virtue of the reports being widely quoted. |
| 2 0 1 4 | . |
| The
2014 IMD Report |
www.imd.org/wcc/news-wcy-ranking/#/wcy-2014-rankings/
. http://www.imd.org/uupload/IMD.WebSite/wcc/WCYResults/1/scoreboard_2014.pdf the 2014 report 2014 Canada's ranks # 7..again |
| 2 0 1 2 | . |
| The
2012 IMD Report |
http://www.imd.org/research/publications/wcy/World-Competitiveness-Yearbook-Results/#/wcy-2012-rankings/
the 2012 report exists as a YouTube video |
| 2 0 1 1 | . |
| The
2011 IMD Report |
http://www.imd.org/news/IMD-announces-the-
2011-World-Competitiveness-Rankings-and-the- results-of-the-Government-Efficiency-Gap.cfm Canada's ranks # 7, same rank as in 2010
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| 2 0 0 4 | . |
| Canada's
Competitiveness better ?? Feb 2004 Canada's
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Crane explains that "KPMG has produced a report suggesting Canada is the cheapest country among 11 industrial nations in which to locate a new small or mid-size business. This finding will no doubt be used by the Canadian government, a client for the report, to promote investment in Canada by foreign corporations. Yet, its findings should be treated with caution." says Crane Crane contends "The KPMG
study assumes productivity levels in the 11 countries are equal. Yet, there
are great differences. For example, in business-sector services and manufacturing,
productivity levels are 15 per cent or more lower in Canada than
in the United States."
This is a good example of having to interpret findings by adding in other considerations. |
| KEY
POINTS |
One
of the things that is important for students to cultivate is the ability
to be discriminating when they read reports and try to ascertain the truth
by questioning who wrote a report and what are they trying to gain by the
conclusions being public - or questioning what methods they used and if
any significant factors are missing from the analysis. Crane explains
that the KPMG study makes assumptions that are in error, which means that
maybe the conclusions are not something we can take for certain.
It would be nice to argue that Canada is # 1 in competitiveness, but if this is a conclusion based on some errors, than we have no right to evangelize the report. WTGR |
| 2 0 0 3 | . |
| Canada's
Competitiveness 2003 Canada's
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Crane explains "The report, from the World Economic Forum, is one of a number of reports each year that attempt to assess how well economies are doing. The World Economic Forum report, while not perfect, is one of the better attempts to provide such an assessment. It combines a lot of statistics along with information based on surveys of decision-makers in each country. It combines all this material into two indexes. The first is the Growth Competitiveness Index, which examines the macroeconomic conditions in each economy along with its institutions and its capacity for technological innovation. This index is designed to show each economy's capacity to sustain growth over the medium to long term. This is the index where Canada this year ranks 16th. The second index is the Business Competitiveness Index, which shows the potential for productivity growth in each economy, based on the strengths and weaknesses of businesses in each economy and the quality of the microeconomic environment, which includes the availability of skilled workers, the quality of infrastructure, the existence of advanced research institutions, efficient government processes and the level of competition in the economy. In this measure, Canada ranks 12th, compared to 10th last year. |
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International Institute of Management Development in Lausanne |
Crane's article is based
on the report of the IMD - International Institute of Management Development
in Lausanne
On this page of the IMD web
site, you can read the Executive Summary of the 2003 Report,
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| 2 0 0 1 | . |
| While studying the theory
of international competitiveness is interesting, let's have a look at what
it means to Canada in reality.
A newspaper story in the spring of 2001 reported Canada as having slipped to 9th on a list of competitive nations. |
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| Credibility | Whenever you
read a statement that broadcasts so loudly some claim, it is always wise
to consider the source, author, and how they in turn obtained their information.
If you read the article, you'll note that it is based on a survey done
by the International Institute of Management Development in Lausanne Switzerland.
On this page of the IMD web
site, you can read the Executive Summary of the 2001 Report, written by
Prof. Stephane Garelli imd.org/about/facultystaff/garelli.cfm
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| The
2001 IMD Report |
Prof. Garelli's
summary of the 2001 Report contains the following points
"fear of an economic recession ... "The world is worried about the threat of a period of economic slowdown, if not recession. This concern has been triggered by the rapid deterioration of the American economy, which, as of March 2001, appears to be reaching the end of a 10-year period of continuous economic expansion....To complicate matters further, the economic outlook for Japan, which has its own structural problems, is grim for 2001. Together, the US and Japan, the world's two largest economies, represent 46% of the world GDP. Thus, when almost half of the world economy loses momentum, one can reasonably expect that it will have a depressive impact on the performance of Europe, Asia and Latin America." |
| The
2001 IMD Report Brain Drain |
For those of you who are interested, Prof. Garelli also makes some interesting comments about the "brain drain" into the U.S. in the Executive Summary "Between 1994 and 1999, the US 'imported' 124'000 Indians, 68'000 Chinese, 57'000 Filipinos, 49'000 Canadians and 42'000 British holders of higher education degrees. Of the 5 million people employed in the US by the Information Technology sector, 1 million are foreign born." |
| KEY
POINTS |
What is the
credibility of the survey, that led to this point about Canada. Was it
based on a large number of people? The IIMD survey was based on 3,200 executives
- which is not a small number, but neither is it a large number compared
to the total "population" of executives around the world involved in international
business.
