Building a competitive advantage for Canada

by Paul Davidson
President and CEO
Association of Universities and Colleges of Canada

This op-ed was published in the Special Eduation Report of the Embassy newspaper on February 17, 2010.

Across the country, Canadians are recovering from the deepest financial crisis in 70 years. The recession has been severe, but it has also been uneven. More than 135,000 new jobs for university graduates have been created since September 2008, compared to 770,000 jobs lost for those without a university degree over the same period. This illustrates the ongoing and profound shifts in the nature of our economy, and underscores the need to continue investing in Canada’s new economy.

In recent years, the Government of Canada has shown great foresight by making vital investments in research talent, innovation and knowledge. These investments are paying dividends in communities from coast to coast. Research and teaching facilities are being revitalized; university enrolment is at a record high; and universities are more engaged with the private sector, charitable sector, and communities than ever before.

Canada needs to keep investing in these areas to address our demographic challenge. In the last four decades, virtually all of Canada’s economic growth has been driven by growth in the labour market. Over the next forty years, Canada can expect the labour market to grow by less than 10 percent, even taking into account the arrival of New Canadians. This means we must ensure every qualified Canadian has access to postsecondary education, that we attract bright young minds to Canada from abroad and that we improve our capacity for research and innovation to enhance our productivity and create wealth.

Canadians should be proud of their investments in higher education and research. The growth of Canada’s universities has transformed our country and is having global impact.

But Canada cannot be complacent in a rapidly changing world. Many nations are investing heavily in education and university R&D. For example:

• In Germany, the Higher Education Pact and Excellence Initiative, both renewed in June 2009 will result in significant new federal investments in education and research over the next decade. The Excellence Initiative will receive 30 percent more funds to promote world-class research, while the Higher Education Pact will see the national government contributing towards the institutional costs of research.
• In France, a commission created by President Sarkozy has recommended significant investments in higher education and research, as a major component of a package of investments to promote innovation. The French budget of January 2010 allocated an additional €19 billion (approximately $27 billion) for higher education and research.
• In Australia, this year’s federal budget increased investments by $5.3 billion in tertiary education, research and innovation over the six years as well as a 25 percent increase in their overall investments in research and innovation this year alone.
• India continues to expand investments in higher education and research, and is anticipated to create 1,400 new postsecondary institutions to serve seven million more students over the next decade.
• The ongoing expansion of higher education and research in China has helped drive a spectacular nine-fold increase rise in research publications. China has overtaken all countries but the U.S. in this important indicator of innovation.

There is a growing worldwide consensus that countries investing heavily in education, research and innovation will emerge from the global recession in a position to lead in economic and social development. The OECD concluded in a seminar held in February 2009 that “reforms aimed at strengthening innovation in the context of broader reforms to address the crisis can help countries emerge stronger from the crisis and help put them on a more sustainable growth path.”

In response to this rising global competition, U.S. President Obama stated in his budget presentation on February 1, 2010, that: “Investment in science and basic research is critical to long-term economic growth.” The budget includes:

• $66 billion in non-defense research and development, an increase of $3.7 billion or 5.9 percent over 2010 levels;
• Continued commitment to double funding for the National Science Foundation (NSF), the Department of Energy’s Office of Science, and the National Institute of Standards and Technology (NIST), for an overall increase of 6.6 percent;
• An increase of $1 billion or 3.2 percent for the National Institutes of Health;
• An increase from $6.9 billion to $7.4 billion (8 percent) for the NSF.

The U.S. budget measures demonstrate that even in the midst of severe fiscal stress, the U.S. administration understands that strategic investments are required for their country’s future prosperity and to strengthen their global economic competitiveness.

Because of our strong fiscal position, Canada can better afford new investments than our competitors. As Canada considers how to accelerate out of the recession and into a period of sustained growth, it needs to continue to invest in the new economy. We can afford to do more to develop and unleash Canadians’ innovative and creative capacity. We can do more to attract talent from around the world. Investing in these areas will address Canada’s economic, demographic and productivity challenges and prepare us all to prosper in the new economy.