Saturday, June 26, 2010

The Canadian Century?

At the beginning of the 20th century, Canada was one of the richest countries in the world, enjoying boundless natural resources, a privileged place in the commercial empire established by still-dominant Britain, and access to the energetic American market. Against this backdrop, it didn't seem unreasonably boastful in 1904 when Prime Minister Wilfrid Laurier proclaimed that "the 20th century shall be filled by Canada."

Ninety years later, his words seemed more ironic than prophetic. The Canada of 1994 in many ways resembled the United States or Europe of today. Deteriorating public finances at every level were causing grave anxiety among both the public and experts. The federal government was plagued by persistent deficits. The national debt was growing at an alarming rate. The media and the international community were all predicting a day of fiscal reckoning with far-reaching implications. The Wall Street Journal went as far as to call Canada "an honorary member of the Third World."


Fast-forward again to today, and Canada seems to be back on track. The country's economy grew at an average rate of 3.3 percent between 1997 and 2007, the highest average growth among the G-7 countries, including the United States. Canada's job-creation record was nothing short of stellar. From 1997 to 2007, Canada's average employment growth was 2.1 percent, doubling that of the United States and exceeding employment growth in all other G-7 countries. Perhaps most importantly for future economic prosperity, during the same period Canada outperformed the G-7 average almost every year on business investment. Canada outperformed the United States on this measure in every year but three over the same period.

So perhaps Laurier was not wrong, just 100 years early. If the country continues on the path it is following today, it's not unreasonable to think that this will be the Canadian century, the era in which the country comes into its own as a world economic power and finally steps out of America's shadow.

The story of how a classic economic basket case transformed into a top global performer has implications beyond Canada. Every one of the tools Canada used to extricate itself from its parlous position is available to the United States. As the world's top economic powers gather in Canada for this year's G-20 summit, U.S. President Barack Obama and his team would be wise to study the Canadian model, or risk being left behind.

Continued....here

No comments: