State of the Nation 2008

3. Foundations for Innovation — Elements of the Innovation System

The Competition Policy Review Panel's June 2008 report entitled Compete to Win defined productivity as the efficiency with which resources available to an economy, such as labour, capital, and business expertise are being used to produce goods and services.4 Productivity reflects our ability to make the best use of our people and other resources to increase our standard and quality of life. There is a strong empirical link between innovation and a nation's productivity.5

This section describes the conditions that support a well-functioning innovation system, comments on local and international factors influencing innovation, and discusses research areas of focus to build innovation strengths. It then provides an overview of the resources for R&D and Canada's principal R&D performing sectors.

4 Competition Policy Review Panel, Compete to Win (2008), p.4.

5 S. Rao, A. Ahmad, W. Horsman, and P. Kaptein-Russell, "The Importance of Innovation for Productivity." International Productivity Monitor, No. 2 (Spring 2001), pp. 11-18.