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By D’Arcy Jenish
Canada may have a solid banking system, reasonably low unemployment and a stable economy — despite the wrenching recession and consequent turmoil of the past three years — but all that is no guarantee of a rosy future. Not according to the 2011 Global Creativity Index published recently by the University of Toronto’s Martin Prosperity Institute. The institute uses the index to measure a country’s commitment to research and development, technological innovation and other measures crucial for economic growth and prosperity. Canada is firmly embedded in the upper echelon of the 82 nations assessed, but lags behind Sweden, Finland, Australia and several others.
“We seem stalled,” says the institute’s research director, Kevin Stolarick. “We have our position and we stay there.”
Canada ranks 13th in percentage of gross domestic product devoted to research and development, ninth in scientific and engineering researchers per capita and eighth in the number of patents per capita. “If we are going to move the needle on productivity, we have to be more innovative and creative in all our industries,” Stolarick adds. “It’s just as much about Ford and Maple Leaf Foods as it is about RIM.”
One of the things that has Canada lagging behind some of the leaders — like the Scandinavian countries — is the gap between inventions and innovations, and Stolarick contends that there is a significant difference between the two. “An invention is usually a really cool idea,” he says. “An innovation occurs when you can turn that idea into a product or use it to improve your manufacturing process.”
In recent years, the federal government, as well as many of the provinces, have invested in research and development by setting up centres of excellence and attempting to promote the commercialization of discoveries made in academic settings. Stolarick says that these efforts have tended to encourage invention rather than innovation and suggests that governments should be making better use of procurement as a lever to close the gap between the two.
Ottawa has an opportunity to do just that with the $33 billion naval shipbuilding program unveiled late October. He contends that Canada’s Department of National Defence should take its cue from its American counterpart. “One of the things that is really different between Canada and the US when it comes to innovation is that the US government is really great at demanding innovative products and ideas,” Stolarick says.
Ontario’s Liberal government has taken a very different approach in order to rejuvenate the manufacturing sector. It is promoting green energy and the production of wind turbines and solar panels through a variety of programs and generous subsidies. The government’s efforts may not work, and for a variety of reasons. “People accustomed to making cars won’t necessarily be able to do green energy manufacturing without serious re-training,” he notes. “That is incredibly expensive and harder to do as people get older.”
A sounder approach is to improve productivity of existing industries through innovation. He cites the auto industry as one where Ontario enjoys a healthy edge over many competing jurisdictions, especially south of the border. “One reason we have an auto industry is that Canadian plants are more efficient and productive,” says Stolarick. “If the automakers were making purely economic decisions they would close US plants and keep the Canadian ones open, but for political reasons they can’t be seen doing that.”
Meantime, there is also the approach of the Scandinavians. “They went through the globalization process ahead of the rest of the world,” he notes. “They were shifting manufacturing to eastern European countries while understanding that that they needed to focus on the high-value stuff like design, production planning, management, marketing and finance.”
