BCE. RITCHIE :
'. Canadians will have to: con."
-{ front major issues if we are
vi : serious. about: competing in to-:

“day's “WoHlds
ee Ob IS a. ‘world where coun-., :
‘trles like Mexico, and.the Philip:
‘pines:are producing: four times
aa y.engineets as.we are. It:
orld. Where,’ Brazil is:

a ‘graduating - 60": percent ‘more’
scientists. ‘every year than
4 Canada..."

And. much closer. to.home, it
‘Eds a. world: of: free trade where:
Ewage. ‘rates « in. the southern
i United States. — never. mind
t.

‘developing . ‘countries: — . aFe:
“often less than half the tates”
: here: ‘in’ Southern, Ontario...
a The. future challenge is to add
a ‘great’ ‘deal more value to what
ewe produc¢ in Canada, not only -
td the raw materials themselves,
: but! through: the industries that
* fave OUr-resource sector.
Pink Of it. Canada probably
-_euts.down more trees than any
LN country i in the-world, but weim-
i port! ighainsaws. We. have. ‘the
F xe 1d’s ‘biggest pulp and papér
indisttry,. but-much of the most

"from Finland.:.

" ‘porter of: fish products,: but “if”
“3you, want ‘a - state-of-the-art:

‘the techniques of aquaculture,
-you take-a trip to Norway. To-
“May, “that is no Jonger good
“enough, watt A
“Everyone: ‘understands that
‘our high- ‘dollar ‘and an infla-
tionary pattern of wage ‘set.
© tlements, particularly in central

‘Canada, Have’ been’ eroding our’.

‘competitiveness i in recent years.
But at a much more fundamen-

tal level, we have also been fail- :

ing to keep up in ‘productivity.
What might be the solution?
' ‘Recall that two of the principal
@bjectives of the Free Trade
‘Agreement Were. to’ expand the

size. of the availablé market and .

to expose Canadian. industry to

(greater competition,” :

: The hope Was that this would
“give a big boost to productivity,

Perhaps it will; eventually.

 eButudtie ‘he: sdeantime dhe
‘Ibusinesas:sconditionsi:- ‘for

manufacturers i in n Canada have

- ‘sophisticated: machinery ‘comes?

We arethe world’s ‘argest' exe

C.E. Ritchie

practical adjustment stategy in
the view. of many entrepreneurs
has been to. move south of the

.- border.
We need a national commit- .
‘ment to competitiveness that

begins on the shop floor and ex-
tends to ‘the highest councils of
business, labour and govern-

: ,.. Ment. The responsibility cannot
vessel, of if you want to master

be delegated. It rests with every
Canadian. .
Competitiveness’ is reatly
about the. chance’. for. every
Canadian to ‘have adecent | Ppay-
ing job. And equally, itis about

_ Canada's’ continued willingness
and ability tobéa sharing socie-

ty, with the, resources to help

: Ours less.. ~fortunate: citizens and

regions, ~~
One example of a ‘significant -

drag on Canada’s: com-.

petitiveness is the lack of
freedom in our own internal
market,

The Canadian. Manufac-
turers’ Association -, estimated:
that more than 500 barriers to
the free movement of goods and

4

services’: were. costing * our.
economy | roughly $6.5 billion

every year, (0°
We should- be.
~“Sgvablistrait | liv értiit Fret'Trate
Agreement’ among’ the’ BrOvitices.
and the federal government: ‘

‘prepared ‘to .

If there i is. any a area a of ¢ consen- .

“ Our manufacturing industries,’

; world-class research’ universities
in this country.

an

graduate, and. perhaps in some .
of the lower grades as well,

‘students, “we swould. ‘Teally be
_ testing the school systems.

~ excellent . ‘institutions, Canada
has no ‘university. to match a
Harvard, or a Stanford, or an
M.LT., though many of our
professors, and a number of in-
dividual- departments, would
equal this standard.

the pride.of i any society to have
within its midst institutions of
the highest calibre in the world.

‘That is the’ kind of uncom-
- promising excellence we must
‘have ittbre'of.in thiscountry::

-to take'up the challenge of com- '
~petitiveness with thie’ degree of
; commitment that is required.

sus On a competitiveness
strategy, It: is ‘the need to
develop human regources that .
are second to none;

While Canada has among the
highest. rates. of public: expen-
diture on education in the world .
— neatly $45 billion'a year. - =

the output of our system is caus-

ing increased ;.concern.:‘for
parents, employers". and “for
many educators as well::

It is intolerable, for- example,

that almost 30 percent Of young
Canadians drop out before they,
finish high school.

