State of the Nation 2008

Context and Executive Summary

This report provides an overview of the health of Canada's science, technology and innovation system. The report charts Canada's progress over time and compares Canadian performance to the performance of science, technology, and innovation leaders around the world. Finally, it identifies areas that deserve our attention if we aspire to position Canada in the leading group of innovating countries.

Innovation matters. In a globalized world, creating and retaining jobs for Canadians and improving our living standards will increasingly be linked to our ability to innovate. Our living standards and quality of life will rise with more energy efficient cars and airplanes, new treatments for diseases, better access to the Internet, and communication devices that connect us as communities and to the global economy. Our ability to tackle the issues important to Canadians — whether they be cleaner and more energy efficient use of our resources, or the ability to provide services across vast distances — will depend on a strong science base and a capacity to innovate.

While Canada's innovation potential is unbounded, there are challenges to face. The current global financial crisis has hurt our economic performance, particularly in the automotive, forest products, information technology and biotechnology sectors. It is reducing the revenues available to the private sector, universities, colleges and government.

At the same time we face longer-term challenges. Technological frontiers move outward at an accelerating pace, making it difficult to stay at the leading edge. Global and national challenges, such as climate change, energy consumption and production, and the costs and implications of an aging population, demand action. New, lower cost, entrants to the global economy increase competitive pressures on our companies.

The current economic environment has reduced the margin for error and increased the risk and consequences of poor decisions. In times of economic hardship, research and development (R&D) budgets can be squeezed in companies, universities, colleges and governments. Ensuring that our decisions and investments result in long-term, sustainable economic growth, however, remains urgent and vital to our future.

Canada has made progress in the last decade in supporting an innovation system. We now know that if we want to create jobs and opportunity in a competitive world, science, technology and innovation must be on a national agenda that focuses support on those who drive our innovation success. Drivers of our innovation success include:

  • a private sector that has science, technology, and innovation strategies at its core;
  • institutions of education and research that develop, recruit, and retain strong talent pools; and
  • researchers who keep us at the forefront of knowledge and workers who see and act on opportunities to work smarter and more creatively.

We have learned that innovation performance comes from how well these performers do individually and how well they collaborate with each other. Stimulating innovation requires sustained collaboration and a systemic response by different individuals and institutions in the innovation system working together. Municipal, provincial and federal government funding, and policies act as incentives to innovative activity. Policies can also promote and ease international collaboration, strengthening access to the global pool of knowledge and expertise. Companies, institutions and governments must be strategic and nimble with their science and technology (S&T) investments and decision-making to capitalize on emerging technological shifts and new economic and societal opportunities.

Achieving excellence with a defined level of resources requires making choices. On the advice of the STIC, the Minister of Industry recently announced sub-priorities that will focus resources and support discovery and applied research and innovation that build on Canada's competitive advantages. This will lead to accelerated development of areas of importance to Canada while recognizing that a substantial proportion of funding is dedicated to excellent basic research.