3
The Knowledge System

The first stage of the Knowledge Assessment in Prince Edward Island was initiated in Charlottetown on February 24 and 25, 1998, with meetings of four focus groups. The topics of discussion were based on the template of the national knowledge system prepared by the NRC Committee on Knowledge Assessment and adapted for PEI in consultation with an advisory group of the Institute of Island Studies.

The four focus groups represented the private sector, the research community, learning professionals, and non-governmental organizations. The private sector group included officials of firms in the following industries: business consulting, aerospace, information technology, venture capital, construction, potato farming, and telecommunications. The companies ranged from I to 300 employees, and have been in existence from I to 100 years. In fact the lines were not tightly drawn, and there was considerable overlap among the focus groups. Some individuals served on more than one group, and some institutions were represented on more than one of the groups. A full list of the participants is given in Appendix 1.

Climate For The Knowledge Economy

Cultural and Political Climate

As a place to live and a place to work, Prince Edward Island has clear and undeniable advantages. Its physical beauty is striking, and this is attested to by the thriving tourist industry and the vacation retreats of numerous wealthy and



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--> 3 The Knowledge System The first stage of the Knowledge Assessment in Prince Edward Island was initiated in Charlottetown on February 24 and 25, 1998, with meetings of four focus groups. The topics of discussion were based on the template of the national knowledge system prepared by the NRC Committee on Knowledge Assessment and adapted for PEI in consultation with an advisory group of the Institute of Island Studies. The four focus groups represented the private sector, the research community, learning professionals, and non-governmental organizations. The private sector group included officials of firms in the following industries: business consulting, aerospace, information technology, venture capital, construction, potato farming, and telecommunications. The companies ranged from I to 300 employees, and have been in existence from I to 100 years. In fact the lines were not tightly drawn, and there was considerable overlap among the focus groups. Some individuals served on more than one group, and some institutions were represented on more than one of the groups. A full list of the participants is given in Appendix 1. Climate For The Knowledge Economy Cultural and Political Climate As a place to live and a place to work, Prince Edward Island has clear and undeniable advantages. Its physical beauty is striking, and this is attested to by the thriving tourist industry and the vacation retreats of numerous wealthy and

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--> less wealthy North Americans. Its climate, while harsh in winter, is comfortable and sunny during the summer months. It has a mythology, attractive to many, of being an island of farmers and fishers, independent and ingenious, hard workers who shun the traditional eight-hour day. At the same time, it is a province of Canada, albeit the smallest, and therefore enjoys (or endures) three levels of government: the federal, the provincial, and the local or municipal. And it has the Confederation Bridge or ''Fixed Link" connecting it to the mainland, new and still controversial within PEI but better known than the Island itself throughout much of the world, contrasting a romantic image of lost isolation with a practical one of a new era in communications with the rest of Canada and the world. The real long-term impact of the bridge remains to be seen. For agriculture, the soil is good, rainfall is plentiful, and Islanders believe the quality of their potato crop is the finest in the world. The province also has a strong livestock sector in dairy, hogs, and beef, made self-sufficient in feed supply through the rotation crops from the potato industry. According to the focus groups, other crops are distinctly secondary and receive much less support from the government. Islanders see themselves as a race of entrepreneurs. As is true of farmers and fishers everywhere, risk is part of their lives, but they claim to face it with their own brand of common sense (and with comfortable awareness of the Canadian Government's generous social safety net). They have a sense of place, and community is important. The provincial capital, Charlottetown, is a small city of about 30,000, but provides an urban counterpoint to the general rural environment. Infrastructure is generally as good as, and in some cases exceeds, other parts of Canada, with one notable exception: the complete lack of public transportation. The province's railroad, which opened in 1875, was removed in the early 1990s, and the abandoned railbed was converted into hiking, biking, and snowmobiling trails. The threats that Islanders see to their way of life and their culture have roots in many of the same factors as their strengths. The success of the potato crop has led to over-reliance, and many feel that Island agriculture is reaching its limit in terms of production. Productivity in potatoes is high, but there are adverse environmental impacts from erosion, soil degradation, and excess fertilizer and pesticide applications, and there is limited suitable additional land to be cultivated. There has even been some criticism of the sight of the potato monoculture in the PEI landscape, lacking variety and color, and of the loss of the supplementary income that might be supplied by other crops. However, horticulture thrives in private gardens and is a source of potential expertise. The harsh winters, combined with the seasonality of farming, fishing, and tourism result in a dependence on Federal Government transfers that many Islanders would like to see diminished. Employment Insurance payments and Equalization Transfers from the wealthiest to the poorest Canadian provinces

