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Why do Canadians as individuals outperform Canadian firms in the global economy.docx

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McMaster University
Jack Leach

Why do Canadians as individuals outperform Canadian firms in the global economy? – Roger Martin (Dean of Rotman Commerce) – Article needed Topic 3 & Midterm Prep. James Cameron, director of the world's top-grossing movie of all time; Alanis Morissette, creator of the top-selling album in the United States in the past decade; John Polanyi, winner of the 1986 Nobel Prize for chemistry; Jeffrey Skoll, co-founder of eBay, the world's largest auction site; Bob Young, founder of the world's premier Linux supplier. The list of individual Canadians who can be counted among the world's outstanding leaders in their chosen endeavours goes on and on. But what about Canadian companies leading the world in their chosen endeavours? Very few come to mind: McCain in frozen French fries; CAE in flight simulators; Bombardier in regional jets. What is it about Canada that enables us to consistently produce outstanding individuals who confidently take their place as leaders on the world stage, while only sporadically producing firms that lead in the global economy? What can be done to enhance the success of our firms? Like most things, this perplexing outcome did not take shape overnight, but is a culmination of a century of choices that have shaped the environment in which our firms grow and develop. In many ways, the seminal choice was that of Sir John A. Macdonald, who launched the National Policy in 1879, ushering in a hundred years of Canadian protectionism. Macdonald hoped to broaden the base of the economy by protecting Canadian manufacturers with high tariffs. Rather than providing them with the pressure to continuously upgrade their capabilities, the National Policy encouraged Canadian firms to operate behind the tariff wall, creating an environment that was increasingly surreal and out of step with the world economy. Later, in 1904, a hopeful Sir Wilfrid Laurier predicted that the 20th century would belong to Canada. He cited an abundance of natural resources and Canada's position as an emerging liberal democracy within the British Empire as competitive advantages in the new world economy. But while an abundance of natural resources helped to underpin Canada's prosperity, it also helped reinforce the problematic aspects of the National Policy. Able to export effectively and finance our imports by harvesting our plentiful and cheap natural resources, we tended not to build internationally competitive firms in the manufacturing and service sectors, or even globally oriented firms in the resource sector. With tariff policies relieving the pressure of international competition, and with abundant natural resources driving export revenue, what could possibly compel our firms to innovate? Perhaps demanding customers. Unfortunately, a combination of our legendary Canadian politeness and the absence of choice due to tariff barriers caused Canadians to be less demanding consumers. Too often, we have accepted inferior quality rather than complain and push our local firms to innovate and improve. Further, Canada sought to keep together an uneasy coalition of provinces by encouraging regional diversification, subsidizing the spreading of industries across the country. This created an environment that did little to encourage the growth of reinforcing clusters of firms supported by specialized infrastructure and educational institutions. Isolated in their own worlds, firms such as Algoma Steel and Cape Breton Steel lacked a supportive environment in which to upgrade and innovate. Paradoxically, Canada made choices in other areas that enabled us to create the exemplary culture from which so many exceptional and globally successful individuals have sprung. Like the United States, Canada opened itself to a wave of settlers who brought with them the entrepreneurial zeal of people so committed to creating a better life they left their home countries behind. Throughout the 20th century, Canada was a leader in educational spending, giving its citizens the thinking tools required to succeed. Canada also pursued policies aimed at encouraging a tolerant and multicultural environment. On the cusp of a new millennium, Canada is in an intriguing position. We are valued internationally as an exemplary global citizen. Our people are succeeding abroad in foreign firms and in a variety of fields outside business. But too few of our firms are succeeding globally, and it's starting to show. Laurier's prediction didn't take into account the impact that globalization would have on the Canadian model. Late in the 20th century, globalization began to expose long-developing weaknesses in Canadian foundations of p
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