06.11.2018

Innovation Overview in Canada 2018

Innovation Review in Canada

 

Key Messages on Innovation Centres

  • Ontario is the top-performing province in the overall innovation report card, scoring a B and ranking seventh overall—down two positions from the previous report card.
  • Quebec falls one place in the rankings, slipping from B to C, while previously strong performer British Columbia slides seven places and two letter grades—from B to D.
  • P.E.I. and New Brunswick remain the worst-ranked provinces, scoring D– grades, while four other provinces—Nova Scotia, Newfoundland and Labrador, Saskatchewan, and Manitoba—slide from D to D– grades as Ireland leapfrogs them in the rankings.
  • Canada ranks 12th of 16 peer countries—down three positions—and earns a C on innovation. Performance on a few indicators has improved, but stronger performance by a number of international peers has pushed Canada down in the rankings.

Provincial, international, and Canadian innovation grade rankings

Putting innovation in context

What is innovation? The Conference Board defines innovation as a process through which economic or social value is extracted from knowledge—by creating, diffusing, and transforming ideas—to produce new or improved products, services, and processes.

Although attention is often focused on radical innovation—such as breakthrough technologies (e.g., 3-D printing, quantum computing), new products (e.g., smartphones), or services (e.g., Uber)—incremental innovation is just as important. For example, substantial productivity gains can be achieved through the adoption and use (rather than creation) of new information and communication technologies (ICTs) or by implementing a more efficient approach to knowledge management. These sorts of incremental process innovations benefit firms and economies without necessarily being on the global frontier of radical innovation.

Innovation is important not only to the success of firms and other organizations but also to the economic and social well-being of communities, regions, and countries. Firms that innovate successfully enhance their competitiveness and position themselves for growth. Countries and provinces with robust and successful innovation activity see improvements in productivity, economic growth, and job creation and have more resources available to support spending in education, health, infrastructure, and other areas.

As the Council of Canadian Academies’ Expert Panel on Business Innovation writes, “innovation drives an economy’s ability to create more economic value from an hour of work, thereby increasing economic output per capita. The resulting productivity growth creates potential for rising wages and incomes, and thus for a higher standard of living.”1

How is innovation performance measured?

To measure innovation performance, we evaluate Canada, its provinces, and 15 peer countries on the following nine report card indicators: public research and development (R&D), researchers engaged in R&D, scientific articles, entrepreneurial ambition, venture capital investment, business enterprise R&D (business R&D), ICT investment, patents, and labour productivity.2 We also evaluate the performance of the provinces on enterprise entry rates; unfortunately, there are no comparable international data for this indicator.

We also calculate an overall innovation grade for each of the comparator regions, based on the aggregate performance on the nine indicators for which international data are available (enterprise entry rate is not included in the calculation). Grades are calculated using the relative performance of the countries only. Provincial grades are assigned only after the grade thresholds have been generated by the country comparisons. As a result, provincial performance has no bearing on the grades given to each of the countries. For more details on how the grades are calculated, please visit the Methodology page.

Data for the territories on most of the innovation report card indicators were unavailable or, in some cases, were available but grouped the territories together rather than distinguishing between Yukon, Northwest Territories, and Nunavut. In some cases, data for the territories are available but for too few indicators to provide a reasonable picture of their overall innovation performance.

How are the report card indicators chosen?

The indicator choice is guided by the Conference Board’s definition of innovation, the need to cover each of three dimensions of innovation (capacity, activity, and results), a desire to be as consistent as possible with our previous international innovation report cards, and the need for indicators that make sense at the provincial level.

For example, previous How Canada Performs international innovation report cards included a set of indicators that compared the export market shares of peer countries in aerospace, electronics, office machinery and computers, pharmaceuticals, and instruments. Although these make sense when comparing countries, they make less sense in the provincial innovation report card given the tendency of sub-national regions to focus more narrowly on a few key areas. The choice of indicators is also limited by the availability of comparable data for both provincial and international jurisdictions.

