A TCI Book Review

The Next Century � Why Canada Wins Nuala Beck HarperBusiness, Toronto, 1998, ISBN 0-00-255742-8

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In her previous two books, Shifting Gears - Thriving in the New Economy and Excelerate - Growing in the New Economy, Nuala Beck has extolled the virtures of this entity she calls the New EconomyTM. This consists of industries that have had, and will continue to have, extremely favorable growth prospects. They are characterized by having a high proportion of what Beck calls 'Knowledge Workers', an elite comprised of occupations in three categories: 1) professionals such as engineers, lawyers, doctors, management consultants, etc.; 2) the senior ranks of management; and 3) engineering, scientific and technical workers. The engines (i.e. driving industries) of the New Economy are computers and semiconductors, health and medical technology, communications and telecommunications, and instrumentation. (This contrasts with the older ('Mass Manufacturing') economy of most of the twentieth century, where the driving industries were automobiles, machine tool industries, housing and retailing - and the still older ('Commodity') economy of the 1800s, driven by textiles, coal and steel, and the railroads.)

This is all ground amply covered in her previous books. In The Next Century - Why Canada Wins, she presents her view that Canada will be one of the big winners among nations in the years ahead - indeed, until well into the next century. Her reasoning for this is as follows:

• the obsession with the globalization of investment and the integration of the world economy will soon fade: "The collapse of Asia Pacific, the deep systematic restructuring Japan faces, the economic and political turmoil in the former Soviet Union, South America's fragile grip on economic stability, and the possibility that France, Italy and Germany could be the world's next "surprises" diminish the attractiveness of globalization in a very fundamental way." (p.4)
• in the book, she presents an analysis of the return-to-risk profiles her firm has done of these various economies (which essentially measures both economic growth as well as volatility in developing a balanced measure of the attractiveness of these economies to investment) - these profiles clearly show that US-based industries are the most stable and attractive to investment
• as a result, the United States will emerge as the most powerful and dominant economy of the twenty-first century
• Canada's proximity to the US, and our shared culture, poises us well to participate in this growth.

Indeed, Canada is already participating strongly in the New Economy�. Another analysis in the book ranks various nations in terms of their Knowledge Workers as a percentage of their total employed labour force. Canada scores 11th in the world by this measure, actually ahead of the US (scoring 13th) and (surprisingly) Japan (scoring 28th):

Country and Rank	% of Knowledge Workers, 1996
1. Netherlands	44.1%
2. Singapore	37.3%
3. Germany	37.2%
4. Denmark	36.7%
5. New Zealand	36.2%
6. United Kingdom	35.9%
7. Sweden	35.6% (1995)
8. Iceland	35.0%
9. Czech Republic	34.0%
10. Finland	33.3%
11. Canada	32.8%
12. Norway	32.4% (1995)
13. United States	31.9%
14. Ireland	31.2%
...	...
28. Japan	16.1%

Beck identifies 38 industries in Canada and the United States that have the best growth and investment prospects (and which are part of the New Economy). These are:

In Canada:

1. electrical and electronic products
2. communications
3. telecommunication carriers
4. banks and credit unions
5. truck transport
6. business services
7. educational services
8. wood preservation, particle & wafer board
9. primary metals
10. machine shops
11. hardware, tool & cutlery
12. rubber products
13. plastics products
14. motor vehicle parts and accessories
15. plastic and synthetic resins

 

in the United States:

16. communications equipment, excluding defense

17. electronics and electrical equipment

18. telecommunications equipment

19. computer & office equipment

20. semiconductor and electronics components

21. medical equipment & supplies

22. instrumentation

23. medical instruments and supplies

24. opthalmic goods, watches and clocks

25. information technology

26. agricultural chemicals

27. construction and mining equipment

28. industrial machinery

29. metalworking machinery

30. cutlery and handtools

31. transformers, switchgears and switchboards

32. travel trailers and campers

33. wood building and mobile homes

34. lubricating oils and greases

35. household furniture

36. petroleum and coal products

37. miscellaneous manufacturing industries

38. miscellaneous personal goods

 

Some of these industries are obvious candidates, given her thesis, but others leave one wondering (particleboard? mobile homes?). Nonetheless, the book contains detailed information on shipments, growth, volatility, and the 'return to risk' measure for each of these sectors.

Another factor that will accelerate the growth of Canada's (and North America's) New Economy will be very low-cost money. As deficits are paid off, the cost of money will fall (She actually talks about entering an age of 'free money', where 0 interest rate financing for some period of time will become the norm. This very low cost or "free" money will fuel rapid growth into the next century in New Economy industries.

Despite her rosy forecast for Canada overall, she does not see a bright future for Quebec. This is because the professional services sector in the province has been particularly hard hit in recent years due to the relatively small size of the market in Quebec, language barriers, and differences in the requirements and practices of some professional occupations in Quebec with the rest of North America. (As an example of this latter factor, Beck cites a laid-off lawyer who, trained in Quebec's unique Civil Code, would find it difficult to practice outside the province). These difficulties she sees will continue. Accordingly, New Economy industries, which rely heavily upon professional services, will not find Quebec a good place to grow and develop.

She also conveys certain thoughts about how to maintain Canada's competitiveness into the future. She is clearly very enamoured with Ireland's commitment to education, mentioning several times in the book the universality of access to post-high school age education (i.e. free university education to all who qualify) as being a key factor in their rapid rise to a leading knowledge-based economy.

The Next Century - Why Canada Wins is very optimistic - perhaps too much so - but it does put the economic drivers of North America's economy into clear perspective. It is a very quick and thought-provoking read.

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THE TCI MANAGEMENT CONSULTANTS RATING (5 star max): * * *

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