State of the Nation 2008

1. Introduction

Strength and leadership in science, technology and innovation (STI) is the price of entry to full participation in the knowledge-based global economy of the 21st century. To thrive in the new global economy, a country must innovate. Deep and comprehensive capacities to discover, create, source, adopt and market new goods and services underpin our country's future economic growth and each citizen's quality of life. Improvements in our health, personal security, and the quality of our environment all go hand-in-hand with our ability to innovate.

What drives innovation in Canada? Curiosity and the thirst for knowledge, the desire to succeed in the marketplace, better services for Canadians, better stewardship of our environment and resources, and realizing our full potential, motivate individuals, institutions of learning, businesses and government.

The potential for the future is enormous. Canada has significant S&T strength and is building core S&T advantages — our people, our communities, our enterprises and our knowledge. We have fostered businesses that are able to compete effectively in the global arena and our population is one of the most educated in the world. Our researchers make significant contributions to the global pool of knowledge. Our marketplace frameworks help make Canada a prosperous nation and an attractive destination for investment. Two official languages and vibrant, diverse, tolerant, communities where culture and the arts thrive, enrich the lives of Canadians and draw others to our country. As the Competition Policy Review Panel observed: "Canada also provides political stability through strong institutions and a commitment to the rule of law, an increasingly important competitive asset for economic and resource development."1

Recent assessments of Canada's innovation performance, however, tell us that all is not well. The Council of Canadian Academies in their 2006 report, The State of Science & Technology in Canada, concluded that Canada has built significant strength in many fields of research over the last decade and is gaining ground in many new areas such as bio-based and health sciences, various applications of nanotechnology and natural resources. However, Canada did less well in "converting strength in basic science into sustained commercial success."2 In its 2007 report card the Conference Board of Canada still places Canada in the gifted class among nations, but tells a story of a country moving to the back of the class because of underperformance in almost all subjects. Canada received a D grade and ranked 13th out of 17 countries in the area of innovation, making us a below-average performer with only pockets of achievement. The Competition Policy Review Panel linked much of Canada's poor productivity performance to the comparatively poor performance of Canadian companies in the creation, diffusion and transformation of knowledge and the use of knowledge through commercialization.3

Maintaining our investments in science, technology and innovation will help us ensure that we bounce back quickly from the current global economic downturn. Our investments in science, technology and innovation can help us to build our current strengths, help us to leapfrog competitors who are not in as good financial shape as we are, and provide us with opportunities to shore up the areas where we are not among the world leaders. But failing to act, or making the wrong decisions, will turn the short-term problems we face in the current global financial crisis into a long-term, possibly permanent decline in our living standards. Now is the time to up our game.

1 Competition Policy Review Panel, Compete to Win (2008), p. 24.

2 The Committee on the State of Science and Technology in Canada, Council of Canadian Academies, The State of Science & Technology in Canada, 2006, p. 25.

3 Competition Policy Review Panel, Compete to Win (2008), p. 18.