Ideally, metrics on innovation activities and results would be obtained from firms—including data on the proportion (and size) of firms pursuing product, service, process, marketing, and other innovation, as well as their resulting performance in terms of revenues, operating costs, and market share. Although data on firm-level innovation activity are collected and compared internationally, sufficient data have not been collected by Statistics Canada to allow for province-level analysis. Also, to the best of our knowledge, complete and comparable international and provincial data that directly measure firm-level innovation (product, process, or service innovation) and its results are not collected. Consequently, we rely primarily on a set of economy-level indicators of innovation capacity, activity, and results.

Innovation Performance

Capacity Activity Results
  • Public R&D
  • Researchers
  • Scientific articles
  • Entrepreneurial ambition
  • Venture capital investment
  • Business enterprise R&D
  • ICT Investment
  • Patents
  • Enterprise entry rate
  • Labour productivity

Source: The Conference Board of Canada.

Public R&D (i.e., R&D performed by the government and higher-education sectors) and researchers engaged in R&D are indicators of innovation capacity—that is, resources and expertise required to provide a strong foundation for scientific progress and the exchange of ideas. The capacity category also includes a measure of the productivity of the scientific community—i.e., scientific articles. The most recent How Canada Performs international innovation report card included an ease of entrepreneurship index (an indicator of the extent to which the business and policy environments support new ventures) and a top-cited papers index (which provides a sense of the quality and utility of scientific articles to the wider science, technology, and innovation community). Unfortunately, comparable data for the provinces are not available for these indicators.

Entrepreneurial ambition (i.e., the proportion of the population aged 18–64 who report early-stage entrepreneurial activity, including attempts to establish, or own and manage, a new business), venture capital investment, business R&D, and ICT investment are indicators of innovation activity—that is, investments made by business and other investors to further develop ideas and implement productivity-enhancing technologies, as well as early steps taken by entrepreneurs to start new ventures.

Patents and enterprise entry rates are indicators of innovation results—that is, signals that the innovation process has resulted in products, services, or processes worth protecting and new ventures worth starting. Previous international versions of the innovation report card have included trademarks, but comparable data for the provinces and international peers are not available.

Finally, labour productivity is an overarching indicator of innovation performance. Improvements in labour productivity are the result of a number of factors, but innovation plays an important role. As a measure of the efficiency in converting inputs (e.g., expertise, technology, processes) into useful outputs in the production, marketing, or delivery of goods and services, productivity captures the gains of innovation. For example, while ICT investment should contribute to efficiency gains, there’s no guarantee that firms will actually implement and use ICT effectively. Changes in productivity are one way to measure, albeit indirectly, the aggregate benefits of a range of innovations.

What does the provincial innovation report card look like?

Canadian and provincial individual indicator grades

What does Canada’s overall innovation report card look like?

Overall, Canada earns a C on the innovation report card and ranks 12th among 16 peer countries—a drop of three positions from the previous report card. The decline is less a result of Canada falling substantially on any of the indicators and more a function of much-improved performance by a few international peers. A few leading countries have substantially improved their performance on some indicators, while countries that previously performed about as well as Canada have stepped up their game. For example, Belgium climbed seven positions—from 17th to 10th among the 26 jurisdictions—while Japan and Australia each climbed three positions, passing Canada in the ranking.

Canada has slipped on a few indicators relative to international peers. The most substantial decline occurred on the venture capital investment indicator—not because Canada’s investment fell, but because relative to the United States (the leading jurisdiction), Canada lost ground. Canada falls from a B to a C on venture capital investment despite its absolute improvement in this area. Canada maintains its grades but drops a few places in the rankings on two indicators—public R&D spending (from ninth to 10th among the 16 peer countries) and researchers engaged in R&D (ninth to 10th)—while its performance (though not its grades or rankings) weakens on others. 

In short, Canada continues to exhibit the same weak performance that has caused so much concern in recent years. Whether new initiatives launched by provincial and federal governments will help to improve Canada’s innovation performance and potential remains to be seen. Recent announcements offer promise—including the superclusters program, the Innovative Solutions Canada procurement program (inspired by the U.S. Small Business Innovation Research program), new research chairs in higher education, and renewal of the Venture Capital Action Plan. But the extent to which these will contribute to better innovation will not be known for a few years.

Which provinces are top-ranked on innovation?

