Canada’s Innovation Woes Continue

by Jordan Richardson on June 28, 2011

Canada can now pat itself on the back for being a mid-level player in global innovation. The country is being passed by rising giants like China and South Korea in some categories and continually lagging behind other nations, like the United States and Germany, in other categories.

A report will be released Tuesday in Ottawa by the Science, Technology and Innovation Council. The report says that Canada’s performance on its “report card” has slumped on “most key measures” over the last two years.

To anyone who’s been following along at home, Canada’s underachievement in the area of innovation isn’t exactly shocking stuff. While the nation has resources and talent, getting those elements together in a stifling tech climate isn’t working.

Canada is spending less per capita on research and development than most of its peers. Business research and development is down, the venture capital picture is awful, and Canadians are even ranking lower than ever in high school test scores. Canada does spend quite a bit on research and development thanks to tax credits, but there’s very little by way of direct contributions to tech innovators to speak of.

The report discovered that Canadian companies spent 75 percent of what their American counterparts did on machinery and equipment per worker from 2000 to 2007. Worse still, Canada has invested in information technology and communications at just half the pace as United States companies in the same sector.

With respect to labour productivity, Canada sits at a dismal 23rd out of 33 countries in the report card. Canada’s labour productivity has been growing at a rate of less than one percent for the past decade.

So what’s the excuse?

Our corporate tax rates are among the lowest in the Western world, with the Harper government continually ensuring that it remains that way. There is no government mollycoddling to stop the giants from competing on a larger scale, either. And the country certainly isn’t too small to twist with the big boys, especially when you consider the luck that other smaller nations have had.

A lot of the rationale for a lack of development in Canada’s tech sector (and indeed in other key industries) lies in what Globe and Mail columnist Eric Reguly calls a “sell-out culture.” This dates back to the income trusts and to the sell-first insolence embraced by many Canadian companies that could have, with a little shrewdness and a lot less corporate greed, headed into other territories with more innovative flourish.

As such, we are where we are for a reason. As a country, Canada’s inventive ground continues to resemble a veritable wasteland. While we may have the minds and the resources to deliver the goods, our lack of nerve and resolve isn’t doing us any favours. Well hey, at least we can house data centres while our tech innovators (Nortel, RIM) go down in flames.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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