The shifting currents of globalizationPosted: January 22, 2010
The Ontario Government yesterday announced a multi-billion dollar investment deal with South Korean technology company Samsung to build wind and solar energy installations across the Province. The deal will combine Samsung’s expertise and technology with Ontario’s now very available manufacturing labour force.
The Province expects 1,400 direct manufacturing jobs and as many as 15,000 indirect jobs to be created as a result. Setting aside some controversy over the subsidies given to the South Korean company, the deal marks a reversal of fortune of sorts for Ontario, and more broadly, for North American technology. While once we exported technology and imported in-kind labour, now the reverse is occurring. We provide the labour, they provide they technology.
And we’re definitely not alone in making this switch. In California, home to America’s most innovative science and technology companies, including a significant green tech community, nearly 50% of the State’s solar energy needs are met by Chinese companies. They bring the technology and capital, California provides the labour and consumer market.
It wasn’t that long ago that the Chinese and other communist Asian nations first opened their doors to foreign businesses. Discussions that began between Mao and Nixon on the exchange of nuclear technology for closer relations, all in the name of keeping the Soviets contained, grew to full fledged economic cooperation after Mao’s deaths and his successor Deng Xiaoping introduced a new set of capitalist-oriented reforms.
American and European money flooded into China, taking advantage of their massive low-skill, low-cost labour force to build factories that combined Western technology and know-how with Asian labour. And so began our most recent love affair with globalization.
We exported capital and technology, and imported the finished good, and thus in theory imported the necessary labour. Moreover, we received access to massive and growing consumer markets in Asia. The subsequent job losses in domestic low-value manufacturing were mitigated by the inflow of increased corporate profits from our new factories abroad, and the increase in service and knowledge based employment. So long as the proceeds of trade flowed back to America, Canada and Europe, we were happy.
Fast forward thirty years and it seems that trend is now reversing itself. China and its Asian neighbors have quickly leapfrogged that traditional hub and spoke, capital and labour relationship. They increasingly hold the technology and the capital that promotes trade. And while they also have large labour forces, access to our consumer markets means they’re increasingly looking for domestic factories in North America and Europe.
This is the flip side of globalization. Rather than an exporter of capital and technology, we’re now the labour that will facilitate those two factors. And while we grew content collecting the dividends of capital ownership and production outsourcing, we’re now going to see what happens when we lose the power that comes with it.
There’s no question we need both the jobs and the energy that such projects will bring but we’d be well served to take a long hard look at how we got ourselves into this position.
Where are our technology leaders?
Are we competitive in tomorrow’s industry?
And if not, why not, and how can we fix it?
Ontario’s Next Generation job fund and federal funding from Sustainable Development Technology Canada (SDTC) are certainly a start but given the leadership of Asian companies in new green industries, we need to think about how we’ll engrain a culture of innovation in Canada, and build a supportive incentive structure for the commercialization and eventual export of those innovations. This isn’t just a government policy and investment issue (though I don’t deny I believe it largely is); this is about how we teach students at university and high school, how we structure collaboration between academic institutions and between public and private ones, and ultimately, about the way we think of ourselves in the world. If we’re content to be a resource exporting nation then so be it, but in order to ensure stable employment for all levels of skill across the Province and country we need to be much more than that.
The devolution of power from Ottawa to the Provinces and down to cities has left everyone pointing elsewhere for answers and responsibility. Well now’s the time to push that siloed thinking aside and collaborate on a real vision for Canada. Ontario and, more broadly speaking, Canada, needs a strategy. An economic plan for the 21st century; one that keeps Canadians employed, Canadian products on foreign shelves, and one that keeps Canada as a major economic player in the world’s capital and trade flows.