EconomicsCanada - Economic Capabilities Guideline

Economic Capabilities Guideline

What is it that Canadians believe is important when it comes to undertaking economic decisions and actions with confidence and competence? That's just what CFEE asked a wide cross-section of Canadians who attended one of nine forums held across the country.

With input and advice from leading economics educators and economists, CFEE listened to what Canadians had to say. We assembled their feedback in a draft document, which was reviewed and revised. And then we shared it with those who contributed to determine if they could support the document as a working guideline.

With widespread support, we present here—the Economic Capabilities Guideline. It represents CFEE's best collaborative effort to chart a course for future initiatives to improve the economic capability of Canadians. We welcome your feedback and comments.

Framework for the Economic Capabilites Guideline

The Economic Capabilities Guideline has been developed using the following framework.

The Target Concepts: These represent the most essential economic concepts that stand as the building blocks or analytical tools that enable Canadians to understand economic information and apply it to various conditions and circumstances, to formulate personal judgments, to make decisions, and to undertake actions.

The Target Areas for Application and Understanding: These represent the key areas to which the concepts should apply—the areas of economic understanding that have relevance for the economic roles, responsibilities, decisions, and actions that will face virtually all Canadians.

The Target Attributes and Attitudes: These represent the target attributes and attitudes that appear to be most highly correlated with the potential for achieving economic success—success defined in whatever way a person wants to define it.

The Target Skills: Beyond knowledge, understanding, attributes, and attitudes, there are some key skills that also appear to be highly correlated with economic success. These skills relate to our abilities to act and to accomplish the tasks we set for ourselves. In this way, attributes, attitudes, and skills are closely associated. Attributes are those inner factors affecting our sense of our own potential, attitudes relate to how we act, and skills relate to our capacity to act and achieve our goals.

We acknowledge, and refer readers to, the Conference Board of Canada's Employability Skills 2000+ as another reference for this area. However, although the Conference Board's guideline focuses specifically on skills that are important to the "workforce," the Economic Capabilities Guideline takes a broader focus and is concerned with abilities in many areas including the "workplace." Therefore, we see the Employability Skills document as a companion reference but quite distinct from the broader objective we are addressing in this Guideline.

The "Change Factors": It was made very clear from all of our consultations that Canadians are highly sensitive to, and concerned about, the forces, factors, and speed associated with economic change in the world today. It was stressed that, somehow, change, and how to deal with change, should be considered by all Canadians.

To that end, the Guideline identifies a set of key factors underlying much of the economic change that is under way and will continue to occur in our society. Canadians should have opportunities to understand how the factors listed in the Guideline generate change and have the chance to foresee possible problems, challenges, and opportunities that may result from change.

The Fundamental Economic Issues, Concerns, and Debates: There are a variety of fundamental issues that reach beyond the boundaries of economic concern alone. Although these issues, concerns, and debates do not stand as a component part of economic capability, they are key areas for analysis, deliberation, discussion, and debate.

The Target Concepts

The following represent the basic economic concepts that have been judged to be most valuable in enabling Canadians to understand economic events and realities, to analyze conditions, and to undertake economic roles and responsibilities with confidence and competence. It is not intended that Canadians would know these concepts by name and definition; rather, they would have a grasp of the essential concept and be able to apply this understanding.

Comparative Advantage: One producer has a comparative cost advantage over another in producing a good or service when the opportunity cost-that is, what is given up in the process of production-is less (note that if each producer is able to concentrate production activity on areas of relative comparative advantage, it is possible for all to do better through production and then exchange)

Distribution: The decisions, systems, and means by which resources, income, wealth, products, and services end up allocated to people and purposes

Economic Efficiency: The extent to which resources are used for the purpose for which they are best suited and most desired by society

Economic Freedom: The extent to which decisions and actions are based on personal choice and preference rather than on such external determinants as laws, regulations, and the dictates of others

Economic Growth: The increase in the production of goods and services resulting from an increase in the use of resources, better use of resources, both an increase and improvement in the use of resources, or use of new resources.

Economic Performance Indicators: The way in which information is presented summarizing economic conditions and changes over time (for example, employment, inflation, productivity, growth information)

Economic Power: The ability of a person or group to influence personal, household, workplace, or societal economic conditions and outcomes

Economic Resources: The natural, labour, and capital (financial and physical) resources that are potentially available for use in the production of goods and services

Economic Scarcity: The problem created when relatively unlimited needs and wants exceed the availability of limited resources

Economic Stability: The extent to which the level of economic activity (that is, the level of production of goods and services) varies over time through periods of expansion and contraction

Economic Statistics: The quantifiable economic information that serves as input to economic decisions and actions

Economic Surplus: Production of goods and services, and the attainment of income, that are beyond basic needs and that can be used in exchange for other things that are needed/wanted.

