This op-ed was originally published on June 12, 2019 in The Toronto Star.
The Canadian government wants Canada to be more competitive. The World Economic Forum ranks Canada 12th among 140 countries in overall competitiveness.
Factors considered in the WEF’s ranking include exports and trade, attractiveness for investment, innovation, productivity, and tax reform. Competitiveness is typically measured by factors affecting economic growth. However, we mustn’t forget the role of having a social safety net, having a more equal society, and creating conditions for diversity, inclusion, and belonging in making a country an attractive place to have the life, lifestyle, and livelihood that people want.
For Canada to be more competitive, policy-makers need to do two things:
1. Make it possible for family life to be more compatible with professional life and
2. Reduce wealth inequality.
Before we explore that further, let’s take a look at the economics of growth. Thomas Piketty, a French economist and author of Capital in the Twenty-First Century, breaks down growth into two components: population growth and per capital output growth.
“According to the best available estimates, global output grew at an average annual rate of 1.6 per cent between 1700 and 2012, 0.8 per cent of which reflects population growth, while another 0.8 per cent came from growth in output per [capita].”
In many developed economies, populations are aging and women are having fewer children, later in life. The counterpoint to this is the rise in women starting businesses and perhaps the recognition to enable more women to join the workforce.
In Canada’s budget announcement in 2018, it was noted, “Having more women in the workforce has driven economic growth, boosted family incomes, and helped families join the middle class. Yet there are still too many missed opportunities caused by gender gaps in a number of areas, including education and career options, full participation in the economy, and leadership.”
“RBC Economics estimates that if men and women participated equally in the workforce, Canada’s GDP could be boosted by as much as 4 per cent, and could partially offset the expected effects of an aging population.” (Government of Canada).
The Wharton Social Impact Institute conducted a scan of private equity and venture capital firms globally that invest with a gender lens. These are firms that are allocating capital to women entrepreneurs, women-led businesses, businesses who are creating products and services for women or have other gender diversity considerations in their investment strategy. Their scan captured 87 firms of which only 3 are Canadian — Pique Ventures is one of them (Wharton University of Pennsylvania).
If Canada wants to be more competitive, to grow, and have more women contributing to the economy, we need more than just job creation. Productivity growth and population growth are linked and so we need products, services, systems, and policy decisions that dedicate resources to making growing families compatible with growing businesses, such as funding education, care, and enabling men and women to share in family responsibilities.
In addition to getting income into the hands of women, we need to get more capital to women — we need more businesses and investors that make decisions with a gender lens.
Gender balance and equality isn’t the only factor that will get us on a path toward economic prosperity for all. We need to get income and capital into the hands of the least wealthy.
Piketty says, “the hoarding of wealth — increases in wealth, when the level of wealth is significant — does not lead to corresponding increases in spending and does not lead to a proportionate increase in demand for products and services.”
“The poor catch up with the rich to the extent that they achieve the same level of technological know-how, skill, and education, not by becoming the property of the wealthy,” says Piketty.
If we could allocate resources — and wealth — optimally across all people, including the least wealthy, this increases demand for products and services and increases productivity.
At the core of Pique Ventures’ impact lens is the conviction that improving access to essential resources helps people survive, thrive, and be happy. The sole impact we should be measuring is well-being. And so, to achieve more impact, we need to get better at how resources are allocated and by resources, I mean physical resources as well as knowledge, information, and interpersonal relationships.
In considering economic prosperity for all, we must also think about Canada’s social safety net, equality, diversity, inclusion, and belonging, and the ease in building relationships. Economic prosperity, family life, and equality are interconnected.