How to Overcome Canada’s Innovation Paradox

This op-ed was originally published by TheFutureEconomy on August 28, 2023. 

Canada has an innovation problem, and without a significant, continuous, and national effort to foster innovation and capture the value of intellectual property, economic growth in Canada will remain insufficient and our standard of living will continue to decline. 

Canada is very good at public research and development and educating its population at the post-secondary level, but we struggle to turn these advantages into commercial success.

This has been referred to by some as the “Innovation Paradox”, where Canada is very good at public research and development and educating its population at the post-secondary level, but we struggle to turn these advantages into commercial success and innovation-based economic growth.   

Intellectual property (IP) is a critical asset and driver of the innovation economy. Organizations that successfully develop, protect, and commercialize their IP enhance their competitiveness and position themselves for global growth. Innovation and IP are also important for communities, regions, and countries. Those with strong innovation activity and the ability to commercialize their IP see improvements in productivity, economic growth, and job creation. 

Canada’s Innovation Paradox: Our Challenges

Unfortunately, this is where we lag behind. Innovation in Canada has always been seen as an uphill battle. The Global Innovation Index’s 2022 report ranked Canada 15^th of 132 nations in its innovation rankings, behind Germany, Finland, Denmark, Japan, and the United States. The same study also ranked Canada 30^th in infrastructure and 24^th in knowledge and technology outputs.  

Canada’s real per capita GDP growth between 2007 and 2020 was less than 1% and we stand dead last (38th) among OECD countries in per capita growth until 2060.

Furthermore, according to recent Organisation for Economic Co-operation and Development (OECD) data, Canada’s real per capita GDP growth between 2007 and 2020 was less than 1% and we stand dead last (38^th) among OECD countries in per capita growth until 2060. This weak economic growth is costing Canada more than $500 billion in lost economic potential – dollars that could be invested in critical areas such as innovation, health care, human capital, or growing the green economy. 

For those who have been following the challenges of the innovation paradox in Canada, those statistics are unlikely to be surprising and the question inevitably comes to, where do we go from here?  

Government’s Role: Untangling the Innovation Paradox 

The federal government’s recent budget earmarked $2.6 billion for the new Canadian Innovation Corporation (CIC), which was elaborated on further in this blueprint. While these are steps in the right direction, at this point there lacks a clear plan, directions, or desired outcomes.  

The government should collect systematic data on how research programs are progressing.

1. Collect data on the performance of research programs. 

Moving forward, these programs will need to be regularly monitored and assessed to ensure there is progress being made. The government should collect systematic data on how research programs are progressing. Data compiled at the organizational level can be anonymized and can be made available to researchers to improve ongoing policies.  

2. Prioritize advantageous sectors. 

Rather than attacking the issue broadly, the government should prioritize technology fields in which Canada has a consistent and comparative advantage. Technology fields in which Canada has comparative advantage also deserve policy attention because they are the industries of the future, the success of which will provide a solid foundation for wealth generation for Canadians. 

3. Collaborate with the private sector. 

There are organizations across Canada with teams and specific expertise that study the complex issues the CIC and federal government are looking to solve that can provide evidence-based insights and policy recommendations. One of these is The Conference Board of Canada, where we recently partnered with MaRS Discovery District to form the Canadian Centre for the Innovation Economy. The centre’s main objective is to unpack the significant pain points to improved innovation in Canada.  

It’s important to recognize that Canada’s innovation problems won’t be solved overnight, but through collaboration and communication with government and the private sector, we can generate progress that will make Canada a global leader in innovation. The private sector is calling out to help the innovation sector regain its footing. Who will answer the call?