Setting the Agenda for a Knowledge-Based Economy

Openness to innovation is influenced by knowledge. This in turn will greatly influence attitudes. These positive attitudes and abilities are shaped considerably by the education we receive in school during our formative years. This is why the type and quality of schooling that we provide Canadians must occupy a central place in our discussions.

"If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might have viewed it as an act of war". This strong statement comes from the United States President's National Commission on Excellence in Education (Gardner Commission) entitled "A Nation at Risk". Since the publication of this Report, virtually every state has undertaken a study of the quality of education they offer. Americans are not alone in fearing that their quality of education is not high enough. Similar attempts to improve the quality of education have been undertaken in France, Britain and Japan to name just a few.

The fact that Canada is not presently carrying out in-depth -'public evaluations of the quality of education provided by high schools and post-secondary institutions is revealing. It tells a lot about our insouciance and inability to grasp the fundamentals of the challenges confronting our society. Unfortunately, if there is one country that should be concerned by the quality of education it provides, it is precisely Canada.

We have the second highest per capita spending on education among OECD countries, yet one of the worst performance records. The quality of education as measured by numeracy and literacy at high school levels is inadequate. In Canada, one out of every six workers is functionally illiterate. This comes at a time when greater participation and input are being required from workers. Indeed, increased automation and computerization requires workers able to decipher technical instructions and user's manuals as well as autonomously solve problems. If this was only a legacy of the past, it would be understandable. But we do not seem to prepare a better future.

Our relatively weak performance in high school education is highlighted when compared with that of other countries. International studies indicate that, on average, Canadian students do not fare favourably in comparison with students from other countries. Results of the Second International Study of Achievement carried out in 1988 for 23 countries are revealing. In 5th grade, Canadian students ranked 6th after Japan, South Korea, Finland, Sweden and Hungary. By the end of high school, our students had dropped dramatically into second-to-last position. Further, the Study found that between grades 9 and 12, Canadian students only minimally improved their knowledge.-,

Our students do not become more stupid with age. Comparative analysis of the different programs clearly points to a lack of depth and insufficient teaching of mathematics and natural sciences at the high school level. In Biology and Physics, 90 percent of Canadian schools ranked below the worst school in the country whose students achieved the highest test scores.

Another sad fact is that close to 30 percent of all Canadian youngsters drop out of school before obtaining a high school diploma or its equivalent. Furthermore, enrolment rates drop sharply in most provinces as youngsters pass the compulsory school age requirement. These youngsters will be less than 30 years old in year 2000; how do you think they will fare without even a high school diploma? These are serious shortcomings not only in terms of wasted personal opportunities for our young Canadians but also for Canada as whole. According to some sources, over 85 percent of the prisoners in our penitentiaries have not completed their secondary education! This serves as a painful illustration of the importance of education in a society. This alarming drop-out rate can be reduced significantly. Japan's drop-out rate has fallen from 29 percent in 1969 to 4 percent in 1980. In Sweden, this rate has gone from 25 percent to 15 percent between 1980 and 1985.

Japan provides us with a striking example of the benefits of a well-educated workforce. In Japan, the most prestigious annual recognition sought by all manufacturers is the Deming Award. W.E. Deming is an American statistician who first introduced the concept of total quality control to Japanese industry. And why is his name not familiar in North America? Well, Deming attempted to introduce the concept in America but our workforce did not possess the necessary training in mathematics and statistics to grasp the concepts and apply them to the situation in their plants. By contrast, when he attempted the same experience in Japan, the Japanese workforce had no such difficulty and quickly made the most effective use of them.

This is one difference educational quality brings to the competitiveness of a country. We must encourage a pattern of educational development that sustains complex jobs and long run productivity gains. Good education is an essential ingredient in the recipe for success and employment generation. We must emphasize the value of education so that it becomes the preeminent public policy issue.

The ABC of a science and technology policy begins with a strong commitment to quality education. And in the modern world, this means strengthening and extending our typically meagre science, mathematics and technology core to give our students a strong science base.

Unfortunately, our society has reduced education to a simple question of natural birthright. In so doing, we have forgotten that the quality of our education system must be measured against the best systems in the world; we have forgotten that education is first and foremost an investment in our people, in the future of our society. There is no doubt that we are talking about a major investment. But we are already committing a substantial amount of funds, the second highest amongst OECD countries. This is precisely the reason why we must now ensure the adequacy and quality of the education provided.

We would care more about our performance if we knew more about it. I am aware that no subject in education is more intellectually interesting and more fraught with political baggage than testing--the measurement of the performance of students and schools, the results of which are broadly disseminated. Yet objective measurement would serve the interests of the students, schools, parents, and prospective employers. Properly conceived and administered, such measures would be very useful for diagnostic, prescriptive and certification purposes.

The problem of education is one with national dimensions. Canada is one of the few advanced countries without national examinations. Yet, national examinations would provide a benchmark against which to compare the quality of output of schools across Canada and would thus introduce a healthy level of competition between schools across the nation. Given our relatively poor record of educational quality, the federal government should provide financial support to independent institutes to devise ways of measuring school and student performance and to put these measures to use. Recognizing that there is a legitimate national interest in education does not imply that there is corresponding imperative for the Canadian government to be interventionist. However, it does not follow that it should refrain from using non-obstructive instruments to point the system in the direction that will best serve our national interest. The urgent need to substantially improve the education quality would indicate that it should make this a priority in its efforts to improve economic competitiveness. The National Forum of Science and Technology Advisory Councils put forward a similar recommendation.