Ontario leads and is the only province to earn a B on the innovation report card. Quebec slips marginally in the overall rankings, but enough that its grade falls from a B to a C. The other B performer on the previous report card, British Columbia, drops seven places from 10th to 17th and receives only a D grade on the current report card.

Ontario, the top-ranked province, earns a B overall and places seventh, with an A and an A+ on two of the 10 indicators. With public R&D of 0.96 per cent of GDP, Ontario is among the top-ranked jurisdictions in the world and earns an A. Ontario gets an A+ for entrepreneurial ambition—an indicator on which all provinces score especially well relative to international peers. The province earns B grades on two indicators: scientific articles and enterprise entry.

However, Ontario drops from Bs to Cs on two indicators: ICT investment and venture capital. Ontario continues to receive Ds on business R&D and on two of the innovation results indicators—patents and labour productivity—which suggests that the province continues to face challenges commercializing and reaping the larger benefits of innovation.

Quebec ranks 9th among all comparator jurisdictions—one place down from the previous report card—and receives a C grade overall, a drop of one letter grade. Previously, Quebec was the lowest-ranked B performer; now, it’s the highest-ranked C performer. Its relative performance changed just enough to enter the lower cohort. Quebec scores As on two indicators: public R&D and entrepreneurial ambition (on which it received a B in the previous report card). Although Quebec’s venture capital investment rose from 0.14 to 0.2 per cent of GDP and the province claims second spot in the rankings, the dramatic improvement on this indicator by the U.S. causes Quebec’s grade to fall from an A to a B.

Quebec earns C grades on researchers and scientific articles, as well as business R&D (on which it outperforms Canada and all other provinces). However, with Ds on ICT investment, patents, enterprise entry, and labour productivity, Quebec is similar to Ontario in facing challenges related to commercialization and capitalizing on innovation.

What happened to British Columbia?

On the previous report card, B.C. had a strong showing—earning a B overall and ranking 10th among comparator jurisdictions. In the current report card, however, the province drops to a D and falls seven places to 17th of 26 comparator jurisdictions. Among international peers, it outperforms only Ireland and the United Kingdom. What happened?

Although B.C. improves from a B to an A on enterprise entry, this province-only indicator does not affect overall grades (because comparable data for countries are not available). On the nine indicators that make up the final grade, B.C. dropped by a letter grade on four indicators—including venture capital (A to B), scientific articles (B to C), ICT investment (C to D), and researchers engaged in R&D (D to D–). Combined with persistent weaknesses on public R&D (C), patents (D), labour productivity (D), and business R&D (D–), B.C. finds itself falling below the already mediocre Canadian average. B.C. needs to turn its performance around quickly before a low-innovation equilibrium becomes the norm.

How does the other most populous province, Alberta, do?

Alberta also suffers a decline in grade and ranking since the last report card. Previously, the province ranked 15th among the 26 comparator jurisdictions and earned a C grade. But on the current innovation report card, Alberta drops to 19th position and receives only a D grade.

The province continues to perform well on entrepreneurial ambition (A+), enterprise entry (A), and labour productivity (B), but it drops a letter grade on scientific articles (B to C). Alberta maintains its grades on other indicators but falls a few places in the relative rankings, as some international peers gained in some areas. Alberta receives a C for ICT investment, Ds for public R&D, venture capital investment, and patents, and a D– for researchers engaged in R&D. Altogether, Alberta’s marginally deteriorating performance combined with improvements among international peers results in its lower grade and ranking overall on the innovation report card.

How do other provinces do?

Of the remaining six provinces, all perform poorly on innovation. Nova Scotia, Newfoundland and Labrador, Saskatchewan, Manitoba, P.E.I., and New Brunswick all get D– grades on the overall innovation report card because they rank below the worst-performing international peer, the U.K.

Nova Scotia earns a D– and ranks 21st among the 26 comparator jurisdictions—the highest ranking among the Atlantic provinces. The province falls from a C to a D on ICT investment and receives four D– grades, for researchers, business R&D, patents, and labour productivity. Nova Scotia does well on a couple of indicators. With public R&D of 1.2 per cent of GDP, the province leads all jurisdictions and earns an A+ on that indicator. Nova Scotia earns a B and places third on scientific articles—although this represents a decline of a letter grade and one position since the previous report card. Nova Scotia’s higher-education sector provides a good foundation for science and innovation potential—the province is top-ranked among all 26 comparator regions on higher-education R&D.

