Archived — Science, Technology and Innovation Council finds Canada a solid performer in science, technology and innovation — but needs to aim higher on the world stage

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OTTAWA, May 5, 2009 — Science, technology and innovation can drive economic success and improve quality of life for Canadians if all sectors work together to build on advantages and strengthen performance, says a Report released today by Canada's Science, Technology and Innovation Council (STIC).

Canada's Science, Technology and Innovation System: State of the Nation 2008 — the STIC's first public report — charts Canada's progress and compares Canadian performance to the world's science, technology and innovation leaders. The Report benchmarks Canada's innovative performance against more than 50 international and domestic standards of excellence such as research intensity, commercialization rates, quality of research and workforce skills. It provides a baseline from which to maintain a watch on key indicators and monitor progress.

"Our Report concludes that although Canada is improving, other countries are improving faster. Canada remains a solid mid-level performer, but given the importance of innovation to our future, this is not good enough. We need to set our ambitions higher in keeping with what Canadians are capable of achieving," said Dr. Howard Alper, Chair of the STIC. "We have a strong foundation and a robust research capacity but we need to conduct research and encourage entrepreneurship in ways that will create opportunities to translate knowledge into marketable assets."

"Others countries are focussed on improving their innovation systems and the global baseline keeps rising," said STIC Council member David O'Brien, Chair, EnCana Corporation and Chair, Royal Bank of Canada. "Changes in technology, increased global competition, and the need to build employment opportunities for highly skilled Canadians who can thrive in today's global economy demand that we take action to improve our science, technology and innovation performance and assure our future."

The Report urges Canada to strengthen and better link all sectors of its science, technology and innovation system if it wishes to maintain its economic independence, competitiveness, productivity and quality of life, and position Canada in the leading group of innovating countries. "Ambitious outcomes require a collective effort by Canadian business, universities, colleges, non-profit institutions, communities and all levels of government," said Heather Munroe-Blum, Principal of McGill University and a member of the STIC. "No one sector is responsible for performance or can achieve results alone, so we need to work together to nurture the capacity to create, apply new ideas and finance their translation into commercial successes in the global marketplace."

State of the Nation 2008 substantiates that Canada has a sound base on which to build its innovation leadership: Canadian research is of high quality and Canada's funding for R&D and higher education ranks near the top; young Canadians excel in science, math and reading; we have implemented measures to attract the best international talent, and Canadian innovative excellence can be found in virtually every region and economic sector.

There are also areas where Canada is vulnerable. For example, Canadian companies do not invest as much as their key competitors around the world in research and development. In a world where talent is everything, other countries are improving their education results and their support for innovative activity more rapidly than Canada. Low literacy and numeracy skills limit the ability of a significant group of Canadians to innovate and benefit from innovation. Low levels of collaboration among companies and between companies and researchers in universities, colleges and government laboratories limits business potential.

While Canadian universities and researchers are conducting cutting-edge research, for the most part they lack international visibility and recognition. In addition, when Canadian companies work to commercialize such research, they often have difficulty accessing sufficient investment capital to develop and sustain innovative new products and services.

Seizing opportunities to strengthen Canada's innovation performance will help develop a stronger economy and enhance Canada's potential as a leader in science, technology and innovation. Specifically, the Report points to the following areas for collective action.

  • Focus science, technology and innovation in areas where Canada can leverage its strengths to achieve global leadership
  • Markedly enhance business research and development
  • Renew efforts to attract, better educate and cultivate highly skilled people
  • Encourage, recognize, and reward the science and business innovators of tomorrow
  • Aggressively pursue strategic international science, technology and innovation partnerships to advance Canadian interests

Canada's Science and Technology Strategy, Mobilizing Science and Technology to Canada's Advantage, announced the creation of the Science, Technology and Innovation Council. The Council was appointed in October 2007 to provide the government with policy advice on science and technology issues and to produce reports that measure Canada's science and technology performance against international standards of excellence. The Council expects to issue a report on the state of Canada's science, technology and innovation system every two years.

