Queen's motto is Sapientia et Doctrina Stabilitas, which we generally translate as "Wisdom and knowledge shall be the strength of thy times." This motto is especially pertinent to you as engineers graduating today. At no time in our history has the development and use of knowledge played a more critical role in the economic development of this country. And at no time has the application of wisdom to public policy been so critical to the future of Canada and the world. Today, I want to say a few words about the challenges you will face in applying knowledge and wisdom to generate economic growth and social development.

In 1776, Adam Smith published what he called An Inquiry into the Nature and Causes of the Wealth of Nations—the first treatise on the discipline of economics as we know it today. He asked the fundamental economic question, Why do some nations grow and prosper while others do not? His basic answer was that prosperity comes through the efficient allocation of resources, through the competitive marketplace, and through the rapid accumulation of capital. And for almost two centuries thereafter most economists developed and refined these ideas within a framework in which the creation of knowledge had little or no part to play in explaining economic growth. Most economists developed models of the economy in which the state of technology was taken as a given—exogenous to the models—and hence the process of technological innovation as a determinant of growth was largely ignored by most (but not all) economists.

But over the last couple of decades, a new "growth economics" has emerged. It relies on models in which technological change is endogenous and, in fact, fundamental to the process of growth. (Of course, engineers have known this all along—economists are just slow learners!) Today, the emphasis of growth economics is not just on efficient allocation of resources and capital accumulation, but also on knowledge generation and diffusion and on policies that promote technological progress. Four key issues emerge:

  1. The role of research and knowledge creation
  2. The role that the efficient development and application of research can play in increasing productivity
  3. The role that the management of an enterprise can play in harnessing the benefits of new technology
  4. The role that government can play in providing the appropriate framework to encourage technological change and innovation

These are four key issues that you of the applied science class of '02 will have to deal with as you leave Queen's. Let me say a word about your challenge in each.

First: Research and knowledge creation

New knowledge is fundamental to growth. While Canadians can simply use ideas from the research of others, that won't take us to the leading edge. To lead the world, we must generate our own research. The quantity of that research is important, but even more important is the excellence of the research effort. Excellent research is, simply put, a key to strong and sustained growth. In our universities and in our private labs we must pursue the best. Your challenge is to be excellent in knowledge creation. I hope a number of you will go on to graduate school and into research and teaching and that you will always strive for excellence.

Second: Application of knowledge to the development of new products and processes

Developing new products and more cost-efficient processes is the very stuff of engineering, and is absolutely critical to economic growth. But Canadian companies have, over the past few decades, lagged somewhat behind their international competitors in applying research to product and process development. Put quite simply, without innovation in this area, Canadian economic growth will lag that of others and, over time, our relative standard of living will fall. Your challenge over the next few decades is to use your knowledge to make Canada a world leader in the development of new products and processes.

Third: Management

The management of knowledge and of knowledge workers is absolutely critical to the growth of productivity and to the profitability of firms. We are only now beginning to understand the importance of knowledge management, and both the techniques and processes of knowledge management require extensive development. Research and experience have proven that spending money on new technology is wasted unless everyone in the enterprise embraces that technology and integrates it into the way they do their business.

Unfortunately, Canadian senior managers—myself included—have not paid sufficient attention to this issue. We have not yet done enough to adapt our businesses and institutions to get maximum value from our technology investments. We don't fully understand the impact of new technology on workers. And we haven't sufficiently examined whether our corporate organizational structures are appropriate for integrating new technologies and processes.

You are the future knowledge managers. I hope you take up the challenge to make Canadian firms and institutions leaders in this area.

Fourth: Public policy

Perhaps the most daunting challenge of all will be for you to find the right public policy framework to encourage technological progress and productivity growth. Governments are struggling with this now, and you will struggle with it throughout your careers.

Answers are elusive. I have wrestled with this issue in tax policy, in fiscal policy, in health policy, and I continue to struggle with it now, as I oversee the country's monetary policy. In the area of macroeconomic policy, I think we can claim some very modest success. But we have had less success in the difficult fight to establish an optimal public policy framework to grow and sustain a nation of innovators.

I hope some of you will join the public sector and take up this challenge.

So, collectively and individually, you, the class of 2002, face these four challenges as you leave Queen's. I know you will strive to do not just a good job in meeting these challenges but an excellent job.

I wish you success. May wisdom and knowledge be the strength of your times.