Innovation key to Ontario’s prosperity in the 21st century

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The Ring of Fire in Ontario's far north contains a "world class" deposit of chromite.

TANYA TALAGA/TORONTO STAR

The 20th century was a good one for Ontario. Its prosperity was founded on a strong manufacturing base, its proximity to American markets, a rich natural environment and its position as the centre of Canadian economic and political power — power it was not afraid to wield in order to secure favourable federal policies.

That era is over. The global economic downturn has accelerated the need to define Ontario’s 21st century economic vision and prepare for its next great economic era.

We should not underestimate the challenges. High levels of government debt among many of our most important trading partners, a large provincial deficit and high levels of North American household debt present challenges for Ontario businesses. These challenges are not news to the federal or provincial governments, or to the people of this province, many of whom are worried about their jobs, businesses and communities.

Ontario is facing a major turning point in its history. The cyclical economic downturn is taking place against larger structural changes. We are transitioning away from many of the old industries that were the foundations of Ontario’s prosperity for generations. Meanwhile, the global economy is undergoing a geopolitical reordering — the emergence of previously less-developed economies and a relative decline in the economic strength of the United States.

What steps are necessary to meet these challenges and enable Ontario to emerge stronger during this transition? TheOntario Chamber of Commerceand theMowat Centre, supported by Leger Marketing and in consultation with business, government, labour and civic leaders, offer an economic vision for Ontario.

Emerging Stronger is an ambitious plan. It identifies five priorities for Ontario: improving innovation and productivity; building a modern labour force that better leverages newcomers’ skills, experiences and networks, and facilitates the full labour market participation of aboriginal people; returning to fiscal sustainability, which includes a modernized public sector and a supportive federal government; becoming a highly diversified global exporter and investor, fully integrated into global supply chains; and developing a deeper understanding of Ontario’s competitive advantages and ensuring those sectors are supported.

The province is well-positioned to emerge stronger during this period of transition. But two realities must be acknowledged and addressed: our businesses are not as productive as they could be and many businesses are not sufficiently exposed to rapidly growing emerging markets. Although the high — and volatile — dollar creates challenges for many industries, it also creates opportunities to make investments that will increase productivity and deepen connections globally.

The federal and provincial governments must align their public policies and investments accordingly, which includes revising the federal policies that redistribute a good portion of Ontario’s wealth to other parts of the country.

Collectively, we must prepare for intensifying global competition and falling barriers to trade and investment. Openness to the world — and the capacity of Ontarians to navigate in a diverse world — is a key asset. Embracing this quality will be crucial to Ontario’s success.

Ontario has many of the goods and services the world wants. But that should not encourage complacency. The next five years are key: we must embrace the changes that are before us, prepare for even greater competition from our international peers, realize the full potential of the Great Lakes and the Ring of Fire, deepen collaboration globally and harness the power of diaspora networks, and identify and invest in Ontario’s competitive advantages.

Ontarians have always worked hard, but much of our 20th century prosperity was the result of good fortune: proximity to the U.S. market, abundant fresh water and attractiveness to immigrants. We will require a different mindset for 21st century prosperity. We will have to think much more carefully about our assets and opportunities so that we can emerge from this economic downturn stronger, more globally connected and more competitive.

Len Crispinois president and CEO of the Ontario Chamber of Commerce.Matthew Mendelsohnis director of the Mowat Centre for Policy Innovation.