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Laurent Carbonneau: Canada has economic problems. AI can help
Compared to peer countries, Canadians are working a lot to earn modest incomes, even accounting for services like health care and education.
The House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities is currently studying the potential impacts of artificial intelligence on the Canadian labour market.
On Wednesday, Nov. 1 I testified at the committee. This column is based on my remarks given to the committee, and is a message all policymakers need to hear.
By: Laurent Carbonneau
It is good that artificial intelligence is getting scrutiny from politicians.
A new, genuinely general-purpose family of technologies such as AI could well have impacts on the world of work and the economy like those created by industrialization and electrification. Those transitions posed profoundly difficult policy challenges to governments — challenges that many were not able to meet equitably.
With that said, it is very premature to worry about large-scale job losses. In fact, we should be working to embrace AI in a responsible way as a means to solve Canada’s stubborn economic challenges.
If you take a look at the big picture, the most concerning issue for Canada’s economy is the productivity of Canadian businesses and their immense appetite for more labour. This is not normal for advanced economies, and we should take a look under the hood of Canada’s overall economic picture.
Canada’s productivity — GDP per hour worked — is below the OECD average, just behind Italy and just ahead of Turkey and Spain. We’re even worse than them on work-life balance; we’re tied at 30th with the United States for leisure time. Our net income, counting taxes paid and services like health care received, has us 13th in the world, behind rich countries like the U.S. but also small economies like Belgium.
Canadians are working a lot to earn modest incomes, even accounting for services like health care and education. And according to recent Statistics Canada data, productivity has actually just dipped below where it was in 2018.
Whatever policy issues you care about — poverty, climate change, Indigenous reconciliation, or just quality of life — those problems are easier to solve if we are richer and more productive as a country.
Nearly 75 per cent of intellectual property rights generated through the federal government’s Pan-Canadian AI Strategy are owned by foreign entities, including American tech giants such as Uber, Meta and Alphabet.
AI is, fundamentally, a family of technologies that makes both labour and capital more efficient. As a country, when we see an opportunity to make business more efficient and our economy more productive, pursuing that opportunity should be a priority!
While AI is a novel technology, it does not defy the general way that innovation economics works. Companies that are commercializing new innovations, particularly in digital technologies, succeed because they own intangible assets like patents that exclude rivals, they control vast amounts of data, and they leverage network effects to make their products and services more useful to users. Because of those fundamental drivers, today’s innovation economy is dominated by superstar firms equipped with the IP assets, data and networks they need to fend off competitors.
AI is a heavily IP and data-dependent business. The successful AI-driven businesses of the near future will replicate the winner-takes-most pattern. The global AI sector is currently valued around $200 billion dollars and by 2030 will likely expand to around $2 trillion. Canada is well-positioned in the industry in terms of highly-qualified personnel and leading research, but thus far we’ve struggled to create superstar companies.
The benefits created from government investment in research and training, including intellectual property, are accruing to firms outside of Canada — for example, nearly 75 per cent of intellectual property rights generated through the federal government’s Pan-Canadian AI Strategy are owned by foreign entities, including American tech giants such as Uber, Meta and Alphabet.
What’s worse, Canada’s AI talent pool has actually shrunk by nearly 20 per cent over the last three years. And this is showing up in low rates of adoption: 48 per cent of Canadian companies report not using any AI, compared to 36 per cent in the US, 38 per cent in the U.K. and 39 per cent in France.
It is still unclear what AI will mean for the future of work and broad employment patterns. AI is an emerging technology, or a series of them, and it’s too soon to say with any confidence what exactly it will mean for humanity. This, of course, was also true at the dawn of the industrial and electric eras, and we all can see today how much our lives were changed, and improved, by those developments, but also how many challenges both posed for our societies and governments.
As we enter this new technological race, one thing that is immediately clear is that in a potentially era-defining niche in a winner-takes-most sector, Canada cannot afford to be a late adopter of AI with little domestic capacity. Canada already has major economic challenges that we have not done enough to address. AI may be exactly what we need to solve some of these long-standing challenges, while also ensuring that we have a meaningful role to play in a field that could come to define the 21st century. We must seize this moment. Our only other choice is stagnation.
Laurent Carbonneau is director of policy and research at the Council of Canadian Innovators.
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