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--> dominate the Federal subsidy to the Island economy, and the Federal contribution to the economy was thought to be as much as 50% of GDP. 1 Perhaps the threat most often pointed out by Islanders is the loss of young people. The population declined throughout the early decades of the century, bottoming out early in the Depression, before entering a period of slow, then steady growth until the present. Its rate of growth has been far less than the rest of Canada, however, and its share of national population has declined significantly. It is almost a tradition for young graduates to leave the Island in search of work or adventure, and only a fraction return. In contrast, the influx of trained people attracted by the environment, culture, or jobs, is felt by Islanders to be unreliable. Newcomers are sometimes not considered "real" Islanders and are thought not likely to stay long. In fact, many do leave after a few years, some in part discouraged by their lack of acceptance into the community. In addition, there are few opportunities for spouses, and the school system is said to be a negative factor to some potential recruits. The external threat is also on Islanders' minds. The rest of Canada is considered potential competition, especially for Island workers. The economy is highly dependent on the Federal Government, and the threat of Quebec secession is taken seriously here. There are many concessionary programs for the French-speaking population that benefit PEI, and which might be reduced without the influence of Quebec. Transport and energy costs are higher than in neighboring provinces, although the gap with other provinces has closed significantly in recent years with the opening of the Confederation Bridge and the establishment of a regulatory cap on electricity prices. It is widely believed that industry will not locate in PEI unless it is subsidized at a level at least comparable to that offered by neighboring jurisdictions. In potatoes, Maine and Idaho are among the obvious competing jurisdictions capable of making a technological breakthrough at any time. For labor intensive industry, there is also the specter of China. The labor force is one of the positive attributes of the Island, according to the private sector participants. Workers like to apply their ingenuity to solve problems, although there is a belief that PEI workers are not well suited to work in situations that require regimentation and offer few opportunities for individual creativity. PEI workers tend to be loyal to their companies, and dedicated to re 1   This is an outdated impression, although still valid for total public spending. In April 1998, subsequent to the focus groups, the Atlantic Provinces Economic Council released its study of PEI, Linked for Good, which indicated sharp decreases in PEI's dependency on federal and government spending. Net federal spending in PEI (spending and transfers net of revenues raised) declined from 47% of GDP in 1976 to 25% in 1995. Meanwhile, provincial spending (including federal transfers) fell from 33% of GDP in 1980 to 25% in 1995. These decreases in dependency on public sector spending were the largest of any province in Canada. (pp. 17-19).

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--> maining on the Island, despite the promise of higher salaries elsewhere. Labor relations are peaceful, and strikes are rare. In the agricultural sector, there is an adequate labor force to cover the demand of peak periods in spring and fall, which complement the busy tourism season in summer. The workers who generated the most pride among the focus group participants were those associated with the relatively large arts community. Crafts, writing, and performing arts are highly developed. The low cost of living and perhaps the physical beauty and relative isolation attract many artists and performers into a well-organized community linked with a popular local monthly arts and entertainment publication. Celtic fiddling and piping are internationally renowned, and a community symphony orchestra serves the local population. Many consider the arts a resource that has been insufficiently exploited. It is claimed that the spirit of entrepreneurship is strong on PEI. Many young persons want to form their own businesses. They are not afraid of risk, and they are not afraid of change. Many people expect their lives to change, and are willing to support new initiatives by government and the private sector if that will enable them to stay and prosper on PEI. A good example is the recently completed Confederation Bridge. This new fixed link to the mainland appeared to break many cultural icons as well as raising environmental concerns, and was fiercely opposed by a vocal minority of Islanders, but a majority of the general population accepted this potentially radical change with little resistance, if not enthusiasm. Literacy is a problem, according to the focus groups. Many adults, especially in more remote parts of the Island, are not functionally literate, and would have difficulty adapting to the conditions of technological work. There was concern as well about the adequacy of literacy skills among recent high school graduates. Technological literacy is also considered a problem, but the solution may be more accessible. Recent efforts to expand the use of technology in the schools have met with little enthusiasm among many teachers, who are concerned that computers need to be better integrated into the curriculum, and should be perceived as a tool for learning rather than an end in themselves. Technology training facilities for teachers need to be expanded. Although it is claimed that every school has a broad-band link to the Internet, many schools need more computers and trained teachers if they are to realize the benefits. On the positive side, many students have grown up with video games and are more familiar with computers than their teachers, and an imaginative program may find a good response. Concerns about gender discrimination are similar to those of other jurisdictions. Women have full access to education and are well represented in most occupations, save agriculture and fishing. They are rare in the "boardroom," a lamentable condition common to most jurisdictions in North America and elsewhere. The focus groups, nearly 90% masculine in composition, were in disagreement whether more young men than women leave the Island. There seems