Universities and other higher-learning establishments have a crucial role to play in shaping our society to compete as a knowledge-based economy. If we accept, as I have suggested, that the diffusion and adoption of new technologies is a key priority, then it follows that we need human resources with the capabilities to understand, adopt and modify domestically and internationally developed technologies. Universities and technical institutes are thus in a unique position to train qualified personnel.

The poor quality of education at the high school level has many unfortunate consequences, one of which is to denigrate mathematics and natural sciences in the eyes of the students. Although Canada has achieved remarkable success in meeting its objectives of accessibility to university, the distribution of undergraduate enrolment in universities poses a number of problems insofar as science and technology are concerned. It is particularly alarming that the proportion of undergraduate students in science and technology remains stable at a time when Canada is facing competition from nations that have made science and technology a major component of their development strategies. For example, the number of engineers graduating from our universities is the lowest of eight major industrialized nations, 2.7 per thousand workers, three times less than in Japan.

Enrolment in graduate studies in the natural sciences and engineering is also proportionately lower than in the United States or Japan. The problem here is not only one of comparison with our competitors. Many disciplines are experiencing shortages for graduates with advanced degrees and will continue to do so in the years ahead, as demand for scientists and engineers is expected to outpace other sectors.

There are two dimensions I would like to mention here. First, we must ensure that our universities have the resources to provide quality education and carry out world-class research. Canadian universities suffer from chronic underfunding. In real terms, the funding of research activities conducted by universities is about the same today as it was in 1970. Not surprisingly, our relative performance has deteriorated over this period. Last week, the Canadian government took a positive step when it announced that it would grant $240 million to 14 "networks of centres of excellence" for a series of scientific research projects that have been judged world-class by panels of international scientific experts. These networks of centres of excellence regroup several institutions across Canada, primarily universities, who will pool their efforts in similar areas of research. I think such a program is vital for a country like Canada since it will help to achieve the critical mass needed to carry out world-class research and foster a closer and more productive relationship within the Canadian university system.

Second, we must attract more students into science and engineering programs. We must make a commitment towards realigning our resources, both human and financial, towards science and technology activities. In this respect, the establishment last year by the Prime Minister, Mr. Brian Mulroney, of the Canada Scholarships Program, which aims at encouraging students to pursue undergraduate studies in science and engineering, is an excellent initiative. These scholarships of $2,000 renewable for up to four years clearly signal the importance we must accord to science and technology in order to influence Canadian youths to study in these fields. Obviously, initiatives such as the Scholarship Program will not solve all our problems. But it can constitute a powerful symbol of the determination of Canadians to master science and technology in order to enhance their country's competitiveness in the world economy and improve their quality of life. And in the end, a national consensus is built with such symbols.

In the new global world economy, industrialized countries compete on the technological front. We must always bear in mind that the unique character of science and technology requires the concertedness and convergence of public policies and private actions. Indeed, science and technology are public goods, in that society as a whole draws more benefits from innovation and technological progress than the entrepreneurs and the firms that bring the innovation to the marketplace. In other words, the social returns from innovation are higher, in fact twice as high according to recent studies, as the private returns.

These empirical findings have profound policy implications. They suggest that if left to the forces of the marketplace there will be substantial underinvestments in technological innovation. It also follows that governments are justified--indeed they are required--to make significant public investments in the production of scientific knowledge and the encouragement of innovation.

We would be foolish to neglect the necessity for welldesigned public policies. The following example shows all too clearly the cumulative effect of misguided policies. In 1950, Argentina and Canada were in comparable situations. Both economies relied largely on natural resources and agriculture (wheat), their populations and per capita income were almost equal, etc. However, over the years, Argentina made some fundamental errors in the design of its economic policies. As a result, two generations later, this country is practically bankrupt with all the ensuing disastrous consequences for its population, whereas Canadians enjoy an enviable standard of living.

We must ensure that Canada does not go down the wrong strategic road. We must create favourable conditions and a social infrastructure which supports our ability to innovate. When we compare the support for industrial R and D in Canada with that of other industrial countries, we can rightly ask ourselves what the future holds for us.

We must encourage the development of a technological culture--an environment where business people will speed up the adoption and transmission of new technologies, where adding value through technological improvements will be a business objective. "Mobilizing Projects", aimed at rallying a cross-section of businesses as well as the public and educational sector around the goal of widespread adoption of existing technologies, could be a concrete step which can be begun right away.

The development of a technological culture is predicated on the assumption that Canadians have the abilities and training to acquire, diffuse, adapt, modify and improve the technologies. This presupposes an education system of quality with adequate emphasis on mathematics and science, where excellence must be seen as an achievable goal. After all, the quality of our educational system is but a reflection of our aspirations. As a society, it is up to us to choose and implement an educational system of international calibre. It cannot be said often enough: those societies which are enjoying the most rapid growth are those having placed a high priority on the value of their education system.

We must encourage quality education, particularly of sciences, at the high school level. Our focus should not be limited to the resources we commit: it should be on the results achieved. We must continuously push the system towards better performance. We must reduce the drop-out rate and significantly improve literacy. We must encourage a higher number of students to study science and engineering. We must promote education and training policies which will provide all Canadians with the opportunity to "retrain" and put at their disposal the tools required to domesticate technological progress and benefit from it.

This is our challenge. Our priorities must centre on developing the social infrastructure that will allow us to compete successfully as a knowledge-based economy. We have a lot of work ahead of us. But lest you be discouraged, I would like to leave you with this poem by Goethe:

"Whatever you can do, Or dream you can, Begin it:

Thank you.

Boldness has genius, power, and magic".

The appreciation of the meeting was expressed by Harry Seymour, Managing Partner, Waterston Financial Inc. and a Past President of The Empire Club of Canada.