A Nation of Innovators? Decoding the 2019 Federal Budget of Canadian R&D and Innovation

A Nation of Innovators? Decoding the 2019 Federal
Budget for Canadian R&D and Innovation
Presented April 16, 2019 by:
David B. Watters, President/CEO
Jayant Kumar, Managing Partner
Omer Kaya, Associate Partner
Edmer Buen, Multimedia Developer
1

2
1. Invest money. Canadians are not investing nearly enough in R&D/Innovation to
sustain our high quality of life.
2. Build collaborative partnerships. The Federal Government needs to share
power and risk with the Business Sector and Academic Sector in building new
collaborative organizations that are mutually accountable for results.
3. Integrate services. The Federal Government needs to integrate the
coordination of its activities and services that deliver:
1. R&D/Innovation programs
2. Industrial programs
3. Trade programs
4. Skills programs
3 Arguments

Context:
Canada and the World
3

4
Domestic economic context for Budget 2019
Outlook: Sunny skies…..but with a risk of late afternoon clouds
1. 900,000 new jobs since November 2015
2. Unemployment rate (5.6%) lowest in 4 decades
3. Downward deficit track, debt-to-GDP ratio (≈30%) – lowest in G7
4. FDI inflows as % of GDP – Canada leads G7 with 0.6%
5. GDP growth (1.9%) – softer economic growth
6. Modest export growth since mid-2014
7. Weaker-than-expected economic momentum in emerging economies incl. China
8. Risks:
1. Rising interest rates
2. High Canadian consumer debt
3. Increased market volatility
4. Constrained oil pipeline capacity/interprovincial tension
5. Slower economic growth
6. Tensions with China

5
How big is this budget?
BUDGET 2015 BUDGET 2016 BUDGET 2017 BUDGET 2018 BUDGET 2019
Innovation Total Budget
$27.6 B/2 yrs
$1.7 B/2 yrs
$0 B/2 yrs
$8 B/2 yrs
$13.9 B/2 yrs
Harper
Trudeau
#1
Trudeau
#3
Trudeau
#4
Trudeau
#2
$552 M/2 yrs
for Research
and Innovation

6
Will this 0.8% increase in Canada’s R&D/Innovation
activity transform Canada’s economy?
INCREASED R&D R&D BASE ECONOMIC ACTIVITY
Canada’s GDP
for next 2 years
$4,574 B
Increase in
R&D/Innovation
in next 2 years
$552 M/2 yrs
Canadian total
expenditures on R&D for
next 2 years
$69 B/2 yrs

7
Budget 2019 Expenditures by Chapter ($M over 5 years):$Millions
885
4624
1035
1864
2200
1465
717
56
1123
459
1371
103 205
1432
334
1285
467 343 351
2323
1167 1108
-354
Chapter 1 Chapter 2 Chapter 3 Chapter 4

8
Budget 2019 Expenditures – Largest to Smallest ($M over 5 years):
4624
2323 2200
1864
1465 1432 1371 1285 1167 1123 1108 1035
885
717
467 459 351 343 334
205 103 56 -354
$Millions

9
Do we have the right
balance between investing
in economic growth and
social security?
…or is the cart before the
horse?

Canada’s Innovation
Performance
10

11
Major Flows of R&D Funding 2018
Six (6) Sources of
R&D Funding
Four (4) Performers
of R&D
Total R&D in Canada: $34.5 B

12
The function of research is
“to acquire new knowledge”
OECD, Frascati Manual
“Research is the process that turns money into
knowledge…. and innovation is the process that
turns knowledge into wealth.”
Kevin Lynch

13
Major Flows of R&D Funding 2018
1. Funders of New Knowledge
3. Creators of Wealth
2. Creators of New Knowledge

14
Canada’s Declining Gross Expenditures on R&D (GERD, 2004-2018)
Canada’s
GERD/GDP
2.00% (2004)
Canada’s
GERD/GDP
1.55% (2018)

15
Canada’s Declining Expenditures on R&D (2004-2017)

16
How much more money would Canada need to spend on R&D each
year to become an average OECD performer?
$34.5 B
$52 B
$66 B
$100 B
CANADA OECD AVERAGE GERMANY SOUTH KOREA
GERD($B)
• To achieve just the OECD average gross
expenditure on R&D (GERD), Canada
would have to spend an additional $18 B
• To reach Germany’s GERD rate, Canada
would have to spend $32 B more
• To achieve South Korea’s world leading
R&D, Canada would have to invest $66 B
more across the ecosystem
Do we have the vision, courage,
and discipline to become an
innovation leader?!!

