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Canada’s worsening innovation output dilemma

By 22/09/2021October 4th, 2021No Comments


On Monday, the World Intellectual Property Organization (WIPO) released the annual Global Innovation Index (GII), which captures the innovation performance of 132 countries, tracking global trends, country-level strengths, weaknesses, and innovation ecosystem gaps.  

The GII adopts a broad definition of innovation first advanced in the Oslo Manual (fourth edition), developed by the European Communities and Organization for Economic Co-operation and Development (OECD), which reads as follows:

An innovation is a new or improved product or process (or combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process).   

The GII’s conceptual framework is based on two equally important sub-indices, the Innovation Input Sub-Index, and the Innovation Output Sub-Index, with the overall GII score being the average of their average. Briefly, the Innovation Input Sub-Index captures the enabling factors that facilitate innovation activities whereas the Innovation Output Sub-Index denotes the results of innovation activities within the economy more broadly. Despite being weighted the same, the Input Index is based off of five input pillars while the Output Index only includes two pillars.  

This year’s iteration of the GII also includes monitoring of the state of innovation throughout the COVID-19 pandemic. Despite COVID-19’s significant social and economic impact, the GII found that overall innovation investment showed considerable resilience during the crisis. The GII cited a 7.6% increase in scientific publications, a 3.5% increase in international patent filings with the WIP), a 5.8% increase in venture capital deals, and a 10% increase in research and development (R&D) expenditures among the top corporate R&D spenders as being major contributors to innovation resilience in 2020.  

Switzerland retained the rank of most innovative country in the world, with particular strengths in innovation infrastructure and both knowledge/technology and creative outputs. Rounding out the top five most innovative countries are Sweden, the United States of America, the United Kingdom, and the Republic of Korea (detailed below).  

GII 2021 Rankings – Top Five Countries by Input/Output Innovation Pillar 

Countries Inputs Outputs Pillar

Source: WIPO. Global Innovation Index 2021; GACG Visualization

With respect to Canada, the country jumped one spot to 16th in the Global Innovation Index 2021 due to increased rankings in the Innovation Input Sub-Index, in which Canada ranks 8th among 132 countries. Somewhat problematically, however, while the country continuously performs well with innovation inputs, it has long struggled with the Knowledge and Technology and Creative outputs pillars (as detailed below), as a result, Canada dropped one spot to 23rd overall in the Innovation Output Sub-Index.

Canada’s GII Pillar Rankings, 2020 and 2021

Source: WIPO. Global Innovation Index 2021; GACG Visualization

Canada’s innovation ecosystem has long been plagued by its inability to turn research and development inputs into innovation outputs. Decreasing investment in R&D has marred Canada’s innovation performance as overall expenditures have steadily decreased, as a proportion of gross domestic product (GDP), for the past two decades irrespective of the country’s attempt to institute meaningful innovation strategies. Public sector focus has remained firmly fixed on funding and supporting the innovation inputs, such as the higher education research landscape that it has provided inadequate support to the countries corporate innovators, whom have also almost wholistically underinvested in business R&D over the past two decades.

Unsurprisingly, Canada’s decreasing R&D expenditures comes as peer-nations have intensified their commitments to increasing their domestic innovation potential.

Source: GACG Visualization

The phenomenon is captured in extensive detail in our annual R&D ecosystem map, Canada’s R&D and Innovation Ecosystem 2021: Top 10 Risks and Opportunities, which details the primary innovation stakeholders, their activities and connections and the risks and opportunities facing Canadian innovation. Our assessment follows suit with that of the WIPO, in that Canada is weak in terms of innovation outputs.

Canada's R&D Ecosystem Map

Canada’s R&D/Innovation Ecosystem Map 2021: Top 10 Risks and Opportunities

It is these outputs that generate true societal and economic value that expand Canada’s market potential and export capabilities and increase the country’s productivity and overall global competitiveness.



Read more about how Global Advantage Consulting Group’s ecosystem maps can help you pinpoint your position within Canada’s innovation ecosystem.

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