The Council, chaired by Dr. Howard Alper, is comprised of 18 senior, highly accomplished individuals from the research, education, business and government communities.

A copy of State of the Nation 2008, Canada's Science, Technology and Innovation System as well as biographical notes on the Council members can be downloaded at http://www.stic-csti.ca.

For more information:
David Rodier
NATIONAL Public Relations
drodier@national.ca
613-233-1699 ext 243
613-884-2215

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May 5, 2009

Backgrounder
Canada's Science, Technology and Innovation System: State of the Nation 2008

The report Canada's Science, Technology and Innovation System: State of the Nation 2008 provides an overview of the health of Canada's science, technology and innovation system. It 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 Science, Technology and Innovation Council (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.

Research and Development Priority Areas and Sub-Priority Areas
Priority Areas Sub-Priority AreasFootnote *
  1. * Sub-priorities are not ranked within or across categories. (back to footnote reference *)
Environment Water:
  • health
  • energy
  • security
Cleaner methods of extracting, processing and utilizing hydrocarbon fuels, including reduced consumption of these fuels
Natural Resources and Energy Energy production in the oil sands
Arctic:
  • resource production
  • climate change adaptation
  • monitoring
Biofuels, fuel cells and nuclear energy
Health and Life Sciences Regenerative medicine
Neuroscience
Health in an aging population
Biomedical engineering and medical technologies
Information and Communications Technologies (ICTs) New media, animation and games
Wireless networks and services
Broadband networks
Telecom equipment

Assessment and Way Forward

By comparing Canada's performance against other countries, there is much that we can learn about the dynamism of our economy, and our ability to maximize the economic and social benefits of new research, products, services, processes and business models. We have choices to make and strengths on which we can build. There are also areas where our performance is not among the world's best. This is natural. No country leads in everything. To get to the very top, we need to know where we are now, understand how we got here, agree and act on where we choose to excel, and then track our performance relentlessly.

Canada is having difficulty keeping pace with the best innovators. Our benchmarking with others and against our own performance over time shows a pattern of modest improvement, but the effort has been insufficient to bring Canada to the G-7 average, let alone position Canada as an international leader. Canada remains in the middle of the Organisation for Economic Co-operation and Development (OECD) pack of 30 countries and sixth in the G7 in business R&D as a proportion of Gross Domestic Product (GDP). Low overall business R&D and commercialization in Canada has been a constant feature for 40 years.

There are some distinct Canadian characteristics worth observing. Canada has one of the most advantageous innovation tax incentives in the world providing between $3 and $4 billion in the form of the Scientific Research and Experimental Development (SR&ED) tax credit.

Eighty percent of venture capital (VC) is used in the information, communications and technology and pharmaceutical industries. Public policy and business realities have made universities more important centres of R&D than in other countries.

At the same time, we need to emphasize that innovation is more than R&D. Many companies are bringing value to the market by using knowledge that does not necessarily come from R&D. We have significant limitations in measuring this type of innovation — that is knowledge gained through learning by doing and using and through collaboration outside the firm.

There will be profound changes in the North American and global economies in the coming years, reflecting changes to the industrial structure and the emergence of new economic realities. The best way for Canada to adapt to these changes, and even excel under these trying circumstances, is to ensure that our economy is flexible, efficient and dynamic. Shaking off complacency to achieve a more innovative Canadian economy will not only need a dedicated commitment of resources: it will require providing the right stimulus and incentives for innovation; fostering a business culture that sees innovation as a key driver of value; and enhancing the capacity of all elements of our innovation system to work together to create value for all Canadians.

The STIC examined sets of indicators that measure the performance of individuals, institutions and companies. Current indicators are not sufficient to the task. For example, we chose not to include a more detailed discussion of business R&D by sector, as conclusions would have been based on 2002 data, which was the most recent data available.

