Convergence, Innovation and the Economy: The Best Ecosystem to Attract Investment
- Canada must enable value addition in the agri-food ecosystem to truly position the country as a world leader in the sector.
- Canada should focus on the notion of mixing physical innovation with other aspects of virtual and social innovation to attract foreign direct investment.
- The balance between work and life in Canada’s economy is a competitive advantage for attracting and retaining talent.
Balance is critical to the future of the Canadian economy. We must recognize that we operate within finite resources and look beyond economic growth and efficiency towards a more holistic understanding of prosperity. Canada should continue to focus on long-term prosperity and create a resilient economy that can withstand an unpredictable future.
How would you characterize Canada’s international economic, business and innovation brand? What are our competitive advantages, and how can we improve?
Whether the Canadian brand is viewed as positive or negative depends on the investor. Canada has a very strong economic performance—I was just reading over the last year that we have the most economic growth of all G7 countries. Canada also has a solid capacity for business and technology. Most importantly, we have very stable and resilient institutions that have proven to be effective in navigating the 2008 financial crisis, as well as the crisis we are navigating today.
In terms of investment, we have a lot to offer. For investors looking at long-term investments, and who want to contribute to the economy and society, Canada is a good place to invest.
One of Canada’s biggest competitive advantages is agri-food. Canada is known for agriculture, and Canadian agri-food is very much a commodity—but we can develop a lot of potential if we focus on value addition. In terms of industries, we are one of the world leaders in artificial intelligence and digital and computational technology.
“Canada is known for agriculture, and Canadian agri-food is very much a commodity—but we can develop a lot of potential if we focus on value addition.”
Canada has also done well at creating the conditions to support new businesses, whether they are domestic or through foreign direct investment (FDI). It has been interesting to watch the creation of the full ecosystem to support business over the last 10 years. Before you support business, you need science, technology and logistics infrastructure, and I think Canada is taking an ecosystem approach to business that is unique compared to world standards.
One area that Canada is being recognized globally in is the convergence of the virtual, or digital, with the social and physical, such as innovations in advanced manufacturing. New platforms and innovations, which are not industry specific, are being created to address modern challenges. We also have a good lead in the software and game design industry. However, there are still entirely new areas that Canada can look at to meet the needs of consumers and to best support communities through these types of innovations.
How should Canada approach innovation so that we can become more competitive?
If there is a new trend in innovation, we need to take it seriously and revisit how we innovate and the way that we operate. The fact is we cannot continue to innovate by strictly targeting economic growth—we have to look at the various dimensions of stability and make them a part of everyday life. That way we are prepared for the unpredictable.
Whether it is coronavirus currently—which is basically shutting down the world—or extreme weather conditions, we have to be prepared. The West has been innovating for over 200 years since the onset of industrialization. We have created wonderful progress everywhere. The shift from a largely agricultural economy to one that engaged in manufacturing was propelled by the embrace of steam power and new transportation technologies. However, in moving from the First to the Fourth Industrial Revolution we have not sufficiently and soon enough recognized that we operate within finite resources, both in nature and in human capabilities. We need a course correction to weave and reframe these constraints into possibilities for how we approach innovation and wealth creation.
I work in various contexts in Canada, and I think it is a country that already has this understanding written into its DNA and institutions. I would not call it conservatism, but we have a way of looking at stability in the long-term while also considering growth. That might mean we are perceived as less innovative compared to the United States, but at this point in time, having economic resilience is a very important quality. We have to innovate for resilience and performance at the same time.
The world moves fast and is very connected now, and we have to innovate for lasting growth and prosperity, in all its dimensions. If you look at companies, prosperity has long been defined as economic growth or efficiency—which is a key dimension. But the dimension of where we live and how we interact with the world is also key to prosperity.
“The world moves fast and is very connected now, and we have to innovate for lasting growth and prosperity, in all its dimensions.”
This notion of having a more balanced, long-term and multi-dimensional economy is a key advantage for Canada.We recognize that progress cannot be purely about bigger and faster economic growth. This crisis, which is forcing us to scale down, may help us to further balance our sense of what we want the Canadian economy and society to be. Balance should not be a constraint on innovation, but rather, it should provide a roadmap for the types of innovations we need in both the short and long-term.
What is economic convergence and convergence innovation?
Economic convergence, in the traditional economy, is essentially the “rest” converging with the West. It is when the developing countries progressively reach the same GDP and level of economic growth and consumption as the Western world. This was the original economic convergence. About 10 or 15 years ago, the definition began to change, and we now talk about it as the meeting point between different perspectives and actions that lead us toward a common goal or outcome.