17
Higher Education
R&D Expenditure
per GDP (2016)
Direct and indirect
Government Support
of Business R&D per
GDP (2016)
Government
Expenditure on R&D
per GDP (2016)
3rd in
2006
4th in
2006
18th in
2006
8th
15th
24th
Total Canadian GERD/GDP Ranking:
20th/36 (OECD, 2017) D+
Total Business R&D/GDP Ranking:
22nd/36 (OECD, 2017) D
Global Innovation Index:
18th (WIPO, 2018) C-
Canada’s Innovation Report Card
Continued Poor System Performance

18
Global Innovation Index (GII): Canada ranks 18th/120
Outputs (Rank 26th )
1. Knowledge + technology
outputs
2. Creative outputs
Efficiency Rank: 61st out of 120 countries
How well does Canada convert its excellent
innovation inputs to innovation outputs?
….very poorly, we rank 61st in the world
Countries that are ahead of us: Mongolia,
Montenegro, Moldova, Malaysia, Malta, Estonia,
Iceland, Latvia, Lithuania, Croatia, Kuwait, all our
major trading partners, etc.
Inputs (Rank 10th)
1. Institutions
2. Human capital + research
3. Infrastructure
4. Market sophistication
5. Business sophistication

19
Canada’s actual
innovation performance
Federal rhetoric of Canada’s
innovation performance

20
The German Approach to
Competitive R&D/Innovation

21
The Canadian Approach to Competitive R&D/Innovation
Do we invest enough?
Do we have an R&D/innovation target?
Do we have sectoral targets?
Are we improving the performance of our
innovation system?
Do we claim to be a nation of innovators?
Is this weird?
NO
NO
NO
NO
YES
YES!

22
Council of Canadian Academies: State of R&D in Canada (April 2018)
A. Canada produces 3.8% of the world’s research but has declined from 7th to 9th
Areas of research strength:
B. Canada ranks 33rd in industrial R&D
35%
of R&D investment
by foreign -
controlled firms
1%
of global patents are
produced by Canada
(18th worldwide)
34th
worldwide for
trademarks and
industrial design
Total
spending
declining
We spend ½
the OECD
average
$
Psychology &
Cognitive Science
Visual &
Performing Arts
Philosophy &
Theology
Earth & Environmental
Sciences
Public Health
& Services

23
CCA – Competing in a Global Innovation Economy:
The Current State of R&D in Canada (2018)
1. “Canada’s international standing as a leading performer of research
is at risk due to a sustained slide in private and public R&D
investment.
2. Canada is not producing research at levels comparable to other
leading counties on most enabling and strategic technologies.
3. Canadian research is comparatively less specialized and less
esteemed in the core fields of the natural sciences and engineering.”

24
ISED’s Assessment of Canada’s Innovation Performance
“Without immediate and targeted
action that builds upon existing
strengths, addresses key gaps and
weaknesses along the innovation
continuum, and drives growth, Canada
will fall even further behind, putting its
high quality of life at risk.”
ISED, “Building a Nation of Innovators” p. 14, 2019

25
Global R&D Context
Source: R&D Magazine 2019
Global R&D Funding Forecast
• Global R&D totals $2,300 B
• Global R&D is dominated by US, China
and Japan
• Canada contributes only 1.5% of global
investments in R&D (about $34.5 B of
$2,300 B)
Canada’s Challenge:
How to access the other 98.5% of new
knowledge from R&D, …in order to meet
Canadian needs?
Canada

Where are we investing in research and innovation?
26

27
SCALE.AI Ocean
Next
Generation
ManufacturingProtein
Digital Technology
• Continued $950M over 5 years for 5 Superclusters

28
1. How to agree on results to be achieved?
2. How to share information?
3. How to measure progress?
4. How to agree on the allocation of organizational contributions?
5. How to settle disputes?
6. How to agree on the allocation of cluster benefits ex: Intellectual
property?
7. How to decide on new members?
8. How to collaborate on collective goals?
Supercluster Challenges: How do you manage a network?