Newfoundland and Labrador earns a D– grade and ranks 22nd overall. Like Nova Scotia, the province earns D– grades on researchers, business R&D, and patents. The province earns Ds on ICT investment and venture capital, and Cs on scientific articles and labour productivity. Newfoundland and Labrador’s highest grade is the A it earns for its enterprise entry rate of 15 per cent—the second-best rate among the provinces. Newfoundland and Labrador fares reasonably well on entrepreneurial ambition, earning a B; but its performance on labour productivity has slipped from B to C since the previous report card.

Saskatchewan performs well on the entrepreneurship indicators in the innovation report card, earning an A and ranking 7th among international peers on entrepreneurial ambition and scoring an B and ranking 5th among provinces on enterprise entry. However, mediocre to poor scores on nearly all other indicators earn the province a D– and 24th spot overall on the innovation report card. Saskatchewan earns a C for scientific articles—down from a B in the previous report card—and a C for labour productivity. The province is weak in terms of spending and attracting capital for innovation, scoring D grades for venture capital investment and public R&D, and D– grades for business R&D and ICT investment. Saskatchewan also scores D– grades for patents and researchers. As Saskatchewan’s experience reveals, entrepreneurial spirit and enterprise entries alone are not sufficient to lift a region’s performance on the innovation scorecard. Other investments and activities should be explored.

Manitoba earns a D– and ranks 23rd overall on innovation. It gets an A for entrepreneurial ambition and earns Bs for public R&D and enterprise entry. The province slips from a B to a C on scientific articles—largely because the leading international peer, Switzerland, performs so well—and from a C to a D on ICT investment. Manitoba firms attracted $90 million in venture capital investment in 2016—the highest investment level in the province in more than a decade. That was enough for the province to move from 25th to 11th among the 26 provinces and international peers, but because the United States had a dramatic increase as well, Manitoba climbs only to a D from a D– grade over the previous report card. Manitoba receives D– grades for researchers, business R&D, and patents, for performance weaker than the worst-performing international peers on those indicators.

Although P.E.I. earns an A for enterprise entry, its performance on other indicators has slipped—with public R&D falling from an A to a B, and ICT investment from a B to a D. The province scores poorly on indicators related to innovation capacity and activity—earning Ds on scientific articles, venture capital, and ICT investment, and D– on researchers engaged in R&D and business R&D—and on innovation results indicators—scoring a D on patents and a D– on labour productivity. Given the province’s size, it is unlikely to be on the global frontier of innovation. The challenge for P.E.I. is to find its niche in contributing to innovation in local and global supply chains.

New Brunswick ranks last among all provinces and international peers and holds the unfortunate distinction of being the only jurisdiction that fails to earn an A or B on any indicator. In terms of innovation capacity, New Brunswick has mediocre public R&D (earning a C), has very few researchers engaged in R&D (earning a D–), and produces few scientific articles (earning a D). In the innovation activity category, New Brunswick scores C for ICT investment, D for venture capital investment, and D– for business R&D. On innovation results, the province receives a C for enterprise entry, D for labour productivity, and D– for patents. On a positive note, both the value and number of venture capital deals have grown in New Brunswick in recent years, indicating that investors see an increasing number of high-potential companies in the province.

Did Canada miss its innovation moment?

Canada earns a C grade on innovation and ranks 12th among 16 international peers—a drop of three places since the previous report card. While Canada manages to stay a notch above the D grade it received for a number of years, persistent weaknesses and lagging investment suggest that even the C is precarious.

As the report card reveals, performance differs significantly across provinces, both overall and on individual indicators. This complicates efforts to provide a single overarching assessment of Canada’s performance. Ontario, for example, emerges as a strong jurisdiction on innovation, albeit with room for improvement, while New Brunswick is revealed as the weakest performer, both within Canada and among international comparators.

