The following opinion editorial on the future of knowledge-based economies was published by The Cameron Institute and raises some interesting thoughts in terms of how innovation can fuel economic growth while also helping improve patient outcomes and society as a whole.
What do miracle blood clot-busters, cold water detergents, chlorine-free coffee filters, lighter-weight motor vehicles, vaccines, disease-resistant shrimp, and bio-degradable plastics all have in common? They are all products of knowledge-based industries.
Knowledge-based jobs are transforming the North American economy and society. Increasingly, economies are measured by the contribution of knowledge to the gross domestic product; economic growth is being driven by innovation.
During the first decade of the 21st century in Canada, 2.25 million jobs went to persons with postsecondary education and 139,000 jobs went to those with only high school. On the other hand, almost a million individuals with primary or little education lost their jobs in the same period.
A similar situation exists in the United States where there is projected to be a 57% decline in employment in the textile industry between 2008 and 2018, 34% in electronics manufacturing, and 25% in newspaper printing. Meanwhile jobs will grow in science and technology, healthcare, and information technology.
Many countries are aggressively investing to build their knowledge-based economies. Jurisdictions that are successfully building knowledge-based economies have created fiscal, investment and regulatory environments in which firms can flourish. They have not attempted to “choose winners” or save those “too big to fail” as in North America; rather, European and other foreign governments have removed the tax, regulatory and other punitive measures from innovative industries and let market forces populate their economies with high-value companies and jobs.
High wage, high-tax countries such as France, Germany and the United Kingdom, as well as low-wage, low-tax countries such as China and South Korea have all invested heavily in innovation. Brazil, Ireland and Singapore – mid-income nations – have earmarked billions of dollars for knowledge-based jobs. Australia leads the world in public expenditure on R&D as a percentage of gross expenditure.
Yet only five U.S. states have made a significant foray into building knowledge-based employment (California, Maryland, Massachusetts, New Jersey, and Washington) with Ontario being the only Canadian province that has even come close.
Innovation-based companies, once their products have been commercialized, have shown to produce a tax recovery ratio, over a decade, of $8.00 for every $1.00 invested. For every direct job created, 4.5 indirect and induced jobs are created. (This is compared to the multiplier effect of 1 for government spending and government jobs.)
Over the next 5 years, North American governments need to stimulate new capital formation, create the most innovation-friendly tax regimes, and ensure the lowest cost of capital to generate innovation. We need to create new, enabling, fiscal and regulatory environments that align all government efforts to move innovation from the bench to the global marketplace thus creating the jobs so badly needed when unemployment hovers around 8% in Canada and has surpassed 10% in the U.S.
If a federal election were held in Canada today we would see a change in government. Regardless of the political dynamics across the continent these days, knowledge-based jobs cannot be sacrificed for political expediency. In fact, voters everywhere should be demanding of their candidates and parties the exact opposite – more high value, long-term, knowledge-based jobs. Political leaders, both north and south of the border, must seize the opportunity to leverage innovation to forge the North America that we all want for tomorrow – prosperous, healthy, and secure.
Filed under: Innovation, North America Tagged: | Canada, economic development, Innovation, knowledge-based economy, United States of America
