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Risks and Opportunities in Canada’s Innovation Ecosystem

Innovation is a process through which economic and social value is extracted from knowledge through the generation, development, and implementation of ideas to produce new or improved strategies, capabilities, products, services, or processes. 

Currently, Canada is losing in the global innovation race. In 2020, $2.8 trillion was invested globally in R&D industries, government labs and academic research centres in more than 115 countries. Canadian R&D accounts for merely 1.3% of these global investments. 

The country fails to innovate, largely because it does not sufficiently promote or proportionally emphasize the three basic types of research and development (R&D), which are basic research, applied research and experimental development. Our emphasis remains institutionally fixed on the lower end of the technology readiness level (TRL) scale, and even then, Canada is being outpaced by competitor countries. 

Overall, Canada earns a C on the Conference Board’s innovation report card and ranks 10th among 16 peer countries. The top-three countries with “A” grades are Switzerland, followed by the U.S. and Sweden. Denmark, Austria and Finland also performed well, each receiving “B” marks.


Innovation scorecard rankings

Source: Conference Board of Canada

Per Global Advantage’s analysis based on the OECD stat, the graphic below displays Canada ranking on some of the key Innovation metrics​. 

  • Canada’s National R&D expenditures are 36% below the OECD average, and continuing to decline​ 
  • Canada’s Business R&D expenditures are over 50% below the OECD average​ 
  • Canada’s Government R&D expenditures are 54% below the OECD average​ 
  • Canada’s Higher Education R&D expenditures are 59% above the OECD average ​ 
  • A persisting issue in Canada’s innovation system is our inability to turn innovation inputs into outputs 

OECD ranking

Source: OECD

In Global Advantage’s Canada’s R&D and Innovation Ecosystem 2021: Top 10 Risks and Opportunities, we capture the current state as well as the latest developments in this vast national ecosystem. 

Canada's R&D Ecosystem Map

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

Based on the Federal Budget 2021, the largest in Canada’s history, the map provides a detailed overview of the key innovation initiatives while outlining the 10 main risks and opportunities for Canada’s national ecosystem.

Risks and Opportunities Table

Thus, among the main risks for the Canadian Innovation landscape are the fact that now our country accounts for only 1.3% in the global research and development, or that unlike some of its peer nations, innovation in Canada happens mostly in a higher education setting and, therefore, may not always have a commercial application. Furthermore, our private sector is dominated by SMEs, which are naturally more risk-averse compared to more prominent players.  

Nevertheless, given the number of talent, the government’s investment as well as the general strive for innovation, Canada has opportunities to improve and take a leading position in the sphere of R&D/Innovation through any of the initiatives mentioned above.   

Read more about Canada’s R&D/Innovation Ecosystem Map 2021 here.

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