Binder calls on Canada to seek out more foreign investment, put more into R&D

Industry Canada ADM Michael Binder outlined what he felt Canada must do to meet a series of upcoming challenges in the telecom business, including securing new investment and broadening research and development activities. "We are losing market share in foreign investment coming into Canada. You can say that our share of FDI (foreign direct investment) as a percentage went down from 21% in 1990 to 13% in 2002," he said during his keynote presentation, entitled "Canada and the Network Economy" on October 19 at the GTEC Week conference in Ottawa. "It’s not that foreign investment is not going up (figure wise), but it’s the global share that is concerning," he said during a question and answer session. "If you look at all the investment flowing into North America – Canada, the U.S. and Mexico – we used to get 20%, but we’re now down. The overall volume may be higher but as a percentage we are falling," he noted. He pointed out that the U.S. share has increased from 74% to more than 78%, and Mexico’s share has grown from 5% to 9%. Canada’s share of global inbound FDI has declined from 5.8% to only 3%, he stated. The possible difficulty of attracting foreign investment is revealed in a Conference Board of Canada report this year that indicated that multinationals do not rate Canada well as a future production location, Binder added. Along with the waning FDI – a major challenge – Binder also expressed concerns over productivity. He told GTEC delegates that the gross domestic product (GDP) of Canada’s ICT sector is half that of the United States, and that the intensity of ICT use is one-third that of the U.S. "We are lacking when compared with the Americans. We are not investing as much as the Americans in R&D, and we really have to if we’re to remain competitive," Binder stated. While Canada currently benefits from offshoring, Binder sees potential problems in this area as well. Canada is now ranked number 2 to India amongst a group of developed countries that is attracting the bulk of offshore service work, he noted, but the centre of ICT gravity is shifting to emerging players like India and China. So while Canada attracted 56 new call centres in 2002 and 2003, he notes that Canada must make moves to retain its position. Canada has to continue to build strong institutional linkages and access with these countries through R&D partnerships, and trade and investment strategies, focus on moving up the value chain, take advantage of its skilled workforce and ICT capability and find a niche in global ICT sourcing. Other challenges, Binder noted, involve spectrum allocation, in which Industry Canada has to strive for global and regional harmonization. "Increasingly, communities are operating wireless telecommunications networks, so one of the challenges is spectrum licensing," he stated. Also of concern are new security threats, such as identity theft, phishing (online fraud), e-commerce attacks (almost 16% of attacker focusing on e-commerce organizations were considered targeted attackers, up 4% from the last six months of 2003), and email fraud. He also noted that attacks on networks are increasing. Other future considerations, he said were spam, and copyright protection of Canadian content and intellectual property in the network age. "We want to keep Canada involved in this more and more competitive ICT field; ICT is an enabling technology, not an industry in itself. It’s an enabling technology that we would like to improve," he stated. To do that he urged the government, telcos and other companies entering the business to broaden diffusion of ICT in all sectors, including into health, learning, content and business. It’s also important, he said, to keep and attract the best and the brightest personnel, to solidify partnerships between the government, academia and the private sector, to commercialize our ideas, and to build the most competitive and innovative e-economy in the world.

Binder calls on Canada to seek out more foreign investment, put more into R&D

News | 10/28/2004 4:00 am EDT

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