Canadian economy depends on technology

Canada’s future economic success or failure will be played out in a global, knowledge-based economy.

“That’s what we live in, that’s what we work in. And that’s what we have to succeed in,” said Kevin Lynch, Deputy Minister of Industry Canada, in a keynote address at Softworld ’99 in Vancouver.

“The countries that do well are going to be the ones that focus on innovation, high levels of productivity, the latest technology and the skills development of its citizens and global economy.”

Lynch pointed out that among the G7 countries, Canada ranks number one for the highest percentage of population with a post secondary education, at 54 per cent.

“The IT industry is about two things: it’s about ideas and it’s about people. And the people are absolutely crucial,” he said. “This is where we think the public dollars have to go.”

Four years ago, the Canadian government set a goal of connecting every library and school in the country to the Internet. In March of this year, that goal was reached, he said.

“The last school in Canada was a three-student one-room school house off the coast of Nova Scotia. And they are now hooked up.”

Information technology represents nearly 6 per cent of our GDP, almost 500,000 workers, revenues of $100 billion last year alone, more than eight per cent of our exports and about 42 per cent of private sector research and development, he said. And the IT industry is growing at about 52 per cent per year.

“This is not an average sector. This is a sector that is driving every single sector of the economy, including government.”

According to Lynch, Canada’s economy has seen many changes in the last decade, many of which were encouraging. “As recently as ’93, the fiscal situation in Canada certainly wasn’t a promising one at all. Compare that to our fiscal situation today.”

Currently, Canada has the second largest surplus, second only to the United States, he stated. “Contrast that to one of the largest deficits just five years back. And think of the potential that gives us as a country to invest in the future, technology, research and development and our people.”

Lynch quoted the World Competitive Yearbook, which ranked Canada third in the world for the management of public finances, and first out of the G7 countries.

“Canada, up until the 1990s, was a relatively high inflation economy,” he noted. But now Canada’s inflation rate, at 1.6 per cent, is about 36 per cent lower than that of the US. This could indicate a shift in our international market perception, he said.

“That’s a huge turnaround and reverses 40 years of different behaviour. That changes the competitive landscape, changes the thinking and fundamentally changes the cost of capital in Canada.”

Canada’s location next the U.S. is also an advantage, he said.

Mike Farnsworth, Minister of Employment and Investment for the Government of British Columbia, noted in his speech that B.C. in particular is in a strategic location for doing business with the U.S., especially Microsoft in Redwood, Wash., and also with Asia.

“No longer is it necessary for a particular region to be the only place where something’s happening,” he said. “Each brings something to the table, each has advantages and strengths.”

According to Paul Swinwood, president of the Software Human Resource Council, the Canadian information/communications technology (ICT) industry accounts for about three per cent of the world’s business.

“We’d like to maintain that three percent,” he said in a presentation. “We are growing at 16 per cent per annum. That translates to another 50,000 workers per year joining our sector.”

One of the big challenges in the future will be continuing to find those people, he said.