ARCHIVED—Introduction

Background Document
The Challenge of Change: Building the 21^st Century Economy
e-Commerce to e-Economy: Strategies for the 21^st Century
Industry Canada
September 27-28, 2004
Ottawa, Ontario

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Over the past quarter of a century, the increasing use of computers in all aspects of life, combined with the widespread deployment of the Internet, has fundamentally changed society and radically altered the dynamics of economic growth. For every country and community, the management and flow of information – and its translation into knowledge – are dramatically redefining the pace and direction of social progress and economic development. In advanced economies, wealth creation depends more and more on the capacity to use information and knowledge effectively, both in the production of goods and in the increasingly important realm of services and other forms of "intangible" economic activity. Moreover, using knowledge to innovate – in effect, finding smarter ways of doing work or conducting business, often by means of information technology, is the key to improving productivity and to maintaining competitiveness.

An economy dependent upon knowledge must necessarily rely on a strong networked base of advanced information and communications technologies (ICTs), as well as the capacity – the skills, know-how and entrepreneurship – to exploit them for economic and commercial advantage. This reliance on ICTs now extends far beyond the few industries like telecommunications, software and computer services that are traditionally associated with the technology. In fact, the use of ICTs, like electricity, has infiltrated virtually the entire economy. This has created an e-economy, in which firms, organizations and governments make effective use of ICTs to spur on product and process innovation across all sectors of the economy.

To promote a dynamic and competitive e-economy, Canada needs to support the conditions that foster innovation and research for the development, application and diffusion of these technologies throughout society. In the long-term, an effective national response to the many challenges of the e-economy will require nothing less than a cultural shift – in organizations and institutions in the private and public sectors, in civil society and in the lives of families and individuals. Information and communications technologies – which include hardware, software, systems, and the networks that connect them with people – have become integral parts of business processes in every economic sector. "…a new wave of innovation, primarily based on information and communications technologies (ICTs) is surging through the OECD." ¹

ICTs have made it possible to transform business models, organizational structures, the division of labour, and the nature of work. They have emerged as a key source of competitive advantage for firms and countries. By overcoming barriers of time and space and shrinking entry costs, ICTs have helped create a truly global marketplace.

In the global economy, competition can come from anywhere, at any time. Traditional sources of comparative advantage no longer guarantee national prosperity. New strategies are needed for an economy based on ICTs – the e-economy.

In 1998, the federal government set a goal for Canada – to become a world leader in e-commerce. Today, we have largely reached this goal and are poised for a new challenge – to be the first country to build an e-economy for the 21^st century.

To build a strong e-economy, we need strategies to:

• transform business models and increase the adoption of Internet Business Solutions (IBS) by all firms, including small- and medium-sized enterprises (SMEs);
• re-invigorate and redefine the delivery of government and public services;
• build trust and confidence in the e-economy among citizens and businesses;
• create an environment that will foster the e-economy internationally;
• develop an intelligent infrastructure – the backbone of the e-economy;
• ensure that all Canadians have affordable access to this infrastructure and know how to use it;
• strengthen research in the technical, economic, business and social aspects of the e economy; and
• apply this research, through commercialization and other means, to increase innovation and build competitive advantage.

Acting on these objectives in the short- to medium-term will require collaboration among private, public, academic and fourth-pillar organizations. ² It will also require the active involvement of Canadians – as consumers and as citizens.

Canada has already started this work through a series of thematic workshops on different aspects of the e-economy. From September 2003 to May 2004, Industry Canada and its partners, the National Research Council Canada, the Canadian e-Business Initiative and CANARIE Inc., held six workshops to discuss the current state, opportunities and challenges for research on e-government/e-democracy, e-business, privacy, security and trust, e-learning, e-health and finally, the intelligent infrastructure and e-society. These workshops provide some background to the national conference where, in September 2004, leaders from Canada's private, public, not-for-profit and academic sectors will meet to discuss e-Commerce to e-Economy: Strategies for the 21^st Century.

The purpose of this conference is to map out strategies for promoting national prosperity in the digital world of the twenty-first century. The process that led to the development of Canada's 1998 Electronic Commerce Strategy gave leaders from these sectors a similar opportunity to frame a vision and chart a course for our country's future economic growth.

Since then, Canada's private and public sectors have been global leaders in developing and implementing e-commerce strategies. We significantly enhanced our world-class information and communications technology capabilities and have translated these advantages into superior economic performance. We are positioned to benefit from the e-economy, today and tomorrow.

The purpose of this paper is to provide background information on the rise of the e-economy, report on the key findings of the six workshops and to pose a series of challenge questions for discussion at the e-economy conference, as well as in the broader public debate about the e-economy.

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¹ A New Economy? The Changing Role of Innovation and Information Technology in Growth, Organisation for Economic Co-operation and Development (OECD), 2000.

² Fourth-pillar organizations are high value-added coordination mechanisms that connect government, private and academic organizations in ways that enable them to achieve common goals and shared objectives through collaborative effort, more effectively than would be possible under alternative arrangements such as partnerships, strategic alliances or joint ventures.