Measuring What Matters: Understanding Canada’s Innovation Landscape

Published On: November 2023Categories: 2023 Conference Editorials, 2023 Editorial Series, Editorials


Tijs Creutzberg

Council of Canadian Academies

Director of Assessments

Jeff Kinder

Council of Canadian Academies

Project Director

The photos of two white men in suits.
Disclaimer: The French version of this editorial has been auto-translated and has not been approved by the author.

Innovations, especially digital, are not only reshaping our lives but also bringing transformational change to the global economy. Be it ordering a local carshare through a U.S. firm, a Canadian social media influencer creating digital content on TikTok to promote a Chinese product, or a Saskatchewan farmer controlling their automated tractors from downtown Regina, social and economic transformations are as ubiquitous as they are continuous. One can only speculate at the forthcoming impact of generative AI on products and processes across all sectors. 

Canadians for the most part, see all this innovation as positive provided they can buy the new technologies and readily adapt to the social changes that the innovation generates. Similarly for Canadian industries, such innovations are a benefit in so far as they create new markets, open opportunities in global networks of innovation and production, and improve productivity through technology adoption, all while creating well-paid jobs.

Hence the importance of measuring Canada’s innovation performance: having a clear understanding of our ability to innovate, informs policies and decisions that help shape the wider ecosystem in which innovation occurs, and potentially, aiding efforts to secure Canadian prosperity and well-being.

To this end, there have been many measurement studies over decades, including several from the Council of Canadian Academies (CCA), all remarkably consistent in their dismal conclusions – that Canada consistently performs poorly on innovation despite a supportive research ecosystem. Private sector R&D investment as a percentage of GDP has long lingered at the bottom of peer country comparisons and the investment trend is heading in the wrong direction. Labour productivity continues to decline. Companies have struggled to attract investment capital, develop competitive products and services, and scale to a size that can withstand international competition or foreign buyouts. With the collapse of large technology anchor firms such as RIM and Nortel, together with the ongoing decline in manufacturing, Canada’s innovation capacity, by these accounts, is as weak as ever. 

Needed: Innovations in measurement

What if part of the current problem is not innovation per se, but how we go about measuring it? For all the innovation-driven social and economic changes in the last decade, there has been remarkably little change in the measurement of innovation. Indeed, what we measure has long been premised on the tangible economy via a model of industrial innovation in well-defined traditional sectors and which takes place in a wider ecosystem of institutional supports. This model assumes companies make investments in research and technological development, which, if successful, leads to the production, selling, and export of (mostly) goods, and ultimately company growth and scale. And they do so by drawing on measurable inputs including public research, an educated workforce, and financial supports.

While many of these indicators still matter in the intangible economy, others may matter less. Exports, long considered one of the indicators that can capture successful production of new goods, do not account for cross-border digital flows which now dominate service industries. What about Canadian business expenditures in R&D (BERD)? Is the steady decline in BERD reflecting poor innovation or simply the fact that many companies can now successfully innovate with far less capital by relying on cloud platforms and services, and with a small, highly skilled and globally dispersed team? And how much insight into innovation strengths can be had from analyzing sectors from overly general and often outdated sector categories such as ‘ICT’ or ‘manufacturing’. Fintech, SaaS, cleantech, and digital agriculture, for example, all get lost in traditional industry classifications which dominate standard innovation measurement approaches. There are also plenty of challenges with how we measure research performance. Despite progress, there continue to be weaknesses in existing bibliometric indicators and methods, particularly in adequately capturing research performance in the humanities, arts, and social sciences – disciplines vital to creativity and innovation. 

The good news is that new indicators are being developed along with new approaches that may provide a better picture of today’s innovation and S&T dynamics. The CCA’s Scientific Advisory Committee tasked a subcommittee in 2019 with examining the challenges and limitations of methods used to assess Canada’s strengths in science, technology and innovation (STI). The subcommittee outlined several promising alternatives to standard measurement methods that can be used by the next expert panel tasked with updating CCA’s series of reports measuring Canada’s STI strengths and weaknesses. Opinion surveys and qualitative research methods, for example, can be deployed alongside quantitative metrics to tell a richer performance story. There is also a need to understand inclusive innovation and social innovation that complement traditional S&T-driven economic innovation but can complicate the measurement challenge. Not least, Statistics Canada has also taken on the challenge, having, for example, upgraded its business surveys to be able to identify cross-border digital transactions and digitally delivered services, both domestic and international. 

Canada: a strong innovator?

Most intriguing, and to the surprise of longstanding observers of Canadian innovation, is the recently released European Innovation Scorecard 2023 which identifies Canada as a “Strong Innovator”, and one of only three countries whose innovation performance actually increased between 2016 and 2023, along with China and South Korea. Some notable indicators in their scorecard: SMEs with product innovation (54% increase); public-private co-publications (61% increase) and knowledge-intensive services exports (16% increase). Could Canada’s innovation story be changing at long last? Perhaps, but to have more confidence in such assessments, we ought to have a closer look at what gets measured and how.