Canada must move aggressively to capitalize on opportunities in Asia-Pacific

R$ Vancouver Conference

Canada is in a race against time if it wants to fully participate in the S&T explosion now occurring throughout the Asia-Pacific (A-P) region. It also needs a detailed strategy that emphasizes skills, immigration and increased investment. Those are some of the key messages delivered at the third regional RE$EARCH MONEY Conference, held last month in Vancouver.

Entitled The Asia Pacific Connection: Exploiting Western Canada's Edge in the Knowledge Economy, the one-day event showcased a number of prominent speakers and panelists who were united in common purpose: to determine the most appropriate policies and actions for ensuring that Western Canada increases its share of burgeoning A-P innovation and trade.

The scope of the challenge was forcefully illustrated by Yuen Pau Woo, president and CEO of the Asia-Pacific Foundation. Woo outlined the advances being made in R&D and innovation throughout the A-P region. He cited UNESCO data showing that, in 2002, Asia accounted for 32% of global gross expenditures on R&D, with the likelihood that its share was even higher in 2006. Japan is already an acknowledged S&T leader and serves as a model for what can be accomplished.

JAPAN A MODEL FOR OTHERS

"The Japanese experience within Asia is a source of inspiration ... a beacon to which other Asian countries feel that they can aspire to," said Woo.

Perhaps the most striking example of Japan's quest to be a technology leader occurred in the mid 1990s during the Japanese recession. At the height of the economic downturn, the Japanese government mandated a significant increase in R&D expenditures, in effect taking a long term view of spending on S&T. Japan's GERD to GDP is now 3.3%, far above Canada's or the OECD average and its knowledge-based economy is booming.

China has set an ambitious GERD-to-GDP goal, aiming to increase from 1.5% today to 2.5% by 2020. Considering the projected size of the Chinese economy, such a feat would translate in into a huge increase in R&D, placing it in direct competition with the so-called advanced nations.

Woo also provided an overview of the S&T strategies of India and Korea and pointed to increasing cooperation and collaboration within the region as production becomes more fragmented to enhance economies of scale.

"The biggest story in Asia-Pacific in the last 10 years is the extent of trade among Asian countries. Supply chains and production networks that are getting increasingly complex and inter-industry and supply chain production now accounts for 40% of region's trade," he said "This has produced a proliferation of intersection or docking points into which Canadian companies, particularly small suppliers of services and technologies, have the opportunity to provide plenty of services and products."

Examples of Canadian firms that have successfully integrated themselves into the A-P production supply chain are ATI Technologies Inc, Markham ON (graphics chips) and Quest Air, Burnaby BC (liquid hydrogen). Woo concluded by asserting that Vancouver has the attributes to become the main North American gateway to and from A-P.

SKILLS SHORTAGES A MAJOR OBSTACLE

Companies, governments and academic institutions all play a role in ensuring that Canada is competitive with other nations in its interaction with A-P. For Yves Millette, president and CEO of Intuit Canada, the key to success in the region is an adequate and appropriately skilled workforce.

Intuit Canada employs several hundred software engineers in Edmonton. As part of its strategy to remain cost competitive, it is outsourcing lower skilled jobs to Asia. But those positions have been replaced by higher value jobs and the Edmonton workforce is expanding. Millette says that such a strategy will only work if companies are willing to take risk and governments provide adequate support for education.

"It's time to be aggressive. There's lots of competition. Western Canada has good infrastructure, work class educational institutions and the ability to manage knowledge workers. The management of HQP is critical and represents an advantage we have over Asia," he says.

A major barrier to companies like Intuit Canada is the decline of people entering computer science programs at Canadian universities. There is widespread consensus that computer science is not as attractive an option for students following the telecom meltdown and the dot com crash.

"There's a systemic shortage of know-ledge workers. Our future is in jeopardy," says Millette. "We have to increase our investment in education and we need to facilitate immigration because we have this gap and not one of them is going to solve the problem. We have the money to invest and we should recognize that we have competition and we should get there first."

Millette says government has an important role to play, but a recent meeting with Industry Canada officials left him disillusioned.

"I asked what their priorities were and they did not know. They're sitting on their hands waiting," he says. "Industry Canada is not part of the government's five priorities ... You cannot delegate by abdication."

The need to focus on areas where Canada can compete globally was also a major message emerging from the conference. Dr Alan Bernstein, president of the Canadian Institutes of Health Research (CIHR), says that Canada needs to brand itself as a knowledge-based nation and make the investments required to succeed in specific niches where Canada holds advantage.

"Canada is not doing enough ... We need to reach out to China and India through science and research," he says. "We need to get on with it but we're not. The rest of the world is not standing still."

Bernstein outlined the massive investments Singapore is making in biotech following a major slump in the electronics sector. He said Canada must develop the same kind of focus in areas where we can make a difference. But the latest actions are not encouraging. The US government recently approved a $600-million increase to the National Institutes of Health, while Australia approved a $900-million boost to its health research enterprise.

"We get 2.4% increases. That's just not going to fly in this era of global competitiveness," he said. "Canada spends $130 billion a year on health care. There are huge opportunities, especially in China, which has no health care. We need to stop discussing and start doing it."

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