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The kind of world economic environment we find ourselves in and what "ought to be" the changing role of government within that environment. Change and how it has manifested itself: in an increasingly globalized economy and in a steady decline in the value of raw materials relative to manufactured goods and the technology embodied in both goods and services. The process of globalization in its adolescent stage. Our prime economic objective to devise a strategy for maintaining our fair share of the world's industrial activity. Two challenges which must be met. What ought to be the role of the government in responding to the changes ahead. Ways in which the federal government can encourage Canadian industrial activity. Two areas that are crucial: the specific problems of Canadian-owned small and medium-sized business; the way technological innovation comes to market. Quebec's success in developing a vibrant entrepreneurial economy and to what that is due. Government facilitating the entrepreneurs' access to foreign markets. Costs of marketing outside of North America. The trade commissioner service. Three reasons for a knowledge-intensive industry to come into being or to locate in a given country, in three phases. Canada's need to develop our own phase-one industrial capacity. The need for fundamental commitment to the development of an entirely new family of phase-one industries of the future. How that might be done. Looking at the example of Japan. Suggestions as to what the Canadian government could do. Concern with regard to the Canada-U.S. free trade agreement. What the agreement should mean. What we didn't get. What the driving force of the business-government relationship in Canada should be.