Canada’s overall performance has slipped as a result both of absolute decreases in performance on some indicators and of stronger performance by some international peers on others. Although Canada’s rank on the entrepreneurial ambition indicator climbs from third to first, it loses ground on public R&D and on researchers engaged in R&D. On some indicators where Canada’s ranking remains stable, its performance relative to leading international peers falls. For example, Canada is still fifth (among 10 countries for which data are available) on scientific articles, but its grade falls from a B to a C as a result of stellar performance by world-leading Switzerland. Similarly, although Canada continues to increase its venture capital investment and retains second place by a wide margin over the next ranking country, Ireland, the dramatic improvement over the same period by the leading peer, the United States, causes its grade to fall from a B to a C. On these and other indicators, Canada is still moving forward, but the faster pace of leading peers is causing it to fall farther behind.

In the last report card, the Conference Board noted that Canada had achieved some improvements but warned that persistent weaknesses left the country in a less than ideal position. Canada continues to lag international peers on business R&D by a substantial margin. Although spending as a share of GDP increases slightly from 0.87 to 0.9 per cent, most international peers have achieved even larger increases, leaving Canada well behind the international peer average of 1.69 per cent of GDP. Also, Canada’s public R&D has slipped in recent years—pushing the country from eighth to 10th among international peers over the last two innovation report cards. And while Canada has produced more patents per capita than ever, it is still near the back of the class on this indicator because international peers are patenting at a much faster rate.

In short, there are growing reasons for concern about Canada’s innovation performance. While early-stage entrepreneurial activities and investments are on the rise, incremental and persistent declines in foundational elements of Canada’s innovation capacity continue to undermine performance.

Why does Canada keep getting poor overall report cards on innovation?

Canada’s lagging innovation performance is, in large part, a story of business inaction on innovation—particularly, poor commercialization efforts. For nearly two decades, the federal and provincial governments have invested in education, research, and venture capital and have reformed tax and other policies to support and stimulate innovation. On these research and innovation inputs, Canada performs fairly well.

But as the Council of Canadian Academies has pointed out, historically, Canadian businesses have been only as “innovative as they have needed to be” and no more.3 Until recently, insulation from competition, high resource prices, generally good trade with the U.S., and other conditions have meant that Canadian businesses have not had to innovate as much as businesses in other countries in order to be profitable. Overall, Canada has been able to maintain a high standard of living despite relatively weak business innovation.

But these conditions are changing quickly.

A low-innovation, high standard of living equilibrium is increasingly unsustainable. We are seeing more volatile resource prices, shifting global trade patterns, and a growing wave of retirements in the workforce. All of these changes are exposing Canada’s business innovation weaknesses and generating further pressure to become more innovative in coming years. After years of simply getting by, Canadian businesses will need to make better use of the inputs that governments have provided and improve their innovation game in a much more competitive environment.

Years of stagnating government support for key innovation inputs did not help. Money for research declined during the Conservative government years and has only recently received a boost in the Liberal government’s 2017 and 2018 budgets. The government has provided funding for new research chair programs for universities, renewed the Venture Capital Action Plan, promised new investment in supercluster and smart city initiatives, and created the Innovative Solutions Canada research procurement program (inspired by the U.S. Small Business Innovation Research program). Also, extensive pressure from Canada’s science community has successfully led to substantial new funding commitments for fundamental research funding in Canada.

The new funding will improve Canada’s performance on some of the input indicators, but that won’t show up until data for 2018–19 are available. Whether these initiatives succeed in moving the needle on some of the activity and output indicators—and, more importantly, on innovation performance itself—will become clearer over the next few years.

What will it take for Canada and the provinces to be top performers?

The provinces’ industrial structures, higher-education systems, and policy and business environments differ substantially. So too does their performance across the range of innovation indicators. As a result, strategies to improve innovation performance will be as different as the provinces and their current circumstances. Indeed, while some provinces have opportunities to be on the global frontier of innovation in certain industries, others would be better advised to concentrate on adopting innovations and technologies developed elsewhere to improve the efficiency and productivity of their existing industries.

Nevertheless, there are some general principles and approaches that Canada and all provinces should pursue to enhance innovation.

