Convocation Address - University Of British Columbia
May 30, 1990
Change, Opportunity And Innovation
J. Fraser Mustard

Mr. Chancellor, Mr. President, graduands, families and friends of the graduands and faculty, today marks for all of you graduating a bench-mark in your development. You now enter into the next stage of your careers with the knowledge and skills acquired through your interaction with the faculty of this superb institution. This year also marks the 75th anniversary of a remarkable institutional achievement in one of the younger parts of Canada. Born in a period when our forefathers were building this country in a world radically different from today, your institution has rooted itself firmly and in 75 years established itself as a leading Canadian institution recognized throughout the world.

I would like to recognize on behalf of myself and my fellow honorary graduands the foresight and dedication of the Founders and the hard work of the faculty and community that has built UBC. Today you are led by an accomplished and distinguished President with an outstanding faculty. One of the things I found in building The Canadian Institute for Advanced Research is the quality of the faculty in this institution. The Institute has built five national programs. UBC faculty are members of all five programs and two are led by members of this institution. The Institute is a product of innovative Canadians responding to the opportunities we have in meeting the dramatic and profound changes that are taking place in our society and the world. The quality of a society is determined by how well it recognizes the changes and adapts through innovation. Today I want to talk about opportunity, innovation and changes.

At this milestone in your development it is worth thinking about, the source of the benefits that we have all grown accustomed to. For more than 99% of the hundred thousand years human beings have existed on this planet, life has been rather short, brutish and harsh. It is only in the last 300 years that we in the West have learned how to create societies that are prosperous, democratic and provide a high quality of life for most of the citizens. This unique change in the quality of life for about one-fifth of the human race is a product of innovation that came from the freeing of humans from barriers to their creativity. Innovation has two components - technological and institutional. The innovations are a result of human ingenuity and recently most technological innovation has been based on the knowledge from research in science and engineering. Institutional innovations include the social, business, political, financial, educational and legal institutions of a modern society. Our future prosperity and quality of life will be determined by our capacity to continue to innovate and use the fruits of this process wisely.

I would like to talk about three aspects of this today. First, the relationship between innovation and prosperity, second, the relationship between prosperity and the quality of life for society and thirdly, the political, social and economic ramifications. There are three stages in the evolution of a nation’s economy to generate wealth for its citizens. First, the stage where nations depend upon their natural resources and labour force for their wealth. All nations go through this stage and some, such as Canada, have remained relatively prosperous without evolving significantly into the latter stages. The next stage is investment-driven in which the competitive advantage and prosperity in the region is based on the willingness and ability of firms to invest aggressively to enhance their productivity. At this stage innovation is largely based on foreign technologies and markets to absorb the products. This stage requires a national consensus that favours investment and long-term economic growth rather than enhanced consumption. Japan is an example of a country that has recently gone through this stage. The third stage is described as the innovation-driven economy. These societies are much less dependent on the natural resources but are very dependent on their being able to use knowledge to create wealth through science-based innovation. Firms in this type of economy must not only do well in their home markets, but have to compete internationally. The tradable goods and services produced by firms in this stage are high value-added (a large knowledge content). Firms producing these products and services are profitable and are high wage industries contributing to prosperous communities. Canada has not reached this stage of economic development.

There is a fourth stage where nations lose their capacity to create wealth and evolve an economy that lives off its existing wealth. This is referred to as a wealth-driven economy. An economy that turns to living off its wealth finds it difficult to be an effective player in a dynamic, evolving, global economy and as a result its economy declines. The United Kingdom is an example of a country whose economy became wealth-driven early in this century whose relative prosperity has declined. The United States appears to have started to enter this stage around the mid 1970’s. Parts of Canada appear to have entered this stage. When a nation becomes focused on living off its wealth rather then creating wealth, it becomes difficult for a nation to sustain its social programs that are the basis of a nation’s quality of life and its system of social justice for its citizens. A critical question in this dynamic changing world for Canada is, how do we keep a commitment to create wealth and do so within the concept which is increasingly important for our survival as a species on our planet sustainable development? Prosperous nations can build a commitment to create a clean environment more easily than declining nations.

