Canadians should look past near-term concerns with a difficult global environment to the longer-term trends and potential of the economy, says Bank of Canada governor David Dodge remark today during a speech to the Chambre de commerce de Québec.

“Given the extent of uncertainty in the world today, we are all naturally preoccupied with near-term issues and prospects. That’s understandable. But, at the same time, it’s critical that we look past the short-term to the longer-term trends and potential of our economy.”

Dodge focused on the critical role that higher productivity plays in supporting real income growth and improved standards of living over time. The main
factors that determine productivity growth, according to Dodge, include increased capital investment, adoption of new technology, better management, and improved labour skills.

He also stressed the importance of “the right public policy framework that will allow and promote adjustment, and sustain a nation of innovators. The Bank of Canada will continue to do its part by fostering a climate of low, stable, and predictable inflation conducive to initiatives in innovation, risk-taking, and investment.” But he added that all Canadians have a role to play in raising productivity and enhancing our prosperity.

Small firms should be encouraged “to see that it is in their role as entrepreneurs, and in their best interests, to be more outward looking, and to undertake initiatives to increase productivity and reduce costs.”

“Yet another challenge has to do with channeling savings into investments and allocating capital efficiently. Here, I cannot stress enough the need
for a sound, innovative, and vibrant financial sector,” he said. “This is particularly important at a time when we want companies that plan to adopt new technologies to have adequate access to innovative financing.”