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--> to be little data on out-migration, although it could be very helpful in designing programs to retain and regain skills on the Island. Some focus group participants did not consider the media in PEI a strong asset. There is little Island coverage by the national media. Although the Island is well served in terms of the number of local daily and weekly periodicals and radio stations, as well as a CBC television station, it was felt that analysis of local issues needs to be strengthened. More emphasis should be placed on investigative reporting, according to the focus groups. In particular, the role of the media in informing people about the knowledge economy needs to be strengthened. People need to be better aware of the achievements already in place, such as the broadband network. The important initiatives associated with the Knowledge Economy Partnership have not been widely reported, although a symposium related to the Knowledge Assessment received a full page of coverage in one of the local papers. A suggestion made during one of the focus groups illustrates the combination of cultural advantages and economic isolation. The problem was posed as one of marketing and market penetration, and the suggestion was to coin PEI itself as a brand, relating both to tourism and to product identification. The theme proposed is that PEI is a special place where people do not solely work in offices or at day jobs but enjoy a combination vocation/avocation lifestyle. Independent and creative Islanders enjoy and support music and crafts and are quick to master and adopt technology. The risks of the traditional primary sectors have created an Island of entrepreneurs, and the PEI's small scale allows them to enjoy only "a few degrees of separation" in their daily affairs. This is an appealing image that could be used as a brand to promote tourism and all kinds of products. However, it was pointed out that the danger of such a campaign is that if one "PEI-brand" enterprise fails, it could affect the success of all others. This point was especially relevant to one of the vanguard enterprises, electronic commerce, discussed later in the report. In accord with this image, many Islanders are attracted by the potential of information technology. It is a tool to enable people based in PEI to serve clients and even telecommute all over the world. It also provides opportunities for small enterprises, and for small communities. Locally grown enterprises are favored, rather than "footloose" call centers or large fabrication facilities that could later be transferred to lower wage sites. Economic Climate Most of the industrial sector is composed of small and medium enterprises, the majority of them being family-owned businesses. Many of these serve as suppliers and contractors to large primes such as Allied Signal and Atlantic Turbine. The aerospace companies have attracted a number of spin-offs and startups, and recruited other firms for supporting services such as trucking of engines.

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--> There was some discussion as to whether there is good technical support available for startups, but no disagreement on the difficulty in getting capital for new companies. Some venture capital is available on the Island, but very little of it goes to startups. In general, the government is the lender or grantor of first resort, and several Federal and provincial funding programs are available to support new ventures; again little is awarded to new local firms. The equivalent situation in the farm sector is the role of the larger, vertically integrated agro-industrial companies. For example, the French fries companies are widely perceived to have a significant degree of control over that part of the potato industry reliant on growing potatoes for processing. They provide the fertilizers and other chemical inputs, and according to one focus group participant, turn some farmers into piece workers. Where the large corporations own the technology, they also tend to appropriate most of the added value. Illegal or informal transaction costs appear not to be a significant problem in doing business on PEI, and crime rates are low. However, personal relations and connections count for a great deal; this may or may not represent a barrier to new industry on the Island. Some participants claimed that official figures, which in past years described up to seventy per cent of the economy of PEI as falling in the public sector, are misleading, in that a large contribution to that was employment insurance. In any case, the numbers are falling, and they feel a more accurate figure would be less than half. Even so, many focus group members felt that the government influence is disproportionately large on PEI, and that the Island is "over-governed." The government puts considerable money directly into the economy, but it is not always perceived as effective or useful, and needs a greater strategic vision. More use could be made of planning at the community level, to enable micro inputs for micro opportunities. There also should be a comprehensive plan to follow up initiatives already taken. For example, Island Tel has installed the fiber optic network which makes broad-band communications available all over the Island, including schools, but more effort is needed to take advantage of it to improve public service, education, and business opportunities. Programs should be aimed at ultimate goals, like better science and math education, and not stop at means, like broad-band communications. The focus groups felt that in past years government intervention has been biased toward heavy industry sectors, like aerospace and agricultural processing. Current provincial government policy seems to favor smaller business, and information technology is now receiving more attention. It also supports alternative forms of agriculture, like emu ranching, ginseng growing, and bioengineered potatoes. The Government intervenes directly in some areas. It subsidizes industries and loans money to build new plants, relieving the commercial banks of this responsibility and, according to some, the companies of accountability. Many, if not most, of the major industrial initiatives have been subsidized by the govern-

