How can a National Industrial Policy increase the effectiveness of the CIC?

The structure of the Canada Innovation Corporation (CIC) is slowly emerging. The Blueprint issued in February describes it in broad brushes – based around the Industrial Research Assistance Program (IRAP), with additional funding. Its mandate is “to increase Canadian business expenditure on R&D across all sectors and regions of Canada, and help to generate new and improved products and processes that will support the productivity and growth of Canadian firms.”

It may be worth reminding ourselves why this new approach was needed. Canada’s ranking for innovation is poor (Ranked #15 in the Global Innovation Index) and Business spending on R&D has declined as a percentage of GDP for two decades.

How it fits in the innovation ecosystem

The Blueprint illustrates how the CIC fits in as follows: Generally Available Direct Business Innovation Programs:

Experts on ecosystems note that by their nature ecosystems are local. Typically experts say that ecosystems are within commuting distance of a major centre. The reason for that is that each area is different, with different people involved, different institutional structures, differing regulations and different histories. So, for example, we can have a Waterloo ecosystem, a Calgary ecosystem, or a Vancouver ecosystem, but a “Canadian ecosystem” doesn’t really exist.  The CIC will play a different role in each ecosystem across the country.

However the diagram in the Blueprint is very useful in that it illustrates the diversity of Federal organizations that support innovation across the country. It does not include the myriad of provincial organizations that also seek to support innovation. It is quite likely that across the country we have 100 or more organizations with a mandate to improve innovation. 

The question this raises is how to achieve coordination among all these agencies?

The way many countries tackle this coordination problem is through a National Industrial Policy. Without that, many of these organizations might go different directions and work at cross purposes.

One country we can learn from is Switzerland, which is ranked #1 in the Global Innovation Index and has a longstanding reputation for excellence in all of the related fields- R&D spending (#3), World talent ranking (#3), and IP protection (#3).

In addition, Switzerland has a key attribute for Canada in that it has a federal structure where both the Confederation and the cantons are actively engaged in supporting innovation. Any mention of collaboration between the federal and provincial governments is conspicuously absent from the CIC Blueprint.

What should be in a National Industrial Policy?

The Swiss call their approach an “Education, Research and Innovation Policy (ERI).”  This already gives a clue that they link these three areas together in addressing innovation. By education they mean universities and vocational training.

The Swiss strategy is articulated as follows:

Long-term sustained promotion of education, research and innovation (ERI) is one of the pillars of Switzerland’s success. A high-quality education system encourages personal development and integration into the labour market and enables lifelong learning. Education and research are the basis for creativity, inventiveness and entrepreneurship and are thus essential prerequisites for the innovative capacity of companies and the competitiveness of our country. In accordance with Switzerland’s federal policy system, responsibilities for the various funding tasks in the ERI sector are divided between the Confederation and the cantons.

A key part of the Swiss approach is that the Federation and the cantons work very closely together through a variety of joint bodies. They update the policy every four years. Switzerland has the same tensions between the Confederation and cantons that Canada has between the federal government and provinces, perhaps even more so. The fact that they work so closely together shows their strong consensus about the importance of research, education and innovation for Switzerland.

The Confederation allocated 28.1 billion CHF (about $47 billion CDN) over the period 2021-2024, and this represented about 20% of the total, with the cantons paying the balance[1]. Bear in mind that this is for a country with a population of 8.7 million, less than one quarter the population of Canada. Adjusted for population,a corresponding number for the federal spending in Canada would be about $206 billion CDN over 4 years.

The Swiss explain that this significant spending sends out a strong signal of the tremendous political importance given to education, research and innovation in Switzerland.

Some of the key focus areas in 2021-2024 are:

• Vocational education and training
• increasing participation in continuing education and training.
• ERI policy is crafted in a way that allows stakeholders to manage and shape the digital transformation.
• Swiss universities offer top performance in the interests of science, the economy and society.
• Federal funding agencies support research and innovation at the highest level.
• ERI policy encourages sustainable development and equal opportunities in all areas.

It is interesting to note that we might characterize these as Horizontal policies, applicable across the board, rather than vertical policies that identify specific technologies or markets.

Conclusion.

In order for the CIC to achieve its full potential, it needs to be coordinated with the numerous other bodies – provincial as well as federal – that also support research and innovation. One means of doing this is by means of the National Industrial Policy. We saw how Switzerland has achieved outstanding results through its Education, Research and Innovation Policy.

Canada has many of the same areas of focus as the Swiss. With better coordination we could achieve much better results and position the CIC to play a key role in improving Canada’s innovation performance.

Acknowledgements
I would like to acknowledge the contributions of the panelists at a session at the Research Money conference I moderated:  Claudia Krywiak, Karimah Es Sabar, Neil Desai and Nick Shiavo, and Jeff Crelinsten. 

References

[1] State Secretariat for Education, Research and Innovation (SERI), Switzerland. Federal Education, Research and Innovation Policy 2021-2024. https://www.sbfi.admin.ch/sbfi/en/home/eri-policy/eri-21-24.html