Tej Parikh is the economics editorial writer for The Financial Times, a British daily newspaper. He joins our Stewart Muir for a Power Struggle interview. And we include in the following report some points from a guest column by Parikh in Canada\u2019s National Post, which carried the headline \u2018How Canada can unlock its economic superpower potential.\u2019<\/p>\n\n\n\n
Parikh begins the Power Struggle interview with this: \u201cThere\u2019s an enormous economic potential here, very much the same geographic advantages that have underpinned America\u2019s economic emergence over the last 100 years. . . . Given everything we understand about the advantages that countries need to grow, why is Canada not doing better economically?\u201d He added: \u201cWhen you break it down and you look at why income per capita in Canada has perhaps not increased as fast as we might expect on the basis of those advantages, it really kind of breaks down to three components. One is investment, so how much capital goes into the country? <\/p>\n\n\n\n
The second is labour, and not just the amount, the size of the workforce you have, but how well you utilize the workforce. And then the third component is something that economists like to call a total-factor productivity, which is essentially your innovative ability and your ability to bring together capital and people. \u201cAnd when you look at Canada as opposed to other large economies . . . you begin to see that actually there are a lot of restrictions in Canada, not just because of its vast geography but because of regulation, that it actually can\u2019t combine its capital and labour as productively as it could.<\/p>\n\n\n\n
\u201cIt\u2019s about creating those supply chains and critical minerals that the Western world is currently short of. Given it (Canada) has these vast raw material resources, there is a massive scope for it to become even more integrated into Western supply chains in particular and to become a supplier of these things.\u201d From Parikh\u2019s National Post column: \u201cThe country is energy independent, with the world\u2019s largest deposits of high-grade uranium and the third-largest proven oil reserves. It is also the fifth-largest producer of natural gas.Canada boasts a huge supply of other commodities too, including the largest potash reserves (used to make fertilizer), over one-third of the world\u2019s certified forests and a fifth of the planet\u2019s surface freshwater. Plus, it has an abundance of cobalt, graphite, lithium and other rare earth elements, which are used in renewable technologies. \u201cBut the nation has lacked the visionary leadership and policy framework to capitalize on its advantages.\u201d<\/p>\n\n\n\n
Ba\u00e7k to Power Struggle: \u201cInvestors right now will know that Canada has all of this latent potential, they will know that there are resources there, they will know that there are talented workers in Canada. But (they need) the answers to what barriers there are to business and how they can be reduced, and I think that\u2019s the piece that Canada and its provinces can do a better job on. \u201cThat\u2019s the thing that I think Canada would benefit from, showing how it is a kind of a more unified country and showing how that it is a unified marketplace where investors and businesses can develop expansive supply chains.\u201d<\/p>\n\n\n\n
In the National Post: \u201cA country with its geography could clearly generate higher output. To do so, the Canadian economy needs to become more efficient, raise investment and attract more high-skilled workers. Here\u2019s how. \u201cCanada places significant bureaucratic burdens on the movement of people and goods too. This includes restrictions on the sale of certain goods across provincial borders, and variations in licences and technical standards that hinder scaling, competition and efficient resource allocation across the country.<\/p>\n\n\n\n
\u201cA 2022 study by the Macdonald-Laurier Institute found that Canada\u2019s economy could grow by 4.4 to 7.9 per cent in the long term \u2014 up to $200 billion a year \u2014 if it eliminated internal trade barriers via mutual recognition policies. Similar reforms in Australia in the 1990s helped to boost productivity there. \u201cSimplifying its complex tax system, expediting planning processes, easing red tape for foreign direct investment and developing economic partnership mechanisms for Indigenous populations, in tandem with internal trade reforms, would help businesses across the industrial supply chain tap into the nation\u2019s vast energy and mineral resources.\u201d<\/p>\n\n\n\n
On Power Struggle: \u201cYou can be rich in oil and natural gas. But obviously over the last 10, 15 years the global economy has been thinking about alternatives. In Europe and in the UK and in some states in the US, there\u2019s a concerted effort to shift to cleaner energy sources. Canada has vast access to the critical minerals that underpin a lot of renewable energy sources. And then you can go further than that. \u201cThis isn\u2019t just about having access to those, you know, old world energy sources. This is access to the type of energy sources that the world is looking for. So Canada is aligned to the renewable transition and I was quite surprised, actually, that in the last 10 to 15 years you haven\u2019t really heard Canada\u2019s name in that. I thought it was about time that Canada plays that up a bit more and the opportunities it has there.\u201d<\/p>\n\n\n\n
Tej Parikh continued: \u201cThis isn\u2019t about just digging up Canada and exploiting its raw materials. It\u2019s about finding ways in which you can create economic compacts with Indigenous communities, create economic compacts with Indigenous communities. \u201cIt\u2019s a way in which you can sustainably mine parts of the country and ensure that, as you are developing underground resources in Canada, you are also developing local economies. Developing an industry means you develop jobs.<\/p>\n\n\n\n
\u201cOnce you start developing factories and industries in certain areas, then financial services, commercial roles, all of these things build up, and that\u2019s how I think the debate needs to be kind of pushed forward a little bit. \u201cOnce you start developing finance around these industries, you can also find ways to make these industries even more sustainable and environmentally friendly.\u201d<\/p>\n\n\n\n
\u201cI think there are very clever ways in which Canada and all Canadians can see that actually these natural resources that the country has is actually an asset that everyone has a share in.\u201d Stewart Muir then raised the Donald Trump issue: \u201cWhere have you landed on what Trump is all about? I mean, is this a poker game? Is it a chess match? Is it a street fight?\u201d<\/p>\n\n\n\n
Tej Parikh: \u201cHe likes negotiating and I think, from what we can understand from his tariff policy, he takes things to extremes and then he rows things back and he tries to gain concessions where he can. And I think he will take the same approach on most policy he has. I mean, he sees the world through a transactional lens. It\u2019s \u2018what can the other people offer me and how can we do a deal to ensure that I can gain that?\u2019 \u201cAnd I think in some sense, you know, yes, he is unpredictable, above and beyond that. But I think if you know that that's his framing, then I think it means that you know others just need to adjust to it and be pragmatic in it. And that is essentially what we have seen from the way the Canadian prime minister has been interacting with Donald Trump. You have to be pragmatic if you know what the threat could be.\u201d<\/p>\n\n\n\n
Parikh added: \u201cI think the first thing is (Prime Minister Mark Carney) should build on the momentum that he has, the political momentum he has on reducing internal trade barriers in Canada. You then create the groundwork in order to start taking advantage of the mineral resources and the natural resources.\u201d \u201cOnce Canadians start to feel that everyone is benefiting from the natural resources in the country and there are avenues to recycle the revenues from those sectors into the country, whether that\u2019s through housing or developing infrastructure, improving public services, you then have this kind of reinforcement effect between the country and its natural resources and its assets and the development of peoples, and I think working on that will kind of provide the groundwork for Canada\u2019s emergence.\u201d<\/p>\n\n\n\n
In the National Post: \u201cThe Canadian economy is at a crossroads. The belligerence of its main trading partner is driving consensus around boosting the national economy. The world needs what Canada has in abundance. The nation has a unique chance to reach its potential. If it wants to.\u201d<\/p>\n\n\n\n
Watch the full interview here:<\/p>\n\n\n\n