At the same tlme, we lack a
formal appre ticeship, ‘system.
Instead we Have relied on im-
migrants, mostly from Europe,
to supply many. of the
sophisticated skills: needed. in

These skilled technicians: are
increasingly difficult: to attract.
because they are now in demand
worldwide as never before,

I believe. the time has come
for Canadians to consider a na-—
tional high school examination, -
at-.least .for: every Potential,

One primary purpose of such
an” examination would be to.
establish ‘an objective standard.
of comparison among in-
dividual schools and among the
various school systems. across
the: country, ’ ‘By ‘testing the

Another | is that .we ‘should
“foster “one ‘or two. gemuinely

While:we have ‘several: quite

I believe it is important for

Canadians’ ‘may(bé rehictant

~ Really: no missy 2

“And if. in, ur. € demogat

"turn,
‘not to be Teally. serious. about

” facing t up to global competition, ;

“Interest puzzle solved |

* by KIM MAILEY
_The ups and downs of interest
rates mystify many of us. We

_ don't really understand why one

-..*; Year, we earn’ 11 percent on our
* Guaranteed Income Certificates

or money market funds — and
the next year get just 8 percent.
“ Infact, there’s no mystery
‘about: why interest rates rise and
fi hey. simply reflect infla-
on, the demand for credit, the’
¢ of growth of the economy,
the: behaviour of the dollar, and
the monetary policy of our cen-

) understand interest rates,
i shoul focus first on infla-

ations of future inflation _
liigher. interest rates must

Otherwise, people will not
sit:their money in financial
stitutions, but will buy certain
stocks, real estate or tangible
assets, such.as gold which hold
heir. + value well during infla-

tionary periods.

What investors. are actually
seeking when they demand
higher ‘interest ‘rates is a com-
parable real rate of return to
what they earned during times,
of price stability. Real return: is
the difference between the. in-
terest rate and the inflation rate.

a Historically, it has been 2-3

percent, but’ at ‘times in. the

highly. inflationary, late 1970"s -
. New. or expanded spending pro-

and early.1980’s, it fell as low as
minus five percent: That‘ means
people were actually... losing

money on their investinents, -

even while earning double-digit
interest.

proaching negative.

struments currently yielding less
than nine percent, after’ factor-:
ing ‘in. taxes and inflation, -the
real return is approaching zero,

Another major force. affec-
ting interest rates is. lonn de-
thand, “Money is, in sense, a

" sTewrace Standard, Wednesday, November 27,1991

~ Fo 4

commodity like any other.
When demand for this com-
modity is strong or the supply is
limited, its ‘price’? — the in-
terest rate — rises. Conversely,
when demand is weak or supply
is plentiful, rates fall.

The demand for money is ex-

. pressed as a demand for loans.
Business borrows to build

plants and buy new equipment;
government borrows to finance

grams; and households borrow

to buy homes, cars and other

expensive items. ©

Loan demand is closely

» elated to how fast the economy
We are currently, in fact, ap...
“realy
returns’ once again, With bank.
deposits and money-market in-

is. ‘growing. When’. economic
growth is robust; business,

‘government and - -households

tend to increase their spending
— and. their borrowing, With
morte borrowers competing for
loans, interest rates i rise.

The effect of the dollar on in-
terest rates is also important. A
lower dollar can mean more in-
flation, because it. makes the

oes Bl ae

CE, Ritchie ‘Bahe

goods which we import: into
Canada seem to be mare’ expen-
sive which, in turn, often | causes
the Bank of Canada to. raise in-
terest ‘rates. to- curb, this infla-
tionary trend.

“The Bank. of | ‘ canada’ s

monetary ‘policy: : - is: another
determinant. of - interest: rates,
but it primarily ‘affects: short-
term rates (i.e., 90 days or. less),
By. varying the . amount: of
reserves it _ provides to:: the
chartered banks, the Bank of
Canada controls the growth of
the nation’s money supply.

And by taising and lowering
the interest rate it charges. ‘the
banks for these reserves, it con-
trols the Treasury bill rates and
the bank rate..(The latter is the
rate at which the Bank of
Canada lends’ money to. the
chartered banks.)

._ Kim Mailey is an ‘investment
executive with | Scotia ‘McLeod
Ine. .

Please give

The Salvation Amny:
helps — people. at
Christmas, : “It. collects
food,. “Money and.
presents. ;

Needy petple then Bet * the .
hampers, - o Out, peed & can. be :
This year the Salva: don from.'1 p.m, to a

tion Army has an office: -p:

at the Skeena Mall. You:
can drop off food,:
money and toys there.

The office is’ open. .
from 1 p.m.-to 8, p.m,
from Monday to Friday,

People’ ‘who. need a.
- himber_ ca

: