Opinion: Resources, yes, but don’t give up on the knowledge economy just yet

Canadian universities have been shackled by regulation and sheltered from global competition, and that has hobbled the main engine of Canada's knowledge economy, writes Mikko Packalen. Photo by Rattakun Thongbun/Getty Images/Postmedia files

Article content

By Mikko Packalen

Article content

Article content

For decades, Canadian governments have promoted the knowledge economy, betting on leadership in science and technology to foster innovation, global competitiveness and prosperity for all Canadians. Engineers, scientists and academics were expected to deliver economic benefits nationwide.

Article content

Reality has disappointed. Over the last decade, economic growth stalled, and even in earlier decades gains were only modest. The Canadian knowledge economy clearly has fallen short of its promise. Our increasing reliance on tariffs against China is a telling symptom. A country genuinely excelling in innovation would not need high tariffs in order to thrive in the most rapidly evolving sectors, like electric vehicles, batteries and semiconductors. Tariffs have become a crutch for us, as well as a symbol of our inability to compete.

Article content

Article content

Other less obvious barriers are further evidence of this problem. Federal research grants, critical to Canadian scientists, are largely closed off to foreign talent. Generous subsidies for university students apply only domestically, sheltering our universities from global competition and disadvantaging the most talented Canadian students, who miss opportunities to access our schools’ global competitors. Canada’s knowledge elite vocally supports free trade yet benefits from protective barriers against global competition.

Article content

Article content

Canada now lags significantly in the global knowledge race. Focused as they are on maintaining funding, our knowledge elites may deny this uncomfortable fact. But statistics on productivity growth confirm Canada’s declining competitiveness in innovation.

Article content

In recent decades, Canada’s technological gap with the U.S. remained manageable because of the two countries’ proximity and frequent partnership. But China’s rise in science and technology has fundamentally altered this balance. China now rivals the U.S. in nearly every scientific and technological domain. Even OpenAI, the company behind ChatGPT and a poster child for the artificial Intelligence boom, now seeks U.S. government protection against Chinese competition. China’s rise and Canada’s relative decline have diminished our value as a strategic partner to the U.S.

Article content

Article content

The federal election campaign underscored a dramatic shift in Canadians’ economic mindset. Both Mark Carney and Pierre Poilievre emphasized strengthening traditional resource sectors — oil, gas, and minerals — more than revitalizing knowledge industries. The country appears poised to abandon knowledge-based growth for a return to resource dependence (even if modern resource extraction is itself increasingly knowledge-intensive).

Article content

Article content

A rethink of Canada’s resource economy may be in order but it is not yet time for us to abandon the knowledge economy. We can and should revive our knowledge sector — though only through meaningful reforms. Canada’s universities, the supposed engines of that knowledge economy, face mounting financial difficulties. That their repeated pleas for more public funding are often refused reflects diminished public trust in both the knowledge economy’s promise and the universities’ delivery on it.

Article content

At the moment, the U.S. is having a vigorous debate about university and scientific research. Influential media like the New York Times and Washington Post have argued that in recent years universities have drifted from their core mission of free inquiry into political activism. Bipartisan calls for reform reflect an understanding that America cannot afford to lose the knowledge economy race to China.