For 30 years Canadian policy makers forgot which side their bread is buttered on. There are signs they are waking up.A recent study argues that resource industries may be where the most economically significant Canadian innovation happens. This could lead to a new federal innovation strategy that builds on our tremendous strength in mining. The mining supply and service sector could finally get some respect.The study comes out of Calgary, so it will get a hearing in cabinet. Naturally, it emphasizes the oil industry, but it opens the door to a major policy shift. Organizations that represent mining suppliers should be in the face of Industry Canada and politicians for the next couple years. It is important to make sure policy-makers understand that the oil industry isn’t the only resource sector generating innovation for the country.
The reasons resource-based industries have been neglected goes back to the Bible. In Joshua 9:23 the Gibeonites are cursed to be “hewers of wood and drawers of water” – servants whose children ad grandchildren would be servants. Pioneering Canadian economist Harold Innis picked up this phrase. He described our whole country as a nation of “hewers of wood and drawers of water.” According to his “staples theory,” Canada’s cultural, political and economic history was based on selling natural resources. We started with cod and worked through beaver, timber, water, wheat, water and metals. Now we have the oilsands.
By the 1960s, economists and policy-makers were looking for ways to escape what they called “the staples trap.” Canadians didn’t want their children and grandchildren condemned to be hewers of wood and drawers of water. They wanted an advanced, urban, diversified Canada. Staple theorists claimed the country could build on its strength in the resource sector to become more diverse. Moving beyond the resource sector became the shining goal of Canadian industrial policy.
The general slowdown in the world economy that began in the ’70s actually helped. As resource markets weakened, the Canadian dollar fell and manufacturing took off. It was the opposite of what is happening with today’s oil boom. Bad times for the resource sector were good times for Canadian manufacturing.
New times called for new ideas. In 1990, Michael Porter became the guru of Canadian industrial policy. Porter didn’t even consider the possibility that there were advanced clusters in the resource sector. In his view, the resource sector was obviously not the place to look for developing technology and knowledge. The tremendous technological and social innovations in the resource industries were forgotten. A Great Amnesia took hold.
In the new view, Canada’s rich endowment of natural resources was actually holding Canadian business back. Canadian firms had depended too long on natural resource advantages or low labour costs. They were not developing sophisticated products and processes. Mining in particular was seen as a low-tech, low skill, sunset industry. In the shadow of the neglected mining industry, the growing mining supply sector was invisible.
Suddenly a new “new view” is turning heads. In March, Calgary Professor Richard Hawkins published “Looking at Innovation from a Uniquely Canadian Perspective: The Case for a New Alliance of Practice, Policy and Scholarship.” Hawkins argues that even though governments want to support innovation, they have failed because they have been looking in the wrong places. Using research roadmaps printed in the U.S. or in Europe, they focused on industries that were major sources of innovation in the U.S. and Europe. Much of the innovation that happened in the resource sector couldn’t be found with those maps. Our most economically significant industries were neglected.
But, now, oil is big, oil has money, and oil has the ear of the government. For the first time in almost 40 years, policy makers in Canada are open to seeing what the resource sector, including the mining supply sector, has to offer. The Age of Amnesia is ending.
The timing is very good. Major companies like AngloGold Ashanti will develop their own technology roadmaps, but they will still need outside suppliers. Smaller operations will need an increasing flow of new techniques, new machines and new ideas to compete. And mining supply companies will need to remember innovation has always been one of their major products.
