Top Performing Sectors, Part III: A Sobering Thought for Canada's Best
By: Meirav Even-Har, Toronto
Canada is dominated by two-sectors: banks and natural resources. This according to The Globe and Mail's "2012 Ranking of Canada's Top 1000 Public Companies by Profit." Year after year, both sectors make the top ten earners. Overall, Canada's economy is doing well. We're blessed with natural resources like potash, oil, gas and minerals. Our banks have also come unscathed from the financial turmoil that hit their international counterparts.
This is all good news, right? In this final segment of a three-part series I will expand on this very question.
According to a recent editorial in The Globe and Mail, there is an increasingly visible factor that threatens the financial "good times" - foreign economies. Specifically, Brian Milner writes, "Every American sneeze or hiccup could turn into a hospital admission north of the border. The uncertain economic fortunes of the United States remain important, particularly for the Canadian banks that have been aggressively expanding their American footprint."  But that's not all. There is also vulnerability through Europe and China. According to Milner, "A battered Europe means more trouble for China, whose economy was cooling anyway, and with it demand for the resources... Canadian oil producers would certainly feel the pain. China has been the world's leading source of new global demand in recent years, accounting for fully half of the growth in the market..." 
Then again, it is not all doom and gloom for Canada's resource companies. Innovation, it seems is alive and strong among the oil, gas and mining industries. In a recent report published by the Centre for the Study of Living Standards (CSLS), "...the overall innovation performance of the Canadian natural resources sector is strong and has improved in recent years...The sector's innovation performance is grounded on a diverse set of public support programs, a novel stock of technologies, and the consistent collaborative efforts of firms." 
While innovation is strong among the natural resources sector, it doesn't seem to be across the board. Canada's global standing in innovation has been less than flattering in recent years - Canada dropped from 8th place on the Global Innovation Index (GII) last year, to 12th place this year.  According to the Conference Board of Canada, the country's productivity and innovation both lag, coupled with an aging population, presents a serious challenge. 
According to the OECD investing in education is key to get on the right track. It also calls for increased business investment in R&D, and boost competition among "sheltered sectors", like network industries and professional services.  A recent blog by The Pembina Institute raises the need for Canada to shift from our current position as a fossil fuel economy. "Global investment in renewable power trumped fossil fuel investment for the first time in 2011 ($187 billion versus $157 billion, respectively), and the overall clean energy economy is projected to grow from $1 trillion per year now to upwards of $2 trillion by 2020." 
While there is much to celebrate in Canada's economic strength, resting on our laurels doesn't seem like a wise choice. Perhaps next year's Top 1000 list will include more diversity in the sector mix.
This is the third segment of a three-part series. Read Part 1: CSR Performance of Canada's Banks
Read Part 2: CSR Performance of Canada's Natural Resource Companies
 The Globe and Mail: The good/bad news: Banks and resources rule CLICK HERE
 Centre for the Study of Living Standards: Innovation in Canadian Natural Resource Industries: A System-Based Analysis of Performance, Policy and Emerging Challenges, Press release CLICK HERE
 Huffington Post Canada: Global Innovation Index 2012: Canada Drops Out Of Top 10 CLICK HERE
 The Vancouver Sun: Weak productivity, innovation gap pose challenges to Canada's economy: Conference Board
 The Pembina Institute: Canada's economic challenges go beyond Dutch disease, by Dan Woynillowicz CLICK HERE
Image: Money Ahead Road Sign by 401(K)2012 (Creative Commons, Via Flickr)