We know that innovation activities that result in new products and processes are reasonably well captured in data presented, but innovation that results in new business models, business practices or market development is not. This is a result of relatively infrequent surveys of innovation in services, manufacturing and in resource-based industries, and often, the difficulty in comparing international results by sector.

We are also limited in understanding the dynamics of collaboration. Our data allows us to count the number of collaborations by companies or public research institutions, but we know very little about the kinds of collaboration being done. We also do not know which collaborations have been successful and which have not, whether collaborations differ by industry, or the extent to which these collaborations involve only domestic companies or are global in nature. Many of the same challenges exist for international patent data, which is why data on patents has not been included in this report.

Much of the information that we need to analyze the profound changes in our economy will have to come through surveys of innovation plans, activities, linkages and outcomes. Surveys will need to be carried out with sufficient frequency to illuminate change. Businesses and governments need to think now about how official statistics are structured and compiled. They need information to help them assess the economic and social impacts of innovation. At the same time information must be collected in ways that minimize costs to respondents, particularly small- and medium-sized businesses.

Canada has a proud history of scientists who pushed back the frontiers of knowledge to benefit humankind. Canadians have made groundbreaking discoveries and turned scientific discoveries into the products and services that make our lives better. Just as we prepare our athletes to be the best, we must enable our scientists and entrepreneurs to learn by working and competing with the best. If Canadian research and entrepreneurship is conducted at international levels of excellence, they will continue to be a source of national pride and prosperity.

To move forward we recommend devoting attention to the following areas:

Talent – developing a highly qualified workforce attuned to innovation opportunities

  • Young Canadians are excelling in science, mathematics and reading in comparison to their peers around the world, ranking in the top five in each of these categories. We must keep up with others who are improving their rankings.
  • In comparison to those in other OECD countries, few Canadian students are completing Master's and Doctoral programs in areas that drive discovery and innovation. Companies, governments, and universities can encourage more Canadians to complete advanced degrees by educating students on the range of S&T careers and providing students with career opportunities in S&T development, application, management and financing.
  • Canadians in the workplace who apply and adapt new technologies can drive innovation to new levels. Canada has not made progress in a decade in increasing the proportion of Canadians with basic literacy and numeracy skills. Governments and employers must champion adult literacy and technology training to address this skills deficit.

Knowledge development and transfer

  • In Canada, governments at different levels and the private sector have chosen to build research capacity at institutions of higher learning. Focusing resources of all sectors on research priorities, conducting research at international levels of excellence and better using research facilities at universities and colleges to train students in state-of-the-art facilities can help improve innovation performance and benefit companies.
  • Turning R&D excellence into jobs and a better quality of life depends on building strong connections among customers and suppliers, scientists and managers and managers and teachers. We need to advance the transfer of knowledge between science and business.

Business Innovation

  • Canadian companies do not invest as much as their competitors around the world in R&D. We have made little progress in understanding why these competitors are more likely to see investments in the lab and on the shop floor as contributing to their business goals. This understanding is fundamental to evaluating the efficacy of policy instruments to stimulate innovation.
  • How Canadian technology companies finance their ventures and the availability of different sources of risk capital at different stages of business development can have a significant impact on commercialization success. Business associations and the venture capital industry can assist in the understanding of this area.

Tracking Progress

  • More resources and greater effort must be devoted within the innovation system to capturing data, which better explains how individuals, companies and other institutions innovate. This can be done through business R&D and innovation surveys, sector specific technology surveys and user surveys on information technologies and their applications. Without the tools to understand how innovation happens, we will be unable to formulate appropriate strategies for improving innovation performance.

Conclusion

All participants in the innovation system have a role to play in strengthening Canada's innovation capabilities. In the STIC's view, Canada has strong foundations on which to build. Many Canadians are leading the way with the support of all levels of government. If we adapt international best practices for Canada, focus our domestic efforts, maintain a watch on key indicators for success, relentlessly test the efficacy of our innovation support mechanisms, and act quickly to address areas of weakness Canada will be able to compete with the best.