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Prime Minister Mark Carney speaks to his caucus in Ottawa on Friday.Adrian Wyld/The Canadian Press
John Rapley is a contributing columnist for The Globe and Mail. He is an author and academic whose books include Why Empires Fall and Twilight of the Money Gods.
If you build it, they will come. The iconic line, paraphrased from Field of Dreams, would make an apt motto for an investment conference. That is, while big marketing events have their place in promoting Canada as an investment destination, the country’s success in luring capital will come not from talking but from doing – namely, building a country that is such an incubator of new business that investors are lured to it to join the party.
That’s not to play down the virtue of Mark Carney’s investment summit. By most accounts, the event came off well, the closing speech by former prime minister Stephen Harper signalling there’s a national team spirit behind this initiative. And it would have been a waste if an ex-banker with a Rolodex as thick as Mr. Carney’s didn’t organize such an event. Nevertheless, while the housewarming party enabled the government to show off its new paint job, investors will still ask if it’s a home they’d want to live in.
And that’s where the real work remains to be done. To ensure investors help to build a new Canada, with new industries and products that find new markets, all levels of government must remodel the house to accommodate new residents. There was some talk of this at the summit. The government announced a major change to its tax incentive regime and there was chatter around the conference’s edges about the need to streamline regulation and planning. And of course, the country still has ground to make up in reducing interprovincial barriers.
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But while such changes would make it easier for investors to come to Canada, they don’t give them a reason to do so. For that to happen, the country needs to make itself a magnet by spurring business formation that creates new industries and opportunities. Government has a vital role to play, because it alone can maintain the knowledge and innovation pipelines, ideally at the frontiers of world standards. Key to these public roles are education and infrastructure.
Canada’s public schools have long been considered among the best in the world, and this excellence arguably continues into the undergraduate years of university. Unlike in England or the U.S., where the difference between an Oxford or Harvard degree and a cash-strapped college can be vast, it doesn’t make that much difference where a Canadian student does their undergraduate degree. They will get a good education anywhere. One measure of this level of quality is that Canada is home to eight of the world’s top 100 universities when it comes to producing alumni who create successful businesses upon graduation (success being measured by the ability to attract venture capital).
Unfortunately, the innovation pipeline dries up somewhat when one moves beyond the undergraduate level. Canadian universities underperform when it comes to producing master’s and PhD graduates who successfully form businesses. It appears instead that many of the country’s strongest BAs go abroad to further their studies. Some, such as Cohere co-founder Aidan Gomez, return to Canada to set up their businesses, but the more natural tendency is to stay where your professional networks have been established. The country needs to find a way to keep them at home if it’s to break into new sectors.
The egalitarian ethos that ensures undergraduate educations meet similar standards across Canada may be less helpful at the advanced level. Canada doesn’t build its elite research institutions the way France or Britain do, and it would probably help the country if at the graduate level, a handful of top Canadian universities were given the resources to compete for the world’s leading talent.
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Further, the government needs to weave these knowledge centres together into an ecosystem that maximizes the flow of ideas and capital, in a way that happens in Silicon Valley or London and its environs. The move to let private companies run airport operations might help if it succeeds in reducing the cost of flying within Canada, but more vital yet is the proposed high-speed rail between Ontario and Quebec. However, to succeed, it probably needs a redesign.
As it stands, the high-speed Alto is designed to shorten travel times between major urban centres, when what is required is an integrated transport system that melds the Quebec-Windsor corridor into what the Canadian urban transportation planner Richard Zavergiu calls a single “interactive megalopolis.” For instance, four of Canada’s top business-producing universities are in the proposed corridor, but were it extended to London and Waterloo, the number would rise to six. Bring together that critical mass of innovation, entrepreneurship and finance in a common space in which people can move about easily, and you’d have a compelling offer for investors.
All of this is within reach, though getting there will take boldness. But if you build an environment that produces innovation, investors will come.