Increase spending on innovation

Governments and businesses should find ways to stimulate spending on innovation—including public and business R&D, ICT investment, and venture capital, where appropriate.

Canada and many of the provinces have performed well on public R&D in the past, but spending as a share of GDP has slipped slightly over the past seven years. This could have consequences for scientific research and its foundational role in economic and social innovation, as well as for educating and training future researchers to contribute to innovation through roles in academia, business, and government. Although Canada and the provinces may be placing lower priority on public R&D in the face of competing health and infrastructure priorities, reducing funding for research could hinder Canada’s ability to address the health, social, environmental, and other challenges it faces.

With respect to business R&D and ICT investment, policy-makers should investigate whether the current mix of tax incentives and direct support actually stimulates spending and investment, examine how structural features of national and provincial economies affect spending on business R&D and ICT, and explore new ways to improve both—including looking at practices in top-performing countries. Provincial and federal government investments in artificial intelligence research and innovation, infrastructure to close the digital divide, superclusters, and other initiatives are promising, but these must be followed by business investment and activity as well.

Implement and use technology effectively

ICT investment is important to innovation in that it provides the digital infrastructure for the exchange of ideas and data essential to the development, commercialization, and marketing of new and improved products and services. At the same time, the adoption and use of ICTs constitute a process innovation at the firm level that contributes to efficiency gains and productivity growth. The potential gains to individual firms, as well as the economy and society more broadly, provide a good reason to enhance technology adoption.

Recognizing that some structural factors that hinder technology adoption—such as industry structure, firm size, and labour-to-capital-cost ratios—cannot be changed easily, improving performance should focus on a range of contextual factors and firm-level decision-making. More competition in the ICT sector could lead to lower costs for many firms, as well as stronger incentives to improve productivity and competitiveness through ICT investment among firms exposed to greater competition.

To be sure, there is increasing concern that business investment in new and emerging technologies could result in substantial job losses for many Canadians.4 Yet Canada’s lagging record in technology adoption likely poses a greater threat. By failing to keep up with international peers on technology investment, Canadian businesses are becoming less productive and competitive and, in the process, risk being put out of business entirely. That would certainly entail job losses.

By contrast, firms that invest in technology and improve productivity might create employment challenges for some but generate new and more kinds of employment for others over the long term. From a policy perspective, governments should investigate ways to encourage technology adoption while ensuring that displaced workers have the support they need to develop new skills and transition to new roles.5

Create a healthy business climate

Canadians exhibit world-leading levels of entrepreneurial ambition. Ultimately, however, what matters for innovation performance is whether entrepreneurs and innovators are willing and able to act on that ambition—that is, to start and grow new ventures. Canadian entrepreneurs need a healthy climate for new ventures, including adequate market demand and access; strong and reliable supply chains, transportation, and communication infrastructure; favourable tax rates and tax regime clarity; appropriate regulation; and access to capital and expertise. Policy-makers have levers to address some, though not all, of these factors.

Enhance management skills and expertise

Canadian entrepreneurs sometimes lack the management skills and experience to effectively address challenges and opportunities, implement technology, and pursue, manage, and benefit from innovation strategies and activities. Compared with the U.S.—which has a better track record on innovation and ICT investment—Canadian companies face a managerial deficit. Between 1997 and 2004, while 48 per cent of managers in the U.S. had a bachelor’s or advanced degree, only 32 per cent of Canadian managers held such degrees.6 By 2011, the number of Canadian managers with such degrees had climbed to only 35 per cent7

If weak management capacity explains, in part, why Canadian firms lag on innovation, then firms should take steps to enlist expertise where possible, while policy-makers should explore ways to enhance management education and skills training for innovation. Efforts to improve the management capacity of Canadian firms—by educating and training more and better managers and by providing firms (especially small and medium-sized enterprises) with management advice and support—could also help to improve the adoption and effective use of ICT.8

Move toward an inclusive innovation agenda

Until recently, innovation economists, analysts, and policy-makers have focused on how innovation produces gains in productivity, profits, economic growth, employment, and per capita income—all of which are crucial. Less attention has been given to who gets to participate in innovation activities and how the benefits and risks of innovation are distributed. Fortunately, this is changing.

