Journal #3: Ontario economy needs new strategy for growth (Oct. 6 ’04) Summary TD Economics in a special report says Ontario key province for the Canadian economy if it wants to narrow the wealth gap with the United States Ontario economy would have to grow faster than the US economy by at least 1% each year to narrow the wealth gap but presently the prediction is slower growth than the US through 2006 Ontario ranked 8th in Canada in growth in per capita GDP leading to poverty and widening inequality Productivity not improving because of a lack of innovation in Ontario & Canada (e.g. Canada 16.5 vs. Sweden 102.5 triadic patents / million) Canada underspends on R & D compared to Sweden (1% vs. 3.5% of GDP) and Canadian CEOs lack vision, determination and skills to innovate Canada needs to develop more innovative Canadian headquartered companies that can pay high wages based on high demand global products Underinvestment in new capital equipment also leads to a lack of wealth creation Simplistic cost cutting not the answer rather Ontario should be focusing on rewarding innovation that leads to higher-value goods & services Cause - Effect Prediction 1. If Canada spends more money on R & D then new innovative methods of production and new products will be developed that will give Canadian products a niche in the global market place and generate jobs in Canada. 2. If Canada gives tax incentives to Canadian companies that innovate then consumers will benefit from higher quality, lower priced goods with greater variety. 3. If Canada sticks with the status quo and doesn’t change then the wealth gap will continue to widen between Canada and the United States. A smaller tax base will lead to less money for cherished Canadian social programs (health & education). Opinion 1. Canada should spend more money on R & D like Sweden, so that we can have successful companies like Ikea, Volvo and Saab which would give Canadians great jobs which are now going to home bases in the United States and Japan. 2. Canadian CEOs should learn to be more visionary like Swedish or American CEOs and see the potential for Canadian products around the world. This would create many export driven jobs for Canadians. Questions 1. Why does Canada lack visionary CEOs that could make Canadian companies successful in the global economy? 2. What are the most affective methods Canada could use to stimulate long term growth in the Canadian economy?
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