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by Daniel Gloade on July 22, 2013

M.I.T. commissioned a study regarding how wealthy nations can maintain a competitive advantage in the era of globalization.  Specifically, it examined how manufacturing businesses can stay in wealthy countries, like the United States and Canada, when other countries can offer cheaper labour.

The report concluded that reduced wages are only one factor in determining the unit cost of a product. Several other factors are relevant, however.  Those factors include the degree of development of the infrastructure, the accountability of the government and whether the product must constantly and rapidly adapt to fit consumer preferences.

Those factors seem relevant to the high-tech sector in Kitchener-Waterloo.  First, Canada and Ontario have a worldwide reputation for being business friendly.  The governments are, for the most part, accountable.  The finances are generally well-managed.

For high-tech industries, there needs to be constant changes.  The customers for high-tech products are largely in wealthy countries.  Businesses must be closely in-tune to the wishes and needs of the customer.  The business that correctly identifies the customer’s wishes, and provide a product that satisfies this need, will survive.  All others will fail.  Keeping high-tech businesses in wealthy countries makes it easier to have a short business cycle.

Several reputable technology-centred schools are nearby.  This makes it easier for potential businesses to retain talent.  Business investment and input into local schools ensures that schools focus on the in-demand skills.

A wide diversity of high-tech businesses makes it easier to retain talent.   Although there are several businesses nearby that might lure away your talent, your talent will feel more comfortable moving to your area and starting a home if he or she could find work in the same city if something goes wrong.

A high concentration of talent will facilitate them interacting with one another, even from competing companies.  Professionals often attend lectures, seminars and symposiums to discuss matters of mutual interest.  They will offer suggestions and ideas to others which can assist all businesses in that area.

Finally, people entering the business will find it easier to transfer from a high-tech school to a mentorship program or entry level job.  This transition benefits to the students, workers and the community (with the increase of employed residents).

If Canada is to be competitive in the global market, we must develop identify the competitive advantages of each region and created a “critical mass” of factors that will make the unit cost more attractive.

For those reasons I agree with the efforts of all three levels of government and the private sector to entice potential start-ups to start business in Kitchener-Waterloo.

The Website called Canada’s Technology Triangle provides the government arguments for why one should start his or her company in Kitchener-Waterloo.  It is located here:  Also, if you go to The Record website, type in the words “Technology Directory”, you will find several organizations that provide mentorship for tech start-up companies and potential employees.  It is located here:

We can’t predict whether these investments are sound.  Given what is recorded above, however, this attempt to create a critical mass of high-tech talent seems to be a sound strategy.

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