11/11/2011 03:14 EST | Updated 01/11/2012 05:12 EST

Canada can't afford to hunker down during global economic turmoil: GG

OTTAWA - Canada can't afford to hunker down in the midst of global economic turmoil, Gov. Gen. David Johnston said in an interview just before the start of a 15-day trip to southeast Asia.

He said the future is at stake.

"If we want our children to have lives that are at least equal or better than ours — which has been a great Canadian dream — then we certainly have to do better on innovation and productivity," he said.

Johnston leaves for Malaysia, Singapore and Vietnam on Saturday.

He's looking to learn about Asian competitiveness, tout Canada as a prime destination for foreign investment and immigration and find opportunities for Canadian interests.

"We should broaden our horizons," he said in the library at Rideau Hall, where the walls are lined with award-winning Canadian works.

"We should look at the globe entirely as we think about markets and think about opportunities that Canadian expertise can exploit. And that would be a main purpose of this trip....seeing the world as not just North America, not just our backyard."

Long gone are the days when Canadians could depend simply on natural resources or a low Canadian dollar to make money, Johnston said.

And now, with the International Monetary Fund warning of a "lost decade" due to weakness in the United States and Europe, Canadian business can't look to its traditional markets to pick up the slack, he warned.

"It seems to me it's very important for Canada to be a trading nation with the entire globe. And the Asian area is the fastest-growing part of the globe. So we should be there."

Indeed, his trip to southeast Asia was requested by the Prime Minister's Office and comes just as Stephen Harper and Finance Minister Jim Flaherty are in Hawaii meeting with other Asia-Pacific leaders to discuss trade and economics. Flaherty will go on to China and Japan, following in the tracks of Natural Resources Minister Joe Oliver, who was there this week.

Their message echoes that of Mark Carney, governor of the Bank of Canada: if Canada is to thrive, businesses need to get off their wallets and move aggressively into markets that are actually growing, especially in Asia.

But that's far easier said than done.

Canada's productivity — a key to being globally competitive —is mediocre at best and needs to pick up speed, Johnston said.

Johnston, who has a long history of promoting innovation in Canada, recently had dinner with Jeff Immelt, the chief executive officer of General Electric Co., a company Johnston says serves as a prime example of how Canadian firms should behave in the face of adversity.

"They've never hunkered down. When it's in recession times, they are looking even more aggressively at world markets, at the clusters of activity where they are operating in and determining how they can be one of the best in the world."

But are the Governor General, the bank governor, the prime minister and front-bench ministers merely cheerleading from the sidelines while expecting business to take high risks?

No, says former top civil servant Kevin Lynch, a noted thinker on Canada's competitiveness.

"It's not just hype," said Lynch, now vice-chairman of BMO Financial Group.

Many companies will find it's in their interest to expand into higher-growth markets beyond the United States and Europe, he said, especially if their entry into the new markets is made easier by federal efforts.

"It's a shared responsibility," he said. Businesses need to explore new opportunities if they are to prosper, but government can help by reducing trade barriers, negotiating protections for investment and promoting the Canadian brand abroad.

"Capital will go where there are opportunities," Lynch said. "And at a time when you've got long, slow and volatile recoveries in the U.S. and Europe, it's a time to look beyond traditional markets."

Still, Canada is not Australia, he noted. There, government, academia and business have a concerted Asian strategy that has put that country on the forefront of trade and investment with Asia.