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--> ment, including the recent expansion of Atlantic Turbines and a local software company. This amounts to the government paying directly for jobs, and the question was raised whether this was the most cost-effective means of securing them. It was noted however that it is difficult to stop when other jurisdictions offer similar incentives. In some areas, government intervention was considered by several participants to be misdirected, specifically for support of the arts. For example, there was some criticism of the large government subsidies for a performance center rather than investment in programs that would have directly benefited local artists and culture on a year-round basis. Some think that the arts are a key to greater prosperity in PEI, and Government investment in the arts, such as support to theaters and festivals, has a high return. Others feel that infrastructure such as a performance center is a more legitimate role for government than direct subsidies to artists, or even businesses. Government subsidy of private enterprises is a Canadian tradition, but it is apparently not without controversy among Canadians. Some PEI businesses are becoming familiar with international markets and are well linked. PEI potatoes and seed potatoes are sold all over the world. The Island has a good international reputation, promoted by former Islanders living "away." Taxes, including sales taxes, are seen as high, within the upper third among the Canadian provinces. For new industry, however, the government frequently offers tax holidays, and there are no provincial payroll taxes in PEI. The Knowledge Resource Base The creation of new knowledge is an important element of science and engineering and is usually measured by the output of original discoveries or inventions. But discoveries that are new to the province or new in context are equally important with those that are new to the world. Research and development are important both for knowledge creation and human resource development. Creation and dissemination of local knowledge is often of most benefit to local knowledge-based enterprises and essential for competition. A recent study by the U.S. National Science Foundation looked at the papers referenced in patent applications, and found that a majority of them came from researchers within the patent applicant's own country. Even when the local research is not very advanced, an active scientific community plays a role of providing "coupling" to the research going on in the world at large. This coupling may eventually become a two-way flow. The local group learns about research that may become of importance to the Island while the research is still in the nascent state. If the coupling is effective, they can also influence the direction that some of the research is taking. The funds required for such coupling are small, primarily those required for attendance at meetings, journals, and professional visits.

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--> Research and Development The research enterprise in PEI is limited, but investment is tightly focused, providing PEI with a cluster of facilities in the food science area claimed to be the strongest in Canada east of Montreal. Efforts are being made to capitalize on this cluster through the recent establishment of the "Belvedere Life Sciences Research Group," a partnership aimed a pursuing international research and development opportunities in food production systems, animal health and diagnostics, and technology. Much of the research going on at the University of Prince Edward Island is carried out at the Atlantic Veterinary College. The only other major post-secondary school is Holland College, a community college with training and adult education programs. Participants feel that the government has lacked a long-term commitment to research and development in favor of instant results in a very few fields. In the Veterinary College, however, the physical laboratory infrastructure is considered to be very good, and the College's particular strengths in epidemiology, herd health, and mariculture were noted. Outside of the Atlantic Veterinary College, the university is considered by the government primarily a teaching facility, and the professors have relatively little time for research. There are no graduate programs, outside of Veterinary Medicine, and a recent proposal for a Masters in Education was rejected. This "cap" on graduate education at UPEI is embodied in the legislation that established the University in 1969. Establishment of new programs must also obtain the approval of a regional body, the Maritime Provinces Higher Educational Commission (MPHEC), responsible for promoting an efficient and accessible distribution of programs among Maritime universities.2 Currently only a small amount of basic research is carried out at the university, supported by grants from federal government agencies and private sector contracts. But researchers are frustrated by the lack of graduate students, and those with a primary interest in research tend to leave. The Veterinary College, with about 65 faculty, carries out research in aquaculture, agriculture, dairy sciences, and swine husbandry, and has good microbiology and biotechnology facilities. Notably absent from the university is research capability in computer sciences, semiconductors, and electronics that might support an IT industry. Outside the veterinary college there is no agricultural research at the university. There is, however, tourism research carried out at the Atlantic Tourism and Hospitality Institute at Holland College, with links to the Business School at UPEI. A new 2   Following the recent proposal by UPEI for a Masters Degree in Education, the provincial government requested MPHEC to review and recommend on whether the legislative cap should be lifted to allow UPEI to establish graduate programs outside the Veterinary College. MPHEC has recently completed its review, which was under way at the time of the focus group meetings of the Knowledge Assessment, and has submitted a report favorable to the expansion of graduate education at UPEI.

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--> degree, a Bachelor of Business in Tourism and Hospitality, has just been established by UPEI, providing two years of specialized studies following completion of the two-year diploma program at Holland College. This initiative is likely to assist in meeting that industry's research needs. The federal presence in PEI research is concentrated in the food area. The Agri-Food Canada Research Center has about 90 research personnel and accounts for almost seventy-five per cent of the research effort in PEI. There is also a federal livestock and plant pathology laboratory, the Center for Animal and Plant Health, in Charlottetown. The Center has a P-3 level containment facility, with special facilities for handling and testing sensitive materials. These federal facilities carry out research, with the government retaining the rights to results, which may be licensed by cooperating companies or offered in the market. There is a Food Technology Center with core funding from the Provincial Government, very well equipped, and staffed with about 20 researchers, mandated to work with and for industry on product and process development and on quality assurance. The Center also has some resources to support research projects from the private sector through matching grants. There is also some research carried out by industry. Cavendish Farms, part of the Irving Corporation, is engaged in a research collaboration with Monsanto on transgenic potatoes. There is little research on other crops. Another private company, Diagnostic Chemicals, has a good reputation for developing devices used for environmental testing. Promising areas for research at the university include the marine coastal environment and the potential of mariculture. A key environmental issue is sustaining the estuaries which are under threat from acidity, runoffs, and build-up of sediments. There is also some concern over health problems resulting from pesticides used in agriculture, and organic farming was identified as an emerging market of major potential, requiring research into production, processing, packaging, and marketing. Focus group participants saw a need for more research in fisheries, especially with regard to lobster. Despite concerns that stocks might be on the verge of decline, little field research is being carried out in PEI and there is no reliable knowledge base. (There is, however, a unique center for lobster health at the Atlantic Veterinary College.) Aquaculture and mariculture have promise for retaining income from presently harvested species that are under threat; production of mussels is already well established. Species selection for local conditions, including management of ducks and other predators of the product, and control of diseases are important research areas. The winter ice cover limits aquaculture of some species, and research is required into fast-growing varieties, management of predators, control of diseases, and good sources of feed. Algae production for feed might be a fruitful enterprise in its own right. Participants considered much of the existing research to be of a problem-solving nature, with some knowledge gained, but generally not producing salable

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--> results. In part, there seems to be a self-deprecating attitude among researchers about research. Islanders expect experts to come from away and tend to distrust local expertise, at the same time that many of them resent the outsiders. There is no association for the advancement of science to promote research and speak for the research community, and there is no mechanism for agreeing on and implementing priorities in research and development on a sustained basis. The research focus group heard a brief presentation on the activities of AVC, Inc., a private corporate arm of the Atlantic Veterinary College at the University of Prince Edward Island. The corporation was formed to promote and market research products of the university to an international market. The original focus was on products relating to fish health and pharmaceuticals, and it has now expanded its interests to environmental issues. It is a for-profit subsidiary of the university, whose shareholders are faculty members, and patents are held jointly by faculty researchers and the university. However, to date the experience with patents is limited. Holland College also has set up a for-profit initiative involving joint ventures with private firms. The likely focus areas are software development, training packages, and enterprise development. The college also plans to establish an Enterprise Development Center to assist in generating new ventures in the information technology area. Access and Dissemination Prince Edward Island has full Internet connectivity and good links to the Canadian information system, so access to knowledge itself is not a problem. The greater issue is the link between information provider and user, a role traditionally played by extension agents, technological information and technical assistance services, and consultant firms. The agricultural extension service has seen some reduction in resources in recent years, and accordingly has shifted its emphasis from one-on-one consultation that provided advice to growers to larger meetings and courses that provide information but not recommendations. The meetings emphasize potatoes and livestock, with less attention to rotation or alternative crops. The extension workers are considered by some not as well informed as the leading growers. The National Research Council of Canada supports an extension service for industry concentrated in manufacturing and biotechnology. The service is generally good, but there are just four agents assigned to Prince Edward Island. Human Resources And Diffusion Of Knowledge The learning human being is the factor that allows the firm or producer to do new things and remain competitive. This means selection, interpretation, and understanding of information, and the conversion of information to knowledge. Dif-

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--> fusion refers to the flow of knowledge among people and institutions, and the means by which it reaches people who master the knowledge or technology and put it to use. Human Resources The business and research groups had much to say about the quality of the educational system, of which they were on the whole critical. The learning and community groups, with greater representation from the teachers and post-secondary faculty, were more positive, but the discussion, and the lack of agreement itself, left a feeling that this is an area that requires further attention. The critics believed that PEI's proposed knowledge economy is presently not well served by the educational system. After a period of major investment about thirty years ago, which brought the education system on par with other provinces, there is now a perception of stagnation, with an aging workforce and physical plant. Standards vary from school to school, and at present only the university entrance requirements constitute a uniform standard, although secondary graduation outcome requirements are currently being developed through a regional initiative. Some of the focus group concerns included inflated grades, high school graduates who can not write a business letter, dropout rates of twenty-five per cent for males and fifteen per cent for females, the integration of special need students, out of date texts, and the quality of teaching. Neither the schools nor the universities are producing the number and quality of technical workers that are needed for the knowledge economy, and many technology related jobs are going unfilled. (This latter complaint is heard in the U.S. and other industrialized markets as well, as the growth of technology sectors outstrips the educational programs.) The primary and secondary education systems in PEI are under challenge at present. The mathematics and science curricula are being restructured, and the teachers are struggling. The teachers' union is concerned, calling for more consultation with teachers, and for more resources to help teachers cope with technology and increased workloads. In recent years, substantial investments have been made in technology, bringing the ratio of computers to students into line with the national average. PEI was the first province in Canada to connect all of its schools to the Internet via a broad-band network. Some teachers claim, however, that investment has focused almost entirely on hardware rather than content development. Without more integration of computers with the curriculum, they feel that much of the educational potential will go unrealized, and that funds will have been drained from other aspects of education for no good purpose. According to critics, neither the University nor Holland College is sufficiently oriented to preparing trained workers, a complaint frequently heard from employers everywhere. The business leaders felt that the university needs to broaden its

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--> focus and be more open to partnerships with industry; the Veterinary College was cited as a model in this area for the rest of the university. Holland College was felt to be too driven by revenue considerations and criticized for its emphasis on producing income for itself. But Holland College's ''competency-based education" approach emphasizes active industry participation in program development, and the College may be suffering more from a problem of marketing outreach to its prospective clients than from lack of capability. Some felt it was a problem in itself that less than ten per cent of the faculty of the university are Islanders. All admit that retention of new faculty might be improved if more Islanders were recruited, but the law prevents the university from favoring Islanders over other Canadians. Combined with the lack of graduate research programs, the result is that many successful Islanders with research careers return to PEI only in retirement. In academic terms, Island university graduates seem to do well, earning stipends and awards in good graduate schools. About eighty per cent of the student body of the University is native to the Island. There are few international students. It costs about C$10,000 a year for a Canadian student to attend the University or Holland College, including tuition and living expenses. Costs are somewhat higher at the Atlantic Veterinary College and for foreign students. Although these costs are low by North American standards, many students have financial problems and develop debt loads. The proportion of secondary school graduates going straight on to university has declined since the early 1990s. Holland College enrollments, by contrast, increased seventeen per cent last year. Enrollments in private post-secondary training institutions have also increased sharply. Students seek to leave earlier, and to treat education as an investment, seeking just the skills they think they will need in their work, rather than a broader knowledge background. The brain drain of young people, especially technically trained students, is one of the chief concerns of the knowledge and development community. Some feel that with new industry coming to the province the brain drain will become less of a problem; the wage gap with the rest of the Atlantic region has declined, and higher salaries are available in PEI in the aerospace and other industries. More graduates are tending to stay on the Island, except in technology-related areas, and in public administration, business, and nursing. There is little tracking of students who have left the province. Participants believed that if there were graduate educational opportunities, including an MBA, fewer students would leave, and more might be attracted from away. It was suggested in the focus groups that one issue is a governmental fear that allowing graduate degrees, including a proposed M.Ed., would increase the number of teachers with advanced degrees and increase the cost of teachers' salaries. If this assertion is true, it would be a clear demonstration of the choices facing a government promoting a knowledge economy. There may be a simple

