While BlackBerry’s may be ubiquituous in Lagos, and 3D screens from Christie Digital popular the world over, nearly 90% of Waterloo’s exports still go south of the border. And this isn’t for lack of effort to diversify. Over the past two years, Waterloo Mayor Brenda Halloran has made three trips to China, in addition to trips to Belgium and India, in efforts to help network local entrepreneurs and businesses to opportunities abroad. Kitchener Mayor Carl Zehr has similarly visited Brazil and Germany to drum up business and investment.
Yet despite these efforts, gravity will always privilege our economic relationship with the United States. It’s simply far easier and far cheaper to ship products down the road than it is to send them overseas by air and sea. And with five major metropolis’ of over 7 million (New York, Chicago, Philadelphia, Boston and Detroit) within a day’s drive of Waterloo, it’s little surprise that traffic moving south on the 401 continues to drive the bulk of our economy.
Moving forward, however, growth rates in North America will force business and government alike to look elsewhere. , Economicgrowth at home and in the US is forecasted to fall short of two per cent in 2013. By way of contrast, emerging economies such as China, India, Indonesia are all forecast to grow over five per cent. That’s why the Canada government is aggressively pursuing free trade agreements across Asia and the Pacific region, including ongoing negotiations with Japan, India, Singapore and more recent talks to enter the eleven nation Trans-Pacific Partnership agreement.
Broadly speaking, the old adage that “demography is destiny” rings true as middle-class populations in these countries grow, providing mature economies such as Canada’s with great opportunities to reorient towards selling to them.
Federal trade initiatives that seek to set the table for the expansion of trade and the growth of Canadian exports to these markets are step one. However they need a complementary approach by Canada’s cities and regions, let alone entrepreneurs and business, to make it happen. .
Such public efforts, however, can only do so much. Private decisions by the 44 per cent of Canadian small and medium sized enterprises that do not export hold the real keys to expanding Canada’s, and Waterloo’s, international network and the employment and economic growth that follows it.
Exporting is one of the primary drivers of growth amongst firms, and along with a prioritization of research and development spending, are the key factors that drive Canada’s high-growth firms. While there are only 13,000 of these firms across the country, out of a pool of over 1.2 million, they are responsible for upwards of 45 per cent of net job creation in the country. Expanding their ranks is priority number one.
Locally, the Canadian Digital Media Network’s Soft Landing initiative, which provides funding and a network of contacts on the ground in new markets, is a great example of how public and private can collaborate to facilitate this growth and the focus on the overseas markets that are most likely to provide it. There’s no doubt that entering foreign markets can be daunting and this program aims specifically to help mitigate that challenge. Subsequently, developing similar initiatives across other sectors of the economy could yield significant gains.
It’s become trite to state that the realities of a hyper-competitive global economy mean that we can’t be content to look in our own backyard for customers and economic growth. Making it happen requires a collaborative effort across levels of government and across both the public and private sphere. Luckily for us, Waterloo Region is providing a great example of how it can be done.
Dan Herman is the co-founder of the Centre for Digital Entrepreneurship and Economic Performance (deepcentre.com) and a PhD Candidate at the Balsillie School of International Affairs.