Regardless of the survey numbers, some of the points in the report, such as the economic recession potential discussed by Prof. Garelli, appear to have a solid foundation in fact and this was a resource we used for MGTC44 for the Sept-Dec 2001 term. WTGR |
| Competitiveness
cannot be changed easily |
One of the interesting points about this report is their treatment of the concept of "competitiveness". As Prof. Garelli notes "The development of technological infrastructure, the efficiency of government administration, the quality of education or the productivity of the workforce are competitive factors that cannot be altered overnight" |
| KEY
POINTS |
In some courses we talk
about the IMF and the World Bank as large NGO's involved in helping struggling
economies. It will be worthwhile to remember this point about how competitiveness
is something that changes slowly over time, because the IMF has been quite
"firm" with some countries about how they have to change quickly.
WTGR |
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| Canada's
Competitiveness 2001
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Several Canadian newspaper,
including the National Post carried an article in the beginning
of August 2001, which referred to a study released by the national trade
association Canadian Manufacturers & Exporters
. the National Post article begins by saying "Canada is at the bottom of the list of major industrial countries in terms of competitiveness, according to a new ranking by the Canadian Manufacturers and Exporters." "This is the third consecutive year Canada has pulled up the rear among the G7 countries..." "Canada has some excellent
companies and examples of world leaders, but overall the competitiveness
of Canadian business is simply not adequate to ensure continued growth
in today's international marketplace," Perrin Beatty, the CME's president
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| Canada's
Competitiveness 2001
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"Canada has not reduced the gap in the past two years and the danger is ... we might sink even lower and never catch up," Perrin Beatty, the CME's president, said in a commentary on the results. "The report says Canada, instead of competing with other countries on the basis of new products, processes and other innovations, has relied on a low Canadian dollar, low labour costs and a booming U.S. economy to maintain its industrial performance." "Jay Myers, CME economist,
said that while Canadian business has been improving its performance in
investment in technology, R&D and other areas, other countries
have done more. "The problem is our competitors are doing it better
and faster than we are. So what is happening is that Canada's relative
performance against the rest of the G7 is slipping. The U.S. has had a
major improvement in their competitive position and Canada has been slipping
behind," Mr. Myers said."
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| Canada's
Competitiveness better ?? Oct 2001
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"CANADA IS a ``current overachiever,'' says U.S. competitiveness expert Michael Porter in the latest edition of the World Economic Forum's Global Competitiveness Report" Crane writes "But this is bad news, not good. Porter means that our per capita income, or level of prosperity, is high relative to our current level of competitiveness and may not be sustainable. One reason, he argues, is that our natural resource wealth may be hiding our competitive weaknesses in the knowledge - or innovation-driven economy." |
| KEY
POINTS |
One of the things that is
important for students to deal with: if they plan to personally become
involved in international business; is to consider the big picture of what
Canada is good at, so they can successfully target career hunting in that
area.
Traditionally we would talk about the resource extraction and processing industries as the best chances for employment because that is where the greatest number of jobs are, and the greatest volume and dollar amount of our int'l business. But in the future - it would be prudent to consider int'l business career opportunities in more innovation-driven situations, if, you believe Porter's points noted below. WTGR |
| Canada's
Competitiveness better ?? Canada's
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Crane quotes Porter as saying
"Canada's big challenge is to make the transition from an investment-driven
economy to an innovation-driven economy. In an investment-driven
economy, efficiency in producing standard products and services is the
dominant source of competitive advantage, with technology largely imported.
That's Canada up to 20 years ago. In an innovation-driven economy
``the ability to produce innovative products and services at the
global technology frontier using the most advanced methods
becomes the dominant source of competitive advantage,'' Porter says.
Crane writes - "It's important, as Porter emphasizes, to understand what is meant by competitiveness in an innovation-driven economy. It's not about increasing export sales through lower wages and a weak currency. For much of the past 20 years, Canada has relied on a weak dollar to sustain its exports. But this dependence, Porter suggests, reveals a lack of competitiveness. The goal of economic development is a rising standard of living, and that is determined by the productivity of the economy. ``Productivity allows a nation to support a strong currency, and with it a high standard of living. Productivity is the goal, not exports per se,'' Porter argues." David Crane is The Star's economics editor. |
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Mr. David Crane has been the Economics Editor at the Star for many years. he is well known in Canada, and overseas, as a conscientious business journalist and highly regarded for his writings on business and marketing and economics in an international context. Mr. Crane's contribution to this section on Competitiveness is much appreciated. It is my sincere pleasure
to have personally known David Crane for 20+ years and I strongly encourage
students to read his articles on a regular basis.
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