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--> conflict between a successful knowledge economy and a low cost educational system, and decisions may have to be made. One of the underexploited resources of PEI is the diaspora of Islanders living in mainland Canada and abroad. Some have acquired valuable skills in science and technology, business, or management, and others have funds to invest. There was disagreement among the forum participants whether former Islanders could be induced to return or invest. But some jurisdictions with less sense of place than PEI have built successful programs to attract expatriate nationals, and this could be explored. Some suggested a strategy of building an environment that favors knowledge-based enterprise with the hope of attracting Islanders and non-Islanders alike to the physical and cultural beauty of PEI. Such a strategy might be built around the university, but it will be necessary to expand programs and import the skills. A computer sciences masters program might be a place to start, but such initiatives require long lead times and a commitment from the government. Holland College has developed a timely program of training for industry, employing part-time teachers from private sector companies, and working closely with the companies in design of the programs. It has also developed specialized programs responsive to industrial needs, like tourism. However, as noted above, focus group input also suggested that the College sometimes has difficulty adapting its programs quickly to the needs of new industries. Distance learning could fill in some of the gaps. There are some courses available from other universities. For example, an MBA can be had from the University of Moncton; the community information center at Wellington serves as liaison for that program in the French language for the Acadian community, and is considering a French M.Ed. as well. The University and Holland College have taken some initial steps to offer distance delivery of extension courses. Both have established centers on campus to help professors prepare material for distance delivery. Participants disagreed whether it was desirable to partner with an institution, like the University of Moncton, that already has an established distance education program and is able to provide a superior product in PEI. Some saw danger that the institutions in PEI would become mere facilitators for others and unable to attract students and expert faculty to the Island. This is seen by some as a general dilemma for a small university, for developing expertise means raising money, setting priorities, and specializing. Students may not want a specialized university, but prefer to have a choice of programs. Many students see UPEI as the place to be, socially and educationally, after high school when there are few attractive jobs for them. They want the university to serve their needs first, and foreign students and distance education to be secondary. However, many of these students intend to leave PEI after graduation in any case, to "see the world and pay their debts." They expect to remain away to pursue graduate programs, but might be persuaded to stay or to return if graduate degrees were offered, especially in science, business, and the arts.

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--> Possibly the dilemma is not so much the role of the provincial university as the allocation of resources for education. There are many examples in Canada and the world of small universities offering a good liberal education to a general student body, but possessing centers of excellence in selected areas. The issue is one of generating new resources to avoid starving the general educational mission in order to serve a limited clientele. A successful niche strategy might well involve "importing" general courses that could be done better elsewhere and concentrating on a few special offerings unique to the Island and valuable to its economy. Through distance education these could be offered to a global market. Sharing of Knowledge Some of the most exciting examples of knowledge sharing in PEI involve the rural communities. The Acadian community in the Evangéline area of PEI has prepared an information technology integration and training plan, and has integrated computer-based education and training into the schools, with appropriate support and training for the teachers. There are plans to extend this initiative to small business development and health sectors. Industry Canada, in partnership with the PEI government, has installed thirty Community Access Program (CAP) sites on the Island to provide public access to the Internet, supplementing the connection to all the schools and public libraries across the province.3 The local CAP site served as a base in Wellington on which training and for-profit production of computer and Internet-related software products were added. In the Morell region, the CAP site offers computer literacy courses and helps graduates find jobs. Most other CAP sites have not had the same impact on the communities. Some see the need for innovation centers to support small manufacturers, including those that serve larger companies. There is a business service center in Charlottetown, but participants claimed that as a government facility it was run by civil servants who themselves had little experience in business. Nevertheless they have been helpful by providing information on regulations and advice on interfacing with government. The Canadian NRC industrial extension program, while limited on the Island, is also helpful in sharing technological information and knowledge with small and medium enterprises. 3   Since the focus groups took place, an additional fifteen CAP sites have been opened, completing the planned total of 45 sites, and giving PEI the densest network of sites and broadest public access to the Internet of any Canadian province—an important initiative in a province where modest incomes preclude home computers for many families.