Economic Sustainability: The extent to which economic activity can continue into the future in a manner equal to or better than the present in terms of resource utilization and overall societal benefit

Employment Independence: The extent to which a person or household can function without the need for employment income (for example, the ability of a person to "retire" or the necessity for a household to have two income earners)

Externalities Interdependence: The impact, or consequences, that the activities of one individual or and group have on another individual or group-either positively or negatively

Interest: The cost paid, or return provided, that is associated with using someone else's funds over a period of time for the purposes of consuming or investing

Investment: The use of a resource to try to increase the value of that resource and/or the ability to acquire or produce other resources, goods, or services

Markets: The interaction of the decisions of sellers and buyers of goods, services, and resources resulting in various degrees and conditions of competition, demand, supply, and prices

Money: The instruments chosen to serve a society in terms of providing a medium of exchange, a means by which to store value over time, and a unit of account to enable pricing and the provision of income

Opportunity Cost: Every decision entails an opportunity cost-the loss of your next best alternative

Productivity: Output per unit of input

Risk: The degree of uncertainty associated with the potential outcome/result of an economic decision or action

Saving: The accumulation of funds above and beyond current consumer needs and the decisions regarding how those accumulated funds are stored for future use

Work: The physical and intellectual efforts of all those who make a productive contribution to households, business activity, communities, and society as a whole by locating, developing, creating, or using resources to achieve an outcome

The Target Areas for Application and Understanding

The targets for economic capability should enable Canadians to apply the fundamental concepts to an understanding/awareness of the following areas to support their economic thinking, analysis, decision making, and action:

Factors that influence employment/unemployment and that present challenges and opportunities to those who are employed and unemployed

Factors influencing investment, innovation, and technological change

Why nations are becoming increasingly linked economically, the factors that influence the linkages, and the potential and varying impact of these links on nations

Principles and methods of effective personal financial planning

The value of all forms of work to individuals, households, and the economy

Factors that influence the quality, quantity, and nature of work available in an economy

Worker and business organizations and related regulations influencing working conditions

Various roles that governments can play in the economy

Variations among nations and political parties in how they perceive, or could perceive, roles and priorities for government activity in the economy

Various policies that can be used by governments to influence the economy

Factors that influence government economic policy decisions

Factors that influence the purchasing power of money

Roles played by financial institutions with respect to exchange, saving, and investment

Relevant economic information as it is presented in the form of charts, graphs, and tables

Types of economic systems and ways of deciding (a) what will be produced, (b) how production will take place, and (c) how goods and services will be distributed

Roles played by entrepreneurs in an economy and the attributes, attitudes, skills, and processes that are important to entrepreneurial success

Influence of productivity, efficiency, and competitiveness on various economic decisions

Factors affecting variations in the economic development of nations

Factors that affect the distribution of income and wealth

Economic activity that can go "underground" and the consequences if it does so

Options available for assisting those who are economically disadvantaged

There is no free economic good because someone, somewhere, somehow incurs the costs associated with providing an economic good or service

Varying perspectives on the roles, size, and use of profits

The relationship between economic activity and the environment

The Target Attributes and Attitudes

A. Internal Factors: How a person feels about him/herself

The economic capability of a person will be enhanced if the person:

has an inner driving force, cares deeply about something and has a strong commitment to achieving goals that are personally important
(Driving force = Passion)
believes that he/she has a significant ability to overcome obstacles and influence the outcome of events in one's life
(Can influence outcomes = Internal Locus of Control)
believes that he/she can achieve success and does not fear failure in actions related to what is important and related to goals
(Doesn't fear failure = Self-confidence)
has a high level of self-respect, values personal goals, and believes that he/she is worthy of accomplishments and achieving success
(Worthy of accomplishment = Self-esteem)
is willing to apply talent and skills in pursuit of ambitions, dreams, and personal goals
(Willing and able to apply oneself = Self-actualization)
has accumulated a series of personal accomplishments leading to the belief that one is capable of achieving success
(Belief in ability to accomplish = Self-efficacy)
has a broader sense and vision of one's self in the context of community and society to foster a concern for the well-being of others
(Concern for well-being of others = Compassion)

B. External Factors: How a person acts and does things

The economic capability of a person will be enhanced if the person:

is willing to act, take initiative, and follow up with commitment and perseverance
(Willingness to act)
is motivated and focused on accomplishment and achieving short-term goals while maintaining a focus on longer-term goals
(Motivation for accomplishment)
is willing and able to learn-read, ask, inquire, research, and discover in order to seek out the information, knowledge, advice, and insights that can assist in achieving goals
(Willingness to learn)
has basic literacy and numeracy skills, and good health, to enable learning
(Readiness to learn)

