Canada’s innovation imperative

Released June 2011

In the 2011 Report on Canada, the Institute reaffirms that Canada’s economy is one of the world’s most successful among countries with populations greater than 10 million.  But against the United States, Canada’s GDP per capita continues to trail significantly. Canada’s GDP per capita – a measure of the value created by workers and firms in Canada from the human, physical, and natural resources in the country – trailed the US by $9,500 or 17 percent in 2010, essentially unchanged from the 2009 gap of $9,200 in constant (2010) dollars.

The Report identifies Canada’s lower productivity as the key challenge in closing this prosperity gap and concludes that businesses need to step up their investments in technology – from R&D to patents to adapting existing technology to their businesses. Equally important is the ongoing need to develop stronger management capabilities in our businesses. Although the research shows that Canada’s management capabilities are among the world’s best, there is still room for improvement.

The Institute recommends that governments improve their innovation policies by shifting their efforts from new-to-the-world inventions to relevant-to-the-market innovations. The Report shows how important business-led innovations in product design, service improvements, processes, and mergers & acquisitions have propelled our most successful companies to global leadership.

The Institute applauds recent provincial tax policy changes, including the introduction of the HST, as important initiatives that will stimulate business investment. In particular, it encourages British Columbia voters to affirm the adoption of the HST as it will benefit them and all Canadians.

The Institute also suggests innovations in how government helps workers adjust to the ongoing disruptions to our economy from globalization and how it decides on foreign direct investments in Canada through bilateral reciprocity agreements with other countries.

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Topics: Economic policy, growth, and strategy, Government investment and innovation, Business growth and innovation, Clusters, Social policy