Innovation Policy in Canada: A Holistic Approach

Abstract

Canada is widely considered to be an innovation under-achiever, despite decades-long attempts to address this gap. In light of this criticism, this Commentary reviews the range of policy tools that governments in advanced economies have at their disposal to foster innovation. It takes a holistic approach to innovation policy in that many of the policy areas covered in this report are not primarily designed to spur innovation per se, but nevertheless can have a significant impact on it. Innovation policy is less likely to succeed if it does not carefully integrate measures affecting the four essential ingredients of talent and knowledge, entrepreneurship and business growth, innovation in government, and clarity of purpose for government support. This entails, but is not limited to, adopting government framework policies to encourage innovation, such as a pro-innovation tax system, trade policy, intellectual-property regime, competition policy, and approach to regulation, as well as fostering acceptance of innovation in civil society and the general public. Key areas for potential improvement, ultimately contributing to raising Canadians’ standards of living, include: • a greater focus on research and educational excellence, and on deploying and attracting related talent and skills, including those beyond scientific and engineering skills, such as marketing and business; • a suite of trade, fiscal, regulatory and other policies and approaches to: 1) foster entrepreneurship and economic activity based on existing talent, skills and this research; 2) facilitate the risk-taking – and acceptance of risk-taking – that such activities entail; and 3) remove unnecessary barriers to these activities; • innovation in the delivery of public services themselves; and • a more goals-oriented approach to government support for business innovation that nevertheless relies more on market and other arm’s length mechanisms, as well as international collaboration in some areas, to achieve desired goals. The ultimate motivation for wanting to improve Canada’s innovation performance is simple: to improve Canadians’ overall standards of living.