29
How do you manage a Supercluster NFP?.......Super carefully!

32
Do we support Vertical Industry Sectors
……or Horizontal Technology Platforms?

Budget 2019 R&D/
Innovation Investments
33

34
Canada’s Innovation Ecosystem: Basic Flows

Federal Government Granting Councils Higher Education Linking Organizations
Provincial Governments Private Sector
Global Markets
Results and Outcomes
The arrows between stakeholders show the flows of People, Money, Information, and Materials
35

Key Budget 2019 Updates
Granting Councils
Budget 2018: $355 M over 5 years Budget 2018: $215 M over 5 years
International Research Fund
$275 M over 5 years, starting 2017-18, for a new
fund that supports international, interdisciplinary,
fast-breaking and higher-risk research
Canada Research Chairs Program
Annual investment: $265 M (2018)
Total # of chair allocations (filled and vacant):
2,285
Total # of filled Canada Research Chair positions:
1,714
Tier 1: 766 Tier 2: 948
Total # recruited from outside Canada: 134 (8%)
Total # of female chairholders: 552 (32%)
Total # of male chairholders: 1,162 (68%)
# of participating universities: 76
College and Community Innovation Program
Budget 2018: $140 M over 5 years
$57.8 M for NSERC and SSHRC in 2018-19
Natural Sciences & Engineering Research
Council of Canada (NSERC)
Total R&D Expenditures: $1,201 M (2018-19) 9%
increase since 2017-18
Total Extramural R&D Expenditures: $1,074 M
(2018-19)
Social Sciences and Humanities Research
Council (SSHRC)
Total R&D Expenditures: $685 M (2018-19) 4%
Total Extramural R&D Expenditures: $625 M (2018-
19)
Canadian Institutes for Health Research (CIHR)
Total R&D Expenditures: $1,117 M (2018-19) 6%
Total Extramural R&D Expenditures: $1,007 M
(2018-19)
Integrates research through 13 institutes
Budget 2019:
• $34 M over 5 years for “Supporting Graduate
Students Through Research Scholarships”
Budget 2019:
• $48 M for “Supporting Graduate Students
Through Research Scholarships”
Budget 2019:
• $32 M over 5 years for “Supporting Graduate
Students Through Research Scholarships”
Research Support Fund
$369.4 M estimated spending for 2018-19
Vanier Canada Graduate Scholarship Program
(Vanier CGS)
$50,000 per year, per recipient for 3 years
2018 awards:
56 to CIHR
55 to NSERC
56 to SSHRC
Collaborative Research and Training Experience
Program
Research Tools and Instruments Grants Program
Community and College Social Innovation Fund
Increase of $5.0 M in 2018-19 from Budget 2017 for
its extension at NSERC
Decrease of $3.1 M for SSHRC
Canada Excellence Research Chairs Program
(CERC)
Budget 2017: $117M over 8 years for 25 new
“Canada 150” Research Chairs (funded using
existing resources)
Canada First Research Excellence Fund
$199.4 M to help post-secondary institutions excel
globally (2018-19)
36

Tri-Councils: New Research Funding in Budget 2019
37
2019-20 2020-21 2021-22 2022-23 2023-24 Totals
CIHR 4 6 7 7 7
NSERC 4 6 8 8 8
SSHRC 6 8 11 11 11
New
Research
Scholarships
14 20 26 26 26 114
Inflation
@2%*
- 60 - 60 - 60 - 60 - 60 - 300
Total Loss - 46 - 40 - 34 - 34 - 34 - 188
($ Millions)
*Tri-Council A-Base funding in 2018-19 is $3,003 M.

D. Key Skills Plan Initiatives
• $631 M over 5 years to expanding the Student Work Placement Program
• $540 M over 5 years to supporting Indigenous post-secondary education
• Launch Canada’s new International Education Strategy with $148 M over 5 years
• $35.2 M over 5 years with $7.4 M per year ongoing to establish new permanent Global Talent Stream Program (as part of the
Global Skills Strategy)
E. Key Regulatory/Policy Initiatives
• $219.1 M over 5 years, with $3.1 M per year ongoing, shared between Health Canada, CFIA, Transport Canada, Department of
Justice, and TBS, to create ‘Bringing Innovation to Regulations’, which seeks to design three ‘Regulatory Roadmaps’ grouped in
three main areas:
1) Creating a user-friendly regulatory system
2) Using novel or experimental approaches
3) Facilitating greater cooperation and reducing duplication
38
The 6 Business-Led Economic Strategy Tables recommended 39 objectives.
The federal response was only on 1 of these regarding “regulations”.

39
G. Key Environment and Cleantech Initiatives
• $1.01 B (2018-19) to ‘Reducing Energy Costs Through Greater Energy Efficiency’, investments to be delivered by the Federation of
Canadian Municipalities through the Green Municipal Fund. Three initiatives for the allocation of the resources:
Collaboration on Community Climate Action: $350 M
Community EcoEfficiency Acceleration: $300 M
Sustainable Affordable Housing Innovation: $300 M
• $151.23 M over 5 years and $9.28 M per year ongoing to 4 departments (main recipient: Public Safety) to better predict and respond
to environmental threats, improve emergency management, and assess the condition and resilience of critical infrastructure
H. Key Cyber Security Initiatives
• 145 M over 5 years to 6 departments (main recipient: CSE) to protect critical cyber systems including in the finance,
telecommunications, energy and transport sectors
• $80 M over 4 years to ISED to support three or more Canadian cyber security networks that are affiliated with post-secondary
institutions to bolster R&D and commercialization partnerships and grow cyber talent
• $30 M over 5 years cyber investments targeted to protect Canadian democracy (CSIS, CSE, GAC, Heritage Canada)

Federal (FY 2016/17)* Academic (FY 2016/17)** Private (FY 2016/17)**
1. Bombardier: $ 1,603,771,000
2. U Toronto: $ 1,147,584,000
3. NRC: $ 1,058,000,000
4. Magna Intl.: $ 677,869,000
5. UBC: $ 577,190,000
6. U Montreal: $ 536,238,000
7. IBM: $ 525,000,000
8. McGill U: $ 515,302,000
9. BCE Inc: $ 514,300,000
10. U Alberta: $ 513,313,000
11. Pratt & Whitney: $ 513,000,000
12. Constellation Inc: $ 475,473,000
13. Valeant Pharm. Inc: $ 468,795,000
14. Rogers: $ 459,143,000
**Source: Research Infosource 2018
*Source: Statistics Canada Table 27-10-0026-01
The NRC is the 3rd largest R&D institution nationwide

