Canada’s superclusters: a step in the right direction—but will we seize the opportunity?

The Innovation Canada's $950-million Superclusters Initiative gives Canada an opportunity to improve its longstanding poor innovation performance. By taking a more direct funding approach and putting the central focus on firm-led innovation, the superclusters initiative seeks to deliver economic growth and increase employment. Yet significant challenges and hurdles remain if the initiative is to truly move the innovation needle in this country. The Conference Board of Canada has been benchmarking Canada’s innovation performance for decades. The most recent iteration of the How Canada Performs: Innovation Report Card series places Canada as a C-grade performer, slipping from 9th to 12th among 16 peer countries from 2015 to 2018. Although Canada boasts strong entrepreneurial ambition and has improved on a number of indicators—such as venture capital—other countries are improving faster across a variety of innovation measures, so our relative position continues to slip. One of the key drivers of innovation performance in any country is business investment in research and development (R&D). Canada ranks dead-last among the 16 developed countries assessed in this category. Since 2001, Canada’s performance on business investment in R&D has slipped substantially, from 1.26 per cent of GDP to just 0.93 per cent of GDP. In contrast the OECD average has increased from 1.53 per cent of GDP in 2001 to 1.62 of GDP in 2014. Business R&D would need to nearly double in Canada to place us in the top half of the 16 developed countries we assess. Canadian governments have typically been strong sources of R&D spending, but this investment has been geared more toward the public sector side of the continuum—government and higher education R&D—instead of more direct innovation funding to business. This investment helps to explain why Canada performs well on discovery research, but as we traverse the continuum to application, commercialization, scale-up and growth, our performance falls. The investment in science and basic research is valuable, but it remains indirect in terms of impacting the performance of firms and the economy. The Innovation Superclusters initiative could lead to enhanced business investment in R&D. It supports five superclusters, including the Ocean Supercluster in Atlantic Canada, Scale AI in Quebec, Advanced Manufacturing in Ontario, Protein Industries in the Prairies, and Digital Technology in British Columbia. Each of the clusters must, at a minimum, match the federal investment with private sector investment, seeking to undertake applied R&D projects that are firm-led and focused on opportunities that can build robust clusters and sectors across the country. Our analysis of Canada’s innovation performance offers several recommendations and needed changes. First, Canada needs to focus on firm-led innovation activity, and thus build out firm-centric innovation policies and programs. Second, we need to focus investment in areas where we have unique strengths and attributes that would allow us to compete globally. In turn, this helps build and leverage our competitive advantage that leads to growth and scale. Third, building clusters of innovation-led activity that bring together firms, academic and research institutions, and government supports, is vital to renewing our business sectors in Canada. Direct support programs and funding for business-led innovation is key, not just government and higher education R&D funding or indirect mechanisms like tax credit regimes. Lastly, innovation and related growth must be inclusive, allowing all Canadians to participate in, and benefit from, the innovation economy. The Superclusters Initiative, on its face, meets many of these recommendations. That makes it an important step in the right direction. But success hinges on cluster partners actually delivering on their shared mandate. Too often policies and programs fail, not because of how they are designed, but because of how they are executed. Policy-makers and participants need to keep the focus on firm-led innovation and growth and not political priorities of the day, drive toward shared outcomes, move away from protectionist ideologies, and work collaboratively to build scale and competitiveness that can compete globally. The ingredients are there—but cluster partners must seize the unique opportunity afforded to them. Paul Preston is director of science, technology and innovation policy at the Conference Board of Canada. The Hill Times

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Canada’s superclusters: a step in the right direction—but will we seize the opportunity?

Yet significant challenges and hurdles remain if the initiative is to truly move the innovation needle in this country.

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