Bulldozer or bystander? Canada’s stakes in the new global economy 

The global economy is undergoing significant transformations, and Canada’s involvement in these changes will shape its economic future. The critical question revolves around whether Canada will act as a "bulldozer," proactively driving forward in the new economic landscape, or remain a passive "bystander," missing opportunities for growth and adaptation.

The Shift in Global Dynamics

Over the decades, Canada has established itself as a robust player in the international market, heavily dependent on exports, with oil and gas, metals, minerals, and automotive goods leading the charge, primarily toward the United States. However, a seismic shift is on the horizon, influenced by factors such as the rise of artificial intelligence (AI), climate change, and the global energy transition.

The recent statements by Evan Solomon, Canada’s first minister of AI and digital innovation, highlight the urgency of mastering AI: “Countries that master AI will dominate the future. You’re either part of the bulldozer or you’re part of the road.” This implies that Canada must navigate carefully through these changes to avoid being sidelined.

The Role of Industrial Policy

The path forward for Canada requires not just passive observation but active engagement through a strategic industrial policy. Industrial policy involves government support for targeted economic sectors, leveraging Canada’s capabilities for innovation and adaptation to new global realities. Effective industrial policy can bolster sectors that enhance Canada’s economic resilience, especially those exposed to the evolving competitive landscape and climate-related challenges.

Governments can utilize industrial policy as a tool to foster private sector investment, encourage technological advancement, and develop a robust strategy for critical minerals now vital in clean energy solutions.

Challenges Ahead

Canada faces several obstacles in implementing a comprehensive industrial policy—most notably, a lack of private sector investment. Sectors crucial for the future, such as AI and clean technologies, are witnessing underinvestment. Companies often hesitate to commit resources amidst uncertainties related to U.S. trade relations and market volatility, particularly in critical mineral resources where China holds significant sway.

The long-term prospects of Canada’s economy are at stake. Without taking courageous steps to stimulate investment in vital areas, Canada risks slipping from the top tier of global economies and experiencing a decline in living standards.

Smart Industrial Policies

To harness the full potential of a forward-looking industrial policy, the Canadian government must learn from successful international models and bring rigor to its strategic planning. Effective policy should include:

1. Data-Driven Analysis: Similar to Australia’s approach to critical mineral policy, employing thorough impact analyses can help understand specific barriers faced by the private sector.

2. Clear Success Metrics: Establish measurable goals to assess the effectiveness of policy interventions, ensuring that they yield tangible benefits over time.

3. Public Trust: Build credibility by demonstrating a commitment to transparency and accountability in policy execution.

4. Targeted Support: Focus support on sectors poised for growth while facilitating adaptation in others affected by global trends, particularly in robotics, clean energy, and sustainable agriculture.

5. Collaboration with the Private Sector: Fostering partnerships between government and industry can lead to innovative solutions and shared investment risk, helping to bridge the gap in areas underfunded or overlooked.

Conclusion

As Canada stands at a crossroads, embracing an assertive industrial policy is crucial for future prosperity. The dual challenges of AI advancement and climate change demand a coordinated, government-led approach to guide private sector investment and innovation. Establishing trustworthy, research-driven, and transparent policies will be vital to navigate the complexities of the global economy.

In summary, Canada has the potential to be a bulldozer—leading the way toward a vibrant economic future. However, this requires strategic foresight, collaboration, and a readiness to tackle the present challenges head-on. By implementing smart industrial policies that support innovation and responsiveness to global trends, Canada can position itself to thrive in a changing world, securing its place as a top global economy.

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