Key Budget 2019 Updates: Third Party Organizations
41
Federally Funded Not-for-Profits
CANARIE
Annual Budget: $23.8 M (2017-18)
Council of Canadian Academies
$9 M over 3 years (2018-21) from
government
Perimeter Institute for Theoretical Physics
Grand Challenges Canada
Let’s Talk About Science
Engages youth in hands-on STEM activities and
learning programs
Budget 2019:
• $10 M over 2 years
Genome Canada
Advances genomics S&T in order to create economic and
social benefits
6 institutes: BC, Prairies, Alberta, Ontario, Quebec, Atlantic
Budget 2019:
• $100.5 M over 5 years
Mitacs
6,785 completed and active projects as of 2018
$221 M over 5 years starting in 2017 from the federal
government
$74 M anticipated budget for 2019-20 Institute for Quantum Computing
$15 M over 5 years starting in 2018 from
government
Stem Cell Network
Develops new therapies and medical treatments
for respiratory and heart diseases, spinal cord
injury, cancer, and many other diseases and
disorders
Helps translate stem cell research into clinical
applications and commercial products
Budget 2019:
• Renewed funding of $18 M over 2 years
Brain Canada Foundation (BCF)
Raises funds to foster advances in neuroscience discovery
research
Budget 2019:
• $40 M over 2 years for BCF’s Canada Brain Research
Fund
• Investment will be matched by funds raised from other
non-government partners of the BCF
Ovarian Cancer Canada
Supports women living with the disease and their
families, raises awareness, and funds research
Budget 2019:
• $10 M over 5 years to help address existing gaps in
knowledge about effective prevention, screening, and
treatment options for ovarian cancer
Terry Fox Research Institute:
Manages the cancer research investments of the
Terry Fox Foundation
Budget 2019:
• $150 M over 5 years to establish a national
Marathon of Hope Cancer Centres Network
Canada Foundation for Innovation (CFI)
$763 M over 5 years starting in 2018 form
government
Transfer Payments by Industry Canada: $330.7 M
(2018-2019)
Total R&D Expenditures: $423 M (2018-19) 10%
CFI funding contribution: $5.3 M (2019)
CMC Microsystems
Funding from Quebec: $7.5 M over 5 years (2019)
Futurpreneur Canada
Provides ﬁnancing, mentoring, and support tools to
aspiring business owners aged 18-39
Budget 2019:
• $38 M over 5 years
• Futurpreneur Canada will match these investments with
funding received from other government and private
sector partners
• Expected to help 1000 entrepreneurs annually
Sustainable Development Technology Canada
SD Tech Fund Value: $915 M (2013-2020/21)
NextGen Biofuels Approved Funding: $250 M (2007-27)
Sustainable Development Technology Fund
Supports Canadian companies to develop and new
environmental technologies that address climate change,
clean air, clean water and clean soil
Centre for scientific research, training and
educational in foundational theoretical physics
Builds partnerships between academia, industry, and
the world to create a more innovative Canada
Canadian Institute for Advanced Research
(CIFAR)
Annual Budget: $19.7 M in total funding for 2018
($12.7 M In federal funding, including Pan-Canadian
AI Strategy, and $5 M in provincial funding)
300+ researchers and 13 CIFAR research programs
under 4 interdisciplinary theme areas:
1. Life & Health
2. Individuals & Society
3. Information & Matter
4. Earth & Space
$125 M to create a Pan-Canadian AI Strategy (2018)

NCEs – Do we have the right balance?
Network of Centres of Excellence Program (NCEs)
Number of Centres of Excellence: 36 (2019)
Total allocated funds over the lifetime of active programs: $842.7 M
Number of Networks of Centres
of Excellence by Province (2019)
Number of Networks of Centres
of Excellence by Sector (2019)
Manufacturing
42

Third Party Organizations: Let the Hunger Games Begin!
Budget 2019: Stem Cell Network, Brain Canada Foundation, Terry
Fox Research Institute, Ovarian Cancer Canada, Genome Canada,
Let’s Talk Science, TRIUMF
Naylor Report (2017): Also had – CFI, Perimeter Institute, CIFAR,
CCA, Brain Canada, Institute for Quantum Computing
The Challenge:
• “A new Strategic Science Fund…will operate using a principles-
based framework for allocating federal funding that includes
competitive, transparent processes” page 123 of Budget 2019
An Alternative: Federal Community of Practice (COP)
43

Primary Contribution of COP Members to Canada’s ST&I Ecosystem
45

46
Poor System Performance by the Provinces
Source: Conference Board (2018) “Innovation Report Card”

Results, Issues, and
Broader Implications
47

Results – can government deliver?
1. ECONOMIC RESULTS
• Grow Canada’s goods and services exports – from
resources, advanced manufacturing and other – by 30%
by 2025
• Double the number of high-growth companies in Canada,
particularly in the digital, clean technology and health
technologies sectors, from 14,000 to 28,000 by 2025
• Increase Canada’s overseas exports by 50% by 2025
(Export Diversification Strategy – 2018 Fall Economic
Statement)
2. ENVIRONMENTAL RESULTS
• Reduce Canada’s GHG emissions from 726 megatonnes
currently to 525 MT in 2030, 30% below 2005 levels
• Reduce greenhouse gas emissions from federal operations
by at least 40% below