Latest news with #economicsovereignty
Globe and Mail
19 hours ago
- Business
- Globe and Mail
Canada's innovation policies need overhaul to boost economy, experts say
Canada's outdated innovation policies are causing a loss of economic sovereignty amid critical shifts in global trade relations and the knowledge-based economy, experts say. While Canada continues to lead globally in education and research, innovation experts say the country's inability to plan past that phase is costing it hundreds of billions of dollars every year in data and intellectual property ownership. And with the United States-Mexico-Canada Agreement up for review in 2026, they argue the federal government should arrive at negotiations with a Canada-first approach. Speaking Monday at the Intersect conference at the Fairmont Royal York hotel in Toronto, Jim Balsillie, former co-CEO of Research In Motion Ltd., said Canada needs to have an offensive strategy heading into USMCA negotiations. 'The most important thing is to learn how the economy works, know that the agreement isn't worth the paper it's printed on,' said Mr. Balsillie, who is also a co-founder and chair of the Canadian Council of Innovators. Under the Trump administration, the U.S. is leading a shift in global economic policy to become more aggressive and transactional, Mr. Balsillie said. This, added to the emergence in recent decades of a new, knowledge-based economy, has heightened the need for governments to defend their industries and IP. Yet Canada continues to fall behind. Canada has 'ambition deficit' and regulations that are scaring away investment, Sabia says CIBC CEO says Canada needs to be on 'wartime footing' to bolster productivity 'We've got this funny disease where everybody helps their companies, but we don't help ours. In fact, we subvert them,' he said, pointing to sticking points such as the highly controversial capital gains tax increase or the federal government's investments in foreign companies. Mr. Balsillie also addressed Ottawa's claim that eliminating interprovincial trade barriers will add as much as $200-billion to the economy, calling it a 'myth' and a 'distraction.' 'The most meaningful barriers were addressed long ago. Clinging to this narrative distracts from creating serious national economic strategy,' he said. Dan Breznitz, the Munk chair of innovation studies at the University of Toronto, touted the country's investments in fundamental research for technology such as artificial intelligence as world leading. But that's where it stops, he said. When it comes time for companies to scale up and commercialize their research, they, unsurprisingly, go elsewhere. 'We just assumed that, somehow, because we have educated people and ideas, magic will happen in the market,' Prof. Breznitz said. 'Instead people do the rational thing: They look around and they say, 'It's almost impossible to do it in Canada.'' On Monday morning, while Prof. Breznitz was addressing the crowd at the Fairmont, Prime Minister Mark Carney announced he would ensure that Canada hits NATO's target to spend 2 per cent of GDP on defence this fiscal year. Prof. Breznitz said that's important – but not the kind of transformational policy Canada needs right now, after 20 years of slowly declining GDP numbers. 'We've got a prime minister that basically tells us right now, that if he will bring us back to that moment of slow decline, it will be the biggest transformation. I'm worried,' he said. Canada needs to gain strategic control of its talent and research, he said. It needs to figure out how to capitalize on its valuable industries, such as critical minerals, and engage and invest in its own technology. 'It is not okay that we are the lowest, by far, in the G7 in buying and engaging with new technology,' he said. Ultimately, Mr. Balsillie said, Canada's progress hinges on its ability to bring in and listen to new voices within its policymaking spaces who will help it adapt to the modern economy. 'The issue isn't only new ideas. It's escaping old ideas.'
Zawya
6 days ago
- Business
- Zawya
How Africa's new credit agency is challenging global power brokers?
