Five ways Canada can strengthen its position in global negotiations
Perspectives is a new series written by University of Niagara Falls Canada professors, offering in-depth insights into the pressing issues shaping our world. This article does not represent any official position of the university. It is the personal opinions of the author.
Since 2016, the world has undergone a period of unprecedented change, marked by economic turbulence, political conflicts, and natural disasters. These disruptions have reshaped global stability, creating an environment unlike anything seen since the Baby Boomer generation. While these challenges bring uncertainty, they also present unique opportunities that remain largely unexplored.
In this evolving landscape, economic resilience, the ability to anticipate, withstand, and recover from major disruptions, has become a defining factor for long-term prosperity . As the global economy continues to shift, resilience is no longer optional; it is essential. According to the U.S. Economic Development Administration (EDA), disruptions to economic stability typically fall into three categories:
National or international economic downturns
- broader economic events that reduce demand for goods and services, weakening consumer spending and business confidence.
Industry-specific declines
- disruptions in key industries that significantly impact regional and national economies.
External shocks
- unexpected events, such as geopolitical conflicts, trade disputes, or natural disasters, that create instability in supply chains and employment.
Given the increasing frequency and severity of these disruptions, Canada must take deliberate steps to strengthen its economic resilience. This involves developing strategies that help the nation absorb shocks, recover quickly, and create sustainable growth pathways. The economic relationship between Canada and the U.S. serves as a prime example of how these challenges affect resilience.
Recent trade disputes in softwood lumber, energy, and the automotive industry illustrate the vulnerabilities that exist in industry-specific declines. Canada’s reliance on key industries without sufficient contingency planning leaves these sectors exposed to instability. Without a proactive response, these industries risk long-term instability, which could significantly affect employment, investment, and economic growth. Similarly, national and global economic downturns, fueled by inflationary pressures and supply chain constraints, have weakened consumer spending and trade balances. Additionally, external shocks, such as shifting U.S. protectionist policies, continue to create uncertainty in cross-border trade. To tackle these risks, Canada must adopt a forward-thinking strategy that prioritizes diversification, innovation, and strengthened trade agreements. The goal should be to increase economic agility, support domestic industries, and build a strong foundation for long-term prosperity.
Economic resilience is not just about reacting to challenges but about being prepared before they arise. Strengthening resilience requires a long-term commitment to institutional reforms, investment in innovation, supporting education in innovation and digitalization and a national effort to create a more adaptable economy.
While there are several ways to approach this complex issue, the following key strategies offer a practical roadmap to fortify Canada’s economy against future disruptions.
1. Strengthening institutional frameworks and adaptability
Canada must prioritize strong institutional frameworks and adaptability to transform economic challenges into opportunities. This approach aligns with the research of Nobel laureates Daron Acemoglu, Simon Johnson, and James Robinson, who highlight the critical role of strong institutions in fostering long-term economic development and resilience . They argue that inclusive institutions promote economic prosperity by ensuring political stability, efficient governance, and equal access to opportunities. Conversely, weak institutions make economies more vulnerable to shocks, leading to deeper and more prolonged crises. The following measures can help ensure long-term stability by strengthening institutional frameworks and adaptability, fostering economic resilience, and equipping Canada to navigate future disruptions effectively.
- Establish regional resilience hubs: develop collaborative regional hubs that bring together government, businesses, and academia to coordinate responses to economic disruptions. These hubs can focus on workforce retraining, supply chain stabilization, and economic recovery efforts, ensuring local economies can adapt swiftly to shocks.
- Enhance public-private collaboration for Infrastructure and Innovation: strengthen public-private partnerships to invest in key infrastructure projects that improve trade efficiency and economic stability. Encouraging private-sector investment in R&D can also drive technological advancements, digital transformation, and sustainability-focused initiatives.
- Develop national and regional risk assessment models: implement data-driven risk assessment models to identify and mitigate vulnerabilities in key industries. These models can help policymakers anticipate disruptions, allocate resources more effectively, and improve crisis preparedness.
2. Developing and expanding inter-provincial trade
A well-integrated domestic trade network is essential for economic resilience. Expanding inter-provincial trade can strengthen economic and political ties, unlock new domestic markets, reduce investment risks, and enhance strategic partnerships. By ensuring seamless movement of goods, services, and capital across provincial borders, Canada can build a more interconnected national economy that is better prepared for external shocks. According to a report by the Macdonald-Laurier Institute, removing internal trade barriers could boost Canada’s economy by 4.4% to 7.9%. This highlights the significant economic benefits of liberalizing internal trade through mutual recognition and regulatory alignment.
3. Leveraging local capacities for economic recovery
A resilient economy requires leveraging existing local resources to support economic recovery. Identifying regional strengths, natural resources, and skilled labour pools can help mobilize assets more effectively in times of crisis. Additionally, inter-provincial collaboration can create new economic opportunities through shared infrastructure projects and policy alignment. These strategies will ensure that Canada’s economic response mechanisms are swift, coordinated, and effective.
4. Enhancing economic efficiency through digital transformation
Inefficiencies in infrastructure, labour mobility, and innovation adoption continue to hinder Canada’s economic performance. Between 2002 and 2020, U.S. labour productivity growth surpassed Canada’s by 160%, highlighting a critical efficiency gap . To close this gap, Canada must embrace digital transformation in education, workforce development, and industry modernization.
Educational institutions that prioritize digital literacy, innovation, and industry collaboration play a key role in preparing a workforce that is adaptable to future economic changes. By aligning academic programs with emerging industry needs, Canada can bridge labour mismatches, increase workforce mobility, and drive productivity. Investing in digitalization and upskilling initiatives will be essential in strengthening Canada’s global competitiveness.
6. Building a diversified trade portfolio
Overreliance on a single supplier or buyer has made Canada’s economy vulnerable to geopolitical tensions, trade disruptions, and supply chain volatility. Expanding trade partnerships, exploring emerging markets, and securing alternative supply chains are critical to mitigating economic risks and fostering new opportunities for growth. By developing a balanced export and import diversification strategy, Canada can strengthen its global trade position, enhance economic flexibility, and ensure long-term sustainability.
Conclusion
As the global economy continues to evolve, resilience is becoming Canada’s most valuable tool in negotiations and economic policymaking. The ability to adapt, innovate, and strengthen institutional frameworks will determine Canada’s long-term success in an increasingly volatile world. By implementing strategies such as promoting inter-provincial trade, leveraging local capacities, embracing digital transformation, and diversifying trade partnerships, Canada can position itself as a global leader in economic resilience. The future belongs to nations that prioritize adaptability, foster innovation, and invest in sustainable growth strategies. By taking decisive action now, Canada can secure its economic future and thrive in an ever-changing world.
Ehsan Torabizadeh is an assistant professor in University of Niagara Falls Canada’s Honours Bachelor of Business Administration program. An experienced academic and entrepreneur with a strong background in advanced technologies, Ehsan holds a PhD in Sustainability, and both a Master of Engineering and Bachelor of Engineering in Industrial Engineering.
References
[1] U.S. Economic Development Administration (EDA) – Economic Resilience
[2] MIT Economists Daron Acemoglu, Simon Johnson, and James Robinson – Nobel Prize in Economic Sciences
[3] Macdonald-Laurier Institute – Liberalizing Internal Trade Through Mutual Recognition: A Legal and Economic Analysis
[4] Statistics Canada – Labour Productivity in Canada: Trends and Comparisons
