larry borsato

A friend of mine has often referred to Canada as the India of North America. A bit blunt, but his point was basically that the low value of the dollar made it very cheap and therefore attractive to do techology R&D in Canada. However, now that the dollar is at parity, that advantage is gone, so perhaps there is no reason for U.S. companies to do business in Canada anymore. Mark Evans agrees:

With the Canadian dollar at par with the U.S. dollar, Canada’s biggest competitive edge has now disappeared. Canadian R&D operations are no longer inexpensive, which will cause U.S. companies to think twice about whether it makes sense to do R&D north of the border.

Sure, we have really smart people and a federal government happy to give a 20% tax credit on all R&D costs but a robust Canadian dollar make these pluses less relevant. Without the low dollar as a sales and marketing tool, places such as India, Ireland, China and the U.S. will star to look more appealing.

I grew up on the border. We usually shopped in the U.S. because of the better selection there and the lower prices, even with a higher dollar. Now with the dollar at parity, border towns are realizing that it is better and cheaper to shop in the U.S. for pretty much everything, which will kill the local businesses.

Once you get far enough away from the border, that problem disappears. The technology sector is global; it doesn’t have the benefit distance.