For governments, a credit rating is more than a financial signal. It is a verdict that can influence the cost of borrowing, access to markets and, ultimately, the ability to provide for their citizens. Rating decisions are made behind closed doors in a private process that isn't open to assessment or scrutiny. For African countries, this opacity can be especially damaging. When rating decisions lack transparency, it's impossible to challenge potential biases or inconsistencies in methodology that put developing economies at a disadvantage. The result is higher borrowing costs that drain resources from healthcare, education and infrastructure investment. Africa's new credit rating agency has the chance to change this. The African Credit Rating Agency is an initiative under development by the African Union and its partners. It is more than a new entrant; it is an attempt to rethink how financial authority is earned, exercised and scrutinised. The new agency plans to introduce transparent governance structures that could revolutionise rating methodology. As a researcher who has looked closely at the working of rating agencies, I believe this opportunity to bring transparency to financial governance isn't just about better ratings. It's a step towards economic sovereignty. Success for the African Credit Rating Agency shouldn't be measured by whether it displaces the 'big three' rating agencies (Standard & Poor's, Moody's and Fitch). The real question isn't whether an African agency can compete, but rather whether it can show the world how to rate credit differently. A flawed processThe three big agencies do publish their methodologies – their criteria and risk models. This creates an illusion of transparency. Yet the final judgments emerge from committee meetings that produce no public record, no accountability, and no right of meaningful appeal. These rating committees typically comprise five to 10 analysts who meet in closed sessions to make each sovereign rating decision. S&P, Moody's and Fitch each operate internal rating committees for every sovereign rating decision. The deliberations, dissenting views, and specific reasoning behind final votes remain confidential. Only a brief summary is provided with a rating decision. Research has shown that credit rating agencies are more accurate at assessing the creditworthiness of advanced economies than developing economies. There have also been studies on the discrepancy between what is expected when the public methodologies are applied and what the agencies actually rate. These studies have been done for economies like Hong Kong and China, but no equivalent research has yet been undertaken for African sovereigns. This discrepancy exposes an accountability void. When methodology-based predictions miss the mark, we must question what happens in those committee rooms. Especially when African nations are being assessed by analysts stationed continents away, with limited understanding of local economic and political realities. The African Credit Rating Agency could make three changes to the way ratings are done:through public deliberationsby forming hybrid committeeswith technological intervention. First, it could release committee transcripts within 30 days of each decision. This would give markets and governments unprecedented insight into rating rationales. This isn't radical – central banks already publish meeting minutes, and courts publish opinions with dissenting views. Second, it could pioneer panels that include not only rating analysts, but regional economists, sectoral specialists, and even civil society observers. All with recorded votes. This diversified expertise would disrupt 'group think' while capturing nuances of African economies that traditional agencies overlook. I have examined this idea from the perspective of injecting climate and sustainability-related expertise into credit rating committees. I believe this is a crucial step to take to evolve the concept of the credit rating committee. Why the big three keep it closedThe industry thrives on privacy – protecting proprietary methodologies and shielding decisions from external challenge. And the natural oligopoly (a market dominated by a few large players due to high entry barriers, reinforced by market preference for predictability) helps it stay that way. The sovereign credit ratings of the three big agencies are built on quantitative and qualitative factors. But research shows that sovereign ratings are subjected to qualitative understandings. This puts developing economies at a disadvantage when agencies demonstrate pro-western biases because they lack data or knowledge. The impact of a credit rating downgrade for a sovereign borrower is usually multifaceted. Research shows that a single-notch downgrade can raise borrowing costs by more than 100 basis points, equivalent to an extra US$100 million annually on a US$10 billion bond. Investors prefer fewer, stronger signals rather than many competing views. So, there's little incentive for established players to change. The African Credit Rating Agency, as a new entrant, can offer something the incumbents won't: governance innovation that serves both markets and nations. Radical openness will shake markets, at least at first. Committee members might face political pressure. Transparency alone doesn't guarantee fair outcomes. But the world already demands transparency from central banks and constitutional courts. Why accept anything less from institutions that shape sovereign destiny?Next stepsBy 2050, one in four people on Earth will be African. The financial architecture serving them must evolve towards systems that recognise the continent's unique strengths. Opening the rating committee to view represents more than technical reform – it's about shifting who holds power in global finance. If it does this, the African agency won't just deliver better ratings; it will model how global finance can be governed more justly. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
