gordon thiessen : the canadian economy - charting a course for the future remarks by mr gordon thiessen, governor of the bank of canada, to the chambre de commerce regionale de sainte - foy, sainte - foy, quebec, on 26 april 2000. * * * the 1990s was a difficult period for canada and the canadian economy. from the beginning of the decade, it was clear that we had to grapple with the problems that had been hampering our economic performance through most of the 1970s and 1980s. thus, the bank of canada set out to lower inflation. canadian businesses began to restructure their operations to become more productive and internationally competitive. and governments started the process of cutting public deficits and lowering debt burdens. dealing with these problems was certainly painful. and, in some cases, it took us a good part of the decade to overcome them. but we have now made some crucial improvements to our economic foundation. and as we step into the new century, we are beginning to see the benefits. the canadian economy has been expanding solidly for some time now. in fact, if we look through some temporary monthly declines, we are in our nineteenth quarter of positive growth. this is the longest uninterrupted economic expansion in canada since the mid - 1960s. and throughout, inflation has remained low and stable. the advantages of this expansion are now showing up in gains in employment and incomes. this is all very heartening. to maximize these benefits, we must build on - not be complacent about - our new - found economic vitality. we must avoid the boom - bust cycles of the past. this is one issue i would like to discuss today - how to minimize economic fluctuations. not eliminate them altogether, that is just not possible. in today ’ s globalized markets, there will still be times when canada ’ s very open economy will be hit by external shocks. and sometimes there will be surprises on the domestic side too. in the past, though, some of our economic ups and downs were aggravated by outbreaks of inflation. the question is, what can we do now to keep our economy moving along on a sustainable growth path? there is also the question of longer - term economic performance. for example, how low can our unemployment rate go on a sustainable basis? will we succeed in narrowing the gap between our standard of living and that of our us neighbours? what choices should we be making today that will improve

and investment in new technologies. it also means strengthening our educational system and making sure that the workplace environment in canada is ready to respond to the technological and market changes as they unfold.... the importance of flexibility, training and development dealing with rapid change is always difficult. when people are not certain how their lives will be affected by it, they tend to be fearful and resistant. so what will be needed, to an even greater extent than ever before, is a sense of partnership between employers and employees in developing strategies to deal with the challenges of change. in my view, there are two important elements to such strategies : we need to foster a greater degree of flexibility in adapting to change and we need to increase training so that employees have the necessary tools to operate confidently with advanced technologies and to get the most out of them. flexibility is important because job requirements will change more frequently, along with evolving technology. we must be prepared to accept and adjust to these changes as well as to the possible need for greater movement between jobs, employers and even regions. when it comes to training, the main point i would like to make is that human skills are essential to innovation. what is the sense of spending heavily on state - of - the - art technology and equipment that ends up idle or inefficiently used because of a lack of trained personnel? the partnerships that are being formed between industries, on the one hand, and colleges and universities, on the other, are going to be even more important in the future. and i expect that all businesses, especially smaller ones, are going to have to devote more time and resources to training staff.... the importance of an efficient and innovative financial sector the final item on my list today is the importance of an efficient and innovative financial sector. there is considerable evidence that the degree of financial development can have a marked impact on economic growth. a highly developed financial sector helps channel savings into investments and allocates that capital more efficiently. in these times of rapid technological change, many of the new and innovative applications of technology are going to take place in small, often new start - up, companies. financing the growth of these companies presents a challenge for the financial sector because it requires an ability to assess the risk involved and then put the right price on that risk. and when concentrations of risk become too high for individual investors and lenders, the financial system must be flexible enough to allow them to shift their risks and rebalance their loan and