Immigration and Diversity: A Key Competitive Advantage for Canada

October 1, 2005

The following article appeared in the October 2005 issue of the CRIC Papers, no. 18 entitled Diversity in Canada, Regions and Communities

by David Stewart-Patterson
Executive Vice President
Canadian Council of Chief Executives

The 2005 survey by the Centre for Research and Information on Canada Diversity in Canada: Regions and Communities, conducted for the Canada Conference in Edmonton, shows that most Canadians believe that immigration is a big plus for our society and for our economy; and they are right on both points. 

Canada needs immigration because our existing population is aging.  Only a continued strong flow of young and working-age immigrants can sustain the health care, pensions and social programs on which our seniors depend.

Canadian communities benefit from the infusion of many cultures and backgrounds, from the creativity and know-how that people bring to our country and from the synergies that result when we stir ideas and attitudes from many different places together.

By adding both to the quantity and quality of our labour force, immigration helps to increase the competitiveness of Canada’s economy.  Indeed, Canada’s strong flow of immigration from many different countries may provide one of our country’s most important competitive advantages in an increasingly global economy.

Within the business sector, the evidence on the benefits of international connections and engagement are clear: cross-border flows of goods and services, capital, people and ideas all boost competitiveness, productivity and innovation in Canadian businesses.

As the world evolves toward an increasingly knowledge-based economy, flows of people and ideas are becoming even more important than those of capital goods.  To attract corporate activity, especially involving high-skilled and well-paid work, communities and countries need to do more than raise the skill levels of their labour forces by investing in the education and training of their existing populations.  They also must attract and retain talented people from around the world.

The American author and professor, Richard Florida, has hammered home this case in a series of books describing the evolution of what he calls the “creative class”.  He argues that the most successful cities in the world are those that become “global talent magnets”. Immigration is a critical element in achieving this goal.

My work with Canadian chief executives over the past decade is highly consistent with this view of the world, and leads to the conclusion that Canada’s high degree of immigration and its multicultural society are becoming key competitive advantages for Canadian-based enterprises, for Canadian communities, and for our country as a whole.

When people move from one country to another, they bring with them more than their specialized knowledge and skills.  They also bring their personal networks, which appear to be important drivers of economic activity, as well as conduits for creative ideas.  Where people live and work has an economic impact, not only through the salaries they earn, the money they spend, and the taxes they pay, but also on decision-making within their working environments.

One example noted in the 2001 book I co-authored with Thomas d’Aquino of the Canadian Council of Chief Executives, Northern Edge: How Canadians Can Triumph in the Global Economy, looked at the experience of a French-based multinational, Air Liquide, when it conducted two major projects in Canada in 1999: one was an $85 million expansion in Hamilton, the other a new $150 million plant in Edmonton. 

The engineering teams involved both reported to the same executive, a Canadian based in Houston.  But the project managers came from two different countries: those for the Hamilton plant from France and those for the Edmonton plant from Texas. In a post-project analysis, the company found that the European content in the Hamilton project was twice that of the Edmonton plant.  Similarly, the Edmonton project had much greater American content.  In each case, the expert engineers tended to turn first to the network of suppliers they knew and trusted personally. When Canada attracts skilled people, it gains their networks and connections, as well as their skills.

Diversity is at least as important as the scale of immigration.  In his latest book, The Flight of the Creative Class, Florida says that an essential element in turning a city into a global talent magnet is a flow of immigrants from many different places, citing examples that include Amsterdam, Toronto, Vancouver, Auckland and Geneva. “What makes these cities such formidable challengers to U.S. regions is that many of them, in particular the Canadian cities, not only boast a high immigrant population, but a diverse one too. These cities are not dominated by one particular immigrant group, but instead offer a mosaic of ethnic and racial groups from around the world.”

A Canadian example of the competitive power of diversity can be seen at IBM, which in the late 1990s decided to consolidate its telephone technical support for North America in a single location, creating an operation requiring some 1,500 computer scientists.  Toronto made the short list for the internal competition on the basis of its plentiful supply of qualified people, competitive wage rates and other traditional factors.  But a deciding factor in winning the assignment was that only in Toronto could the company find the right people at the right price who also could deliver services in 23 languages.

Immigration and diversity also contribute to competitiveness through their impact on social attitudes.  On one level, entrepreneurial activity tends to flourish in communities that welcome risk-takers.  Immigrants by their very decision to pull up roots have demonstrated their willingness to take risks in search of better lives, and they bring this attitude to their new communities.

Canada’s cultural diversity also gives Canadian individuals and companies a leg up in the global economy. Senior executives in multinational companies consistently tell me that Canadian employees travel well, that they tend to be much more successful than their American counterparts when faced with management challenges in other countries and cultures.  The senior ranks of global enterprises around the world are peppered with such Canadians, and Canadian-based companies, of course, get first crack at recruiting and retaining this talent.

Communities built on diversity are gaining another important advantage from changes in the organization of companies and of work within the global economy.  In their book A Future Perfect, British authors John Micklethwait and Adrian Wooldridge documented the continuing evolution of multinational corporations toward a stage that has less to do with structure than with state of mind: “Businesses become genuinely multicultural multinationals in which the nationality of employees ceases to matter.”

The evolution of information and communications technology increasingly means that corporate functions can be located wherever in the world the people who can do the work either live or can be persuaded to live.

As d’Aquino and I observed in Northern Edge, other cities in other countries share many of our best attributes: strong democratic institutions, a robust social safety net, a clean environment, superb infrastructure, a highly educated population, access to major markets and a great quality of life.  What Canada can offer in addition is the world’s most successful multicultural society, a quality that could become our unique selling proposition, the key characteristic that would enable us to stand out as the preferred alternative among many attractive possibilities.

As Florida put it: “Cities like Sydney (Australia) and Toronto are diverse, tolerant, and already steeped in creative people and occupations.  Not to mention they’re entertaining, motivating, architecturally magnificent, and in general boast a high quality of life, all without the growing homeland-security concerns that America’s large cities must cope with.  Quite simply, they’re natural havens for global talent to call home, and they’re leading their countries headlong into the creative age.”

That said, Canada and its communities cannot afford to be complacent.  The world is not standing still.  As the demographic curve bites deeper into prosperity across the industrialized world, countries that have been less welcoming of immigration in the past must change or face decline. 

More importantly, the explosive growth of economies in countries such as China and India is transforming the competitive market for talent.  Such countries have been major sources of immigration to Canada.  Now their success means that fewer people are likely to leave in search of better opportunities, and even people Canada has attracted in the past may feel a renewed pull from their homelands.

Canada’s diverse, immigrant-fuelled cities are the engines of our country’s growth.  They offer a critical competitive advantage going forward, and our challenge is to make the most of it.