The Target Skills

The following skills will enhance the economic capability of a person:

Capacity to Plan: Ability to chart a course and organize resources for the achievement of goals and to respond effectively to events and changing circumstances and conditions

Communication: Ability to access, gather, synthesize, and provide relevant information and ideas

Creative Thinking: Ability to generate new ideas, approaches, possibilities

Critical Thinking: Ability to apply knowledge, understanding, information, and experience to make effective judgments and decisions and to offer insights, opinions, and ideas

Decision Making: Ability to apply an effective process involving evaluation of alternatives and criteria in making choices from available options

Goal Setting: Ability to establish meaningful goals that are measurable, realistic, and positive (working toward something, not to avoid something) and that cover a variety of time horizons (for example, short-term and long-term)

Interpersonal: Ability to relate well to and collaborate/co-operate/partner/team/
network/associate with others to achieve productive outcomes and goals in an effective, harmonious environment

Opportunity Orientation: Ability to apply knowledge, experience, vision, and creativity to identify opportunities as they exist and as they may arise (for example, existing, changing, and evolving needs, wants, problems)

Personal Effectiveness: Ability to organize one's personal affairs and habits to be consistent with standards and expectations that contribute to a positive relationship with others and the achieving one's goals

Problem Solving: Ability to generate and achieve solutions to problems and challenges that arise

Sharing: Ability to determine ways to effectively assist and support others through sharing of time, knowledge, ideas, and resources

Technological: Ability to apply the relevant tools of technology to tasks and activities that enable the accomplishment of tasks and the achievement of goals

Transfer Knowledge and Experience: Ability to transfer knowledge and experience from one area to another (for example, from school to the workplace, from camp experiences to volunteer activities, from employment to starting a business, from one job to another job)

The "Change Factors"

Canadians should have opportunities to witness, experience, and analyze the extent to which the following "change factors" can influence economic activity, environments, conditions, potential outcomes, and opportunities pertinent to their lives (and those of family members and community members)-today and in the future.

The economic capability of a person will be enhanced if the person is able to understand the potential changes and impacts associated with the following:

Technology
Demographics (particularly the impact of an aging population)
Political Priorities and Policies
New Information, Knowledge, and Discovery
Changing Stages/Phases in the Business Cycle
The Fiscal Position of Governments (the problems or opportunities they create in terms of government activity and economic policy)
Nature of Work and Working Conditions (for example, more at-home activity, increased rate of job change, part-time work, job-sharing, consultant services, online activity, multiple careers)
Relative Economic Performance (for example, changes and consequences arise when there are shifts in the way one person performs a task relative to another, how one business performs relative to another, how an industry performs relative to another, and how one country's economy performs relative to another)
Lifestyle/Consumer Tastes and Preferences
Issues of Public Concern and Priority (for example, the priority of concern assigned by the public in general to such areas as the environment, the debt/deficit, and so forth)
Private and Public Sector Restructuring
Rationalization within Industries and Markets
Globalization and Increasing Economic Interdependence

Fundamental Issues, Concerns, and Debates

Although topics related to issues, concerns, and debates are not part of the actual Capabilities Guideline, they represent key areas to which many Canadians will have to apply their economic knowledge, skills, and values. Therefore, based on the feedback we have received from Canadians, the following are presented as the key issues for discussion and debate. It is hoped that, through various opportunities, these issues can be brought to the attention of Canadians and that they will have an chance to consider them, think about them, and formulate personal opinions and perspectives.

What are the appropriate roles for government in the economy, and how are these roles best undertaken?
What constitutes economic power, and how it is allocated and exercised in our economy?
What is an equitable distribution of income for our society and how do we consider variations in wealth, along with income, in addressing the issues related to economic inequality?
How is poverty defined, and what factors are causes of poverty and what efforts might be undertaken to decrease the level of poverty in our society?
What rights and responsibilities do individuals have in terms of their economic roles and decisions?
To what degree is government debt a problem, and what should be done to address the economic challenges and opportunities that stem from our level of public debt?
What are appropriate government policies to deal with the economy, its performance, and the achievement of its goals?
In what ways do the economy and the environment stand as adversaries or allies in efforts to sustain and improve the environment?
To what degree, if any, should the burden of various taxes differ?
What are the most appropriate and desirable uses for our available resources?
What priorities and policies are best used to deal with the trade-off between concern for inflation and concern for unemployment?
What is the global responsibility of a nation?
What is the social responsibility of a company beyond concern for owners'/shareholders' profit
What priority should be assigned by businesses, and by a nation overall, to efforts to improving productivity, efficiency, and competitiveness?
Who is responsible for the quality and quantity of training provided to workforce participants?