The Global Picture

What has brought us to the world we now live in? In 2000, political pundits were predicting terrorist strikes, a destabilized Middle East and messy political situations around the world over the next seven years, leading to economic instability. They got the politics right but the economics all wrong. In fact, the global economy has grown over the past seven years faster than in any time in the last 40 years.

That elegant analysis came from Dr. Fareed Zakaria. The editor of Newsweek International was a keynote speaker at the mid-April Global Sourcing Forum in Toronto, the brainchild of the non-profit Centre for Outsourcing Research & Education (www.core-outsourcing.org).

What does global sourcing have to do with mining? That’s easy. The copper in your pipes may have come from a mine in British Columbia, Chile or Mongolia. The guy manning your help desk could be down the hall or in any other location on Earth, as long as the language and time zone are compatible. You could look on global sourcing as a threat, but it is just as much an opportunity.

Here are a few thoughts that Zakaria shared with his audience.

Today’s positive economic shock is that 2.3 billion people–the populations of China and India–have joined the global economy and have been fuelling the current growth since 1992, India at 5% per year and China at 7%. Technology has played a part in this. Today’s large ships have reduced the cost of transportation essentially to zero. Thanks to the IT bubble of the late 1990s, the whole world is wired with fibre optic cable and can communicate instantly.

The thirst for energy is strong. Saying “No” to nuclear energy is saying “Yes” to coal-fired plants, and conventional coal is the dirtiest source of energy by far. The coal-fired generators that China and India have already committed to building are going to emit five times the total CO2 that would be saved if the Kyoto Accord were completely implemented. If you don’t deal with this fact, you are not dealing with the real global warming problem.

Global solutions are needed for many of today’s largest challenges, but the global institutions are extremely weak. Perhaps the future will be in regional organizations with some direction from the United Nations.

Canada has two things going for it economically. First, it is a resource-rich country with a variety of resources that will continue to be in demand. As one of only two such countries that are not kleptocracies (Norway is the other), Canada can make long-term investments to develop its resources efficiently, realizing their maximum value.

Canada has other advantages–it is English-speaking, and has an impeccable economy and close ties to both the United States and Europe–that should allow it to excel in the knowledge economy, and yet it is not a major player in cutting-edge products for the financial and banking industries, and its universities do not rank among the top in the world. Unless we make a more significant effort, the poorer end of the workforce will suffer. We have to equip people with little postsecondary education to manage if their jobs are disrupted by global sourcing.