My second point is that the quality of life is powerfully influenced by the relative prosperity of a nation. The health status of a nation’s population correlates with the relative wealth and the distribution of that wealth among the citizens. Nations with poor social and physical environments have poor health. Nations that cease to create wealth such as in Eastern Europe and Russia, have shown a deterioration in the health status of their population as their economies have failed. In contrast, Japan, which has shown an extraordinary capacity to create wealth as it has moved into the innovation-driven stage, has had a dramatic improvement in the health of its population in the last 30 years. Life expectancy has increased from 66 years to more than 78 years. It is now one of the world’s healthiest populations. Thus, all of you have the opportunity to help sustain the health status of Canadians through your contribution to our future prosperity.

My third point, is about innovation and institutions. As societies and economies change they have to create new institutions. You are seeing dramatic changes in various parts of the world today. Nations that have a commitment to create wealth, will have a different political, social and cultural structure than nations that become wealth-driven, individualistic societies that consume their wealth. Creating new institutions that contribute to wealth creation can be difficult, particularly if it challenges established institutions.

Let me give you an example. All of you know that to be successful firms that are trying to create wealth through innovation are dependent on a strong capability in science-based innovation and a committed, flexible, skilled labour force. At present Canada has institutions appropriate for a resource-driven economy, not an innovation-driven economy. Unless we can create research institutions and training and labour market programs appropriate for an innovation-driven economy, we will have increasing difficulty sustaining our prosperity and system of social justice. The cultural, social and political adjustments necessary for us to create these new institutions are considerable. Your appreciation of this issue will determine how well you take part in creating the new institutions necessary for a society that must increasingly create its wealth through innovation.

All of you graduating today have been beneficiaries of the prosperity that Canada was able to derive from its resource-based economy and the mechanisms it developed to use that wealth to create a reasonably fair and equitable society. Are you prepared to commit yourselves to sustaining and enhancing this society so that the next generation will have the same benefits as you have had? You should also ask the question - In this increasingly interdependent world, what commitments should we make to the rest of the world?

All of you know that to improve the quality of life for humans in less prosperous parts of the world requires new sources of energy, the efficient use of energy, efficient use of materials, and new methods for controlling and recycling waste, if we are to preserve the biosphere. Can we be innovative in terms of creating the technologies and institutions to enhance the prosperity of all of the human race within the concept of sustainable development? To contribute to this important development in this underdeveloped world, Canada has to be committed to sustaining and enhancing its prosperity.

If you are prepared to help make Canada a prosperous country for the future, to help build our own society and contribute to key developments elsewhere, you will have to give up the tempting narrow, self-interest goal of working with only the existing wealth of the country. The game of "fiscal roulette" that individuals in a wealth-driven economy play does not create future wealth. It is no surprise that these nations have a strong selfish individualism and a weak collective concern about their future. If we wish to sustain our nation and its prosperity and a high quality system of social justice we have to establish collective will to build our future. At present, our vision is fragmented. In Quebec, the relationship between economic strength, prosperity and their culture and their social and political systems is appreciated by most of the elites. In contrast to the rest of Canada, Quebec has a strong collective will to build for the future. The present problems of our country are, at least in part, a failure to understand the need to create a vision for the future which we are all committed to.

Can we do something?

Of course we can. You are graduates of an institution whose roots are in the vision that helped build Canada 100 years ago.

I have had an opportunity for eight years to test whether you can build new institutions in the country to give Canadians the opportunity to meet today’s and tomorrow’s challenges. It can be done. The small speck of an organization, The Canadian Institute for Advanced Research, is an example of one strategy. Just as our railways 100 years ago brought together a thinly spread out population of diverse cultural and political characteristics to extract wealth from our natural resources, so today we can build new institutions that allow us to engage in nation-bridging and nation-binding and create wealth through knowledge. In this period of extraordinary change, in the world we have the opportunity to establish our vision of the future and work towards achieving it. The commitment each one of you is able to make will be a key factor for the future prosperity and quality of life in this country. You have chosen careers that are characterized by the need to be innovative. You have graduated from an institution that has given you an excellent base to be innovative.

If you have the vision, commitment, perseverance, integrity and humanity, you will, in each of your careers, contribute to building a prosperous nation with a strong system of social justice. Being innovative to meet the challenges and opportunities of today has risks, risks greater than when my generation graduated. The risks must be taken and I think are worth taking.