To Rescue Canada’s Economic Stability in a Pre-Election Year, We Need to Re-think “Value”  

With contributions from Jessica Stewart and Iman Abrahim, graduates of WLU’s Masters of International Public Policy.

Amid a pre-election year and at a time when Canada’s economic future requires a declared strategic position and pathway, urgent measures must be taken for Canada to have a solid value-based offering for the global value chains. Failure to do this will risk further negative impacts on an already gloomy 10-year economic forecast – an outcome of decades of declining productivity and innovation.

Strengthening Canada’s Position in the Global Value Chain

A number of bridging measures could be pursued by the Trudeau Government to help set the stage for more strategic economic reforms better suited to the current data-driven, digitalized and “intangibles” world – a reality for which other G7 allies have already adapted systems-based approaches and new policy orientations. But underpinning these bridging measures must be three important considerations:

1. The recognition that core enablers of these so-called emerging transformative technologies and innovation – such as Artificial Intelligence (AI) – will very quickly become a general-purpose technology which must be embraced and resourced as a key factor of national productivity supporting all sectors
2. An acknowledgement that the “dual use” nature of emerging transformative technologies like AI could, in addition to strengthening Canada’s economy, also bolster its national security contributions in a way that would be welcomed by our allies and help defend the country’s borders, sovereignty, and population
3. An acceptance that, in an ideas marketplace, innovation and economic potential starts in the firm, and therefore requires government policies which support and protect national companies

Such bridging measures should ensure that Canada’s current support for emerging technology initiatives is geared towards critical sectors like higher education, defence, agriculture, oil and gas, transportation, and healthcare. It must attract transnational collaboration that recognizes the global technology ecosystem, with mutually dependent nodes, and with global players moving quickly to either sustain or gain dominance within each of those nodes. Canada’s relative absence from most of these global nodes is limiting its future capacity to bring “value” to the global value chain. In contrast, those well-positioned in the ecosystem have locked down their positions for years to come, feeding off the intellectual property and patent fees which countries like Canada will be forced to continue paying. Canada’s position is, in a way, similar to that of many developing countries. 

A presence on even one “cog” of the global technology ecosystem requires support for higher education, IP generation and retention, standard insertion, and capital investment. The country’s higher education system must be regarded as a critical instrument of national power, which is vital to Canada’s economic survival. Current provincial policies, skewed towards external opportunities, risk sidelining internal innovation and research initiatives vital for commercializing technological advancements. This regulatory gap is further compounded by insufficient national intellectual property frameworks, which are imperative for controlling domestic ownership of innovation, guaranteeing creator rights, and protecting and scaling Canadian companies.

Failure to do this has led to Canada not only using public funds to support research and development that has, with insufficient protection, benefitted other global corporate headquarters owned by foreign actors. This trend has become further exacerbated by government support for Canadian-based manufacturing using foreign IP (i.e. electric vehicles), which only reinforces the knowledge and skillsets of the foreign actors who service these products and processes and not the knowledge and skillset development of Canadians.

Another one of many consequences of Canada’s sub-standard IP protections are the missed opportunities within the medical and agricultural sector, and in the investment and development of Artificial Intelligence (AI) and biotechnologies, which have predominantly benefited foreign firms.

Gearing Up for a Digitalized World

As the global economy becomes unquestionably reliant on digital technologies, national standard-setting on expectations, guidelines, and protocols within the technology sector is critical. This effort would promote uniformity, interoperability and fair competition. Moreover, it would give more Canadian businesses the confidence to invest in new technologies and enter new markets, driving economic growth and competitiveness. Whereas Canada is currently represented within the International Organization for Standardization, the lack of critical mass of a defined ecosystem supporting a strategic pathway and global position limits Canada’s influence in a system-based set of global standards. It also delays the development of a new nationally-owned general purpose technology infrastructure which Canada’s corporate, government and research communities could access.

Strategic capital investment is needed to foster innovation hubs, provide competitive salaries and offer advanced training programs, all of which could help create a more appealing environment for technology professionals. This would also help mitigate the braindrain and address skills shortages. This investment should support the scaling of domestic firms and facilitate the growth of transitional Canadian companies. Such prioritization would not only help mitigate current levels of braindrain and address skills shortages, but also exploit dual-use applications that synergize across both national security and economic prosperity objectives.

Addressing these critical enablers will require more than a disjointed approach of economic whack-a-mole. But in a pre-election year, when the adoption of thoughtful new strategies toward Canada’s position in the global technology ecosystem should not be anticipated, easy-to-maneuver bridging initiatives could, at the very least, help prevent the country from being locked out of the world’s future productive capacity.  

In this context, support for ideas and innovation that begin in Canadian companies could be accelerated through the creation and promotion of a national patent collective to pool and share its patents to facilitate access to technology, reduce litigation risks, and increase freedom to operate to promote innovation within a specific industry or field. This measure would help foster innovation and collaboration among businesses, researchers, and institutions and help strengthen the domestic and international competitive position of Canadian companies. This collective action would help spawn an ecosystem culture, commercialize new technologies rapidly and effectively, and create jobs. 

For example, the Trudeau Government’s April 2024 announcement of a 2.48 billion investment in AI should support the foundation of critical future infrastructure and a physical AI footprint across Canada that can attract further investment. This footprint should include a Sovereign AI Cloud infrastructure (not renting the local infrastructure of foreign multinationals) using Canadian technology and innovations. In the absence of much critical mass supporting AI infrastructure in Canada – and therefore, a way of securing sovereignty over our national data – these important developments should be injected with further funding and led as national projects.

Incorporating international digital standards into national regulatory frameworks would further support growth, allowing Canadian companies to easily enter new markets where these international standards are required, while also mitigating risks and vulnerabilities within its supply chains. Good practices from both the US and EU can be used to better protect Canada’s technology assets, bolstered by shared and centralized real-time intelligence platforms enabled by stronger partnerships between the government and the private sector.

In addition to the promotion of multidisciplinary university programs, and the continuous push for digital literacy and safe practices at all levels of the national education curriculum, partnerships between industry and universities should be job-focused rather than academia-focused. In parallel, government support for innovation hubs and technical programs could enhance skill-building and job readiness. 

A Stronger Canadian Economy

In a pre-election year when clarity on Canada’s strategic position in global value chains is desperately needed, the Trudeau government’s best short-term option for the country is to support achievable bridging measures to prevent Canada from being left behind entirely. These bridging measures, in the form of government-business-university partnerships, digital standards, IP, technology and data asset protection, must come with the acknowledgement that, while the country makes comparatively paltry investments in what is quickly becoming general-purpose technology across the world, the opportunity to use dual-use opportunities to support Canada’s economic survival and national security is further diminishing. Our ability to even access this moving train of global value depends on rapid progress being made to support the ideas and innovations of Canadian companies.