Many now recognize that the distribution of opportunities and benefits is a matter of fairness. And, increasingly, there is recognition that ensuring broad and inclusive participation and better distribution of benefits, in turn, provides a stronger foundation for long-term innovation success and economic growth.9 Indeed, it is not enough that a country or province become more innovative; it is essential for Canada’s innovation economy to become more “inclusive.”

Broadly speaking, innovation is inclusive when there are opportunities for all people to participate and the benefits produced by the innovation economy are distributed fairly. In a recent paper on inclusive growth in Canada, Canada’s Chief Innovation Fellow, Mike Moffatt, and co-authors Hannah Rasmussen and David Watters expand on these criteria. They write that innovation is inclusive when it is both “autonomy enhancing” and “economically inclusive”—that is, when it provides more opportunities for individuals, families, and communities to pursue their goals and it strengthens the link between their choices and the outcomes they experience; and when it improves access to goods and services, better employment opportunities, and higher wages, particularly for the middle-class and the poor.10

As the Conference Board’s society report card reveals, Canada and the provinces face substantial and persistent challenges with respect to povertyincome inequalitygender equity, and achieving greater inclusion and higher wages for immigrantsracialized groups, and people with disabilities. Although Canada prides itself on being an open and inclusive society, the evidence reveals that there is much work to be done. But this work is an opportunity as much as it is a challenge. If Canada wants to improve its innovation performance, it will need the skills, perspectives, and participation of a wide diversity of people and communities. Canada should be more inclusive because it is the right thing to do and because it will contribute to innovation and prosperity.         

Future prosperity in Canada and the provinces and the well-being of people and communities across the country depend on innovation. New or improved services, products, and processes, together with improvements in the way health, social, and other services are delivered to Canadians, will shape the country’s economic performance and individual and social well-being.

As the innovation report card reveals, Canada’s innovation ecosystem and performance are stuck in a low equilibrium relative to its most economically developed peers and competitors. The country faces substantial challenges. At the same time, not all Canadians have had opportunities to participate in and benefit from the innovation economy that Canada has generated. Canada’s challenge—and opportunity—is not merely to improve innovation, but to ensure that opportunities and benefits in the innovation economy are shared equitably.

Footnotes

1    Expert Panel on Business Innovation, Innovation and Business Strategy: Why Canada Falls Short (Ottawa: Council of Canadian Academies, 2009), 27.

2    For more details on how the grades are calculated and how the peer countries are selected, please visit the Methodology page.

3    Council of Canadian Academies, Paradox Lost: Explaining Canada’s Research Strength and Innovation Weakness (Ottawa: CCA, 2013), 6.

4    C. Lamb, The Talented Mr. Robot: The Impact of Automation on Canada’s Workforce (Toronto: Brookfield Institute, 2016); Institute for Competitiveness and Prosperity, The Labour Market Shift: Training a Highly Skilled and Resilient Workforce in Ontario (Toronto: ICP, 2017); M. Oschinski and R. Wyonch, Future Shock? The Impact of Automation on Canada’s Labour Market (Ottawa: C.D. Howe, 2017).

5    DEEP Centre, The Future of Manufacturing in Ontario: New Technologies, New Challenges and New Opportunities (Waterloo: DEEP, 2015); C Lamb. The Talented Mr. Robot.

6    Roger Martin and James Milway, Strengthening Management for Prosperity (Toronto: Institute for Competitiveness and Prosperity, 2007), 9.

7    Calculation based on Statistics Canada, 2011 National Household Survey.

8    Daniel Munro, Navigating and Managing Technology-Driven Change (Ottawa: The Conference Board of Canada, 2015).

9    M. Moffatt, H. Rasmussen, and D. Watters, Towards an Inclusive Innovative Canada (Ottawa: Canada 2020, 2017); Organisation for Economic Co-operation and Development, Making Innovation Benefit All: Policies for Inclusive Growth (Paris: OECD, 2017); World Economic Forum, The Inclusive Growth and Development Report (Geneva: WEF, 2017).

10    M. Moffatt, H. Rasmussen, and D. Watters, Towards an Inclusive Innovative Canada, 6.