You can think about it like a person’s mind. We are very schizophrenic individuals—we are citizens, consumers and parents—and this decides what we do and what we buy. We are very rational and creative human beings, and convergence presents a framework to understand how we can help a person do what is good for them and good for society. Really, it is about how to support that person in the most effective way possible.
Another example is the agri-food sector. We look at ways of innovating that create competitiveness and performance for the sector, but we do so in a way that does not challenge human health or the environment. Economic convergence, as it is designed, led us essentially to where we are now in agri-food.
Convergence in the food sector means creating food at the intersection of various forces, including convenience and what consumers want. The consumer is willing to pay for what is good for their health and for the planet—but you must also consider what the producer and retailer are willing to do. Convergence innovation really takes this approach: keep the person at the centre and find ways to innovate along the entire ecosystem. It is not simply about what comes out of the science and technology pipeline, but what is best for the entire ecosystem. Build supply and demand for those types of innovations in a way that is economically viable for the enterprise as well as the economy as a whole.
“Convergence innovation really takes this approach: keep the person at the centre and find ways to innovate along the entire ecosystem.”
Another example is childhood obesity. In the mid-2000s, we hosted four extremely powerful think tanks addressing childhood obesity. Everybody was saying our kids are having shorter life expectancies, so something is terribly wrong. We started to say that something mainstream needs to happen in the way that we create wealth and provide food.
In 2008 or 2009 we began spearheading Canada in the global sector of pulse crops. Canada recognized we had a solution to the health of the people that was good for protein and diabetes, but also good for the environment—so, why not use this for agri-food development? We worked to get the United Nations to declare 2016 the International Year of Pulses, and then looked beyond to understand how we can build pulses to be what consumers want to eat and to create a value-added pipeline. Progressively, that work led us closer to the supercluster, which is about plant-based protein.
“Convergence is about figuring out how to innovate and make money, while also contributing to a more balanced next generation for nature, society and the economy.”
We are also at the point now where I believe that digitization can be a key enabler of more convergence and I think Canada is really spearheading this thinking internationally. Convergence is about figuring out how to innovate and make money, while also contributing to a more balanced next generation for nature, society and the economy.
How would you characterize the innovation ecosystem in Canada today? How can we improve to lead in the world?
Canada’s innovation ecosystem building strategy has been very effective. If you look historically, we had the Canadian Foundation for Innovation (CFI), which now recognizes convergence within and across scientific disciplines and industry sectors—as a key trend anchoring the strategic roadmap for coming years and as instrumental to making Canada competitive.
Later on, we had the Canada First Research Excellence Fund, which provided funding for agri-food research and development. McGill University received $84 million for Healthy Brains, Healthy Lives, which is for digital-powered neuroscience, clinical and behavioural research around mental health.
Université de Montréal received investments for the Institut de valorisation des données (IVADO) which focuses on data science and optimization for benefiting society. Additionally, University of Guelph received another $76.6 million for Food from Thought, advancing innovation in the agriculture and food sectors.
“To lead, Canada needs to effectively use its natural ecosystem in the agri-food sector.”
Canada First Research Excellence has had an important impact and illustrates how Canada has been very strategic about accelerating its scientific and commercial competitiveness in a way that makes me very optimistic about the role we will play internationally.
To lead, Canada needs to effectively use its natural ecosystem in the agri-food sector. We need to produce a full continuum to capture the value of nature, the value of industry and culture, and to really position our advantage. Canada should take an ecosystem approach to this, instead of having all of the points along the value chain competing. We are definitely in the right position to move towards leadership in the domestic and international agri-food sector by bringing convergence innovation to scale.
How do we translate Canada’s advantages into attracting more foreign direct investment?
Canada should focus on the notion of mixing physical innovation with other aspects of the virtual, digital and social—that is one avenue that can attract foreign direct investment. We also need to work on integrating technology in the auto industry and create value-added products in the manufacturing industry. Adding the digital or the social to the very physical, in manufacturing, is one key connection we need to make.
We can improve our capacity to attract FDI by increasing access to talent, not simply by getting the top graduates from universities, but also by creating a balance between work and life in the ecosystem as a whole. Canada has a very strong competitive advantage from that perspective, and we should not shy away from talking about it.
When Canada attracts investment, we must do so to an entire region, rather than one city or industry. According to data from the US, a regional approach to foreign direct investment may provide higher returns than current practice, for both the investor and the host. That is one aspect of thinking about the ecosystem side of foreign direct investment.
“A regional approach to foreign direct investment may provide higher returns than current practice, for both the investor and the host.”
Investors should know that by investing in Canada, you get an ecosystem that will accelerate your ability to create supply and demand for innovation that creates wealth as well as environmental and societal outcomes at the same time, whatever industry you are in.