Up a lazy river

The Conference Board of Canada has been harping about productivity for years, but their most recent figures are startling. Canadian productivity levels are only 80 per cent of what they are in the U.S., our largest trading partner. If Canada had kept pace with productivity growth in the United States during the last two decades, every Canadian would have $7,500 more in annual disposable income. Moreover, real GDP would have been 21.3 per cent higher, governments would have collected $31 billion more in revenue, and deficits would be less troublesome.

Why has this happened? First off, productivity isn’t about people working harder or faster. Productivity gains occur when work is more efficient and people produce more with the same effort. It helps when machinery is up-to-date and when the goods produced have a high value added factor. Exporting wheat, crude oil, and logs, for example, doesn’t offer much value added. The BlackBerry does.

The problem is that too many Canadian manufacturers are lazy. They are content to supply local or easily accessed U.S. markets. For a large part of the last two decades a devalued Canadian dollar skated even the least efficient companies onside.

Just look at the automotive sector. We’ve had free trade with the U.S. since 1965 yet there are only a handful of Canadian companies that have built on that advantage to become global giants. After Magna, Linamar, and Wescast the rest are small potatoes.

We need a lot more driven individuals like Frank Stronach, Frank Hasenfratz and Mike Lazaridis with visions bigger than themselves who are unafraid to take on the world. Without such entrepreneurs and the necessary investment in technology, Canada will continue sliding into third world status.

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