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--> Use And Application Of Knowledge For Wealth Creation Efficient use of knowledge resources is the test of the knowledge economy. It can be measured by the extent to which knowledge is put to use by all sectors of society through profitable knowledge-based enterprises, effective health services, a sustaining and sustainable agricultural system, and a productive educational system. Some of the conditions for success of such enterprises involve the regulatory environment, the access to financing, and the availability of technical services to small and medium enterprises. Most regulations that affect knowledge-based enterprise in PEI are national, rather than provincial. Exceptions include some of the environmental regulations and various safety-related regulations, which are made at the provincial level. Some participants felt that environmental laws are weaker in PEI than in other provinces, and need to be tightened. The Federal government agencies do provide help to enterprises to meet the requirements of the Federal regulations. Intellectual property laws provide good coverage, and the government provides consultation services. The high royalties paid for biologically altered potatoes confirm the scope of the laws. Quality control is more problematic. The PEI information industry has not yet adopted ISO quality standards, mostly because of their high cost and the lack of local companies to provide assistance. Nevertheless it will be necessary for dealing in Europe particularly, and ultimately it results in cost savings, so it is expected that most companies will make the effort to comply. Generally, without government intervention, there is little capital or credit available for start-up enterprises, and as is generally true in the world, the first stage of investment comes from "sweat equity." Banks will make personal, secured or unsecured loans to individuals, but they will rarely loan to a new company. (The owners of one firm recounted having to loan their own money to the new company so it could get a secured loan to establish a credit record. They claimed their knowledge was not considered an asset by the banks.) Likewise, venture capital is not available to the new startup. Venture capitalists favor firms at least two years old, and prefer larger investments for the same reason that banks do—in order to keep their administrative costs low. There are government agencies, such as Enterprise PEI and the Federal Atlantic Canada Opportunities Agency (ACOA), that will provide support after the start-up phase in the form of venture capital or guaranteed loans from commercial banks. But their participation is determined primarily by a calculation of the number of jobs created per dollar, and it does not apply well to information technology or knowledge-based enterprises, where initially the number of jobs is small. Technical services to enterprises are not widely available in PEI. Members of the business group felt that the service most needed is marketing assistance, and that there is little specialized consulting expertise in PEI to help to find mar-

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--> kets. Some grants are given for attendance at trade shows. The week previous to the focus group sessions, a major trade show on potatoes was held in Charlottetown. Island producers are encouraged to market to the United States and throughout Canada. Many successful businesses, for example in information technology (IT), may have the capability, but they do not know how to expand their market and seek new capital. The government has some assistance programs, and for established businesses, capital may be available, but in IT that is not the primary need. A system of mentoring by experienced businessmen or women would be more helpful. The new Information Technology Association of PEI (ITAP) has begun to play this role, but further emphasis might be helpful. Some participants thought budding entrepreneurs can become discouraged by having to contact many different agencies or offices to find out about compliance with regulations or sources of assistance, and "one stop shopping" for assistance with regulations or technical assistance would be useful. Technology services are likewise in need of strengthening. There are no services for norms, standards, metrology, or calibration on the Island. With the exception of areas covered by the Veterinary College, there are no services providing technical information or assistance with technology choice, management, or quality control. There are no industrial incubators associated with the university, as in some other places. One participant reminded the focus group that we can not understand the use of knowledge without considering the content, and the content will be the key to success. He noted that multimedia flourished in California because it was born of a marriage of Silicon Valley technology with Hollywood, which provided the content as well as the market. PEI must provide its own content, whether related to the arts, to knowledge of potato cultivation or management of mussels and lobsters, or the unique contributions of the different communities. The knowledge economy must not be associated with unattractive jobs like call centers, but be seen as adding value to tacit and embodied knowledge. Lifelong learning must become ingrained, and the communities must become "telecommunities" in the learning society.