It’s starting to feel a bit like a replay of the early 1990s.

Talk of a U.S. recession is in the air; banks are coming to account for huge credit problems (back then, the trouble was centred in Japan; now it’s largely a U.S. phenomenon); and even massive losses by rogue traders are in the news again.

Here in Canada, policymakers are once again worrying about ways to shore up our financial future after an extended period of economic outperformance.

Back in the 1990s, Canada’s economic prospects were also a significant issue. Having embraced free trade, the fear was that our jobs would go to Mexico — and our profits to the U.S.

That hasn’t been the case. Instead, increased trade has produced strong economic growth, record low unemployment and, more recently, an exceptionally strong dollar. After a good deal of hard work eliminating deficits, paying down debt and bringing inflation under control, Canada has become a perennial top performer among the world’s developed markets.

Yet recent years have brought about huge changes to the economic landscape — many of them driven at their core by increasing globalization. Essentially, the centres of economic power are shifting, and firms are having to reconsider what it will take to compete in this new world economy.

Moreover, governments must worry about how they can sustain growth amid an aging population.

An answer to both dilemmas is: improving productivity.

Despite the prospect of a U.S. recession and the threat of a broader economic slowdown in the short-term, our macroeconomic situation remains in relatively good shape. What’s needed is reform to eliminate underlying inefficiencies and artificial barriers to trade, capital flows and competition.

The self-sabotage of provincial protectionism must be eliminated. Labour and capital must be as mobile as possible. This means confronting the convoluted provincial regulatory structures once and for all, and tearing down internal blockades. At the same time, we must gain greater access to foreign markets and grant easier access to ours.

If we’re going to have to relive the bad times of the early 1990s, we must apply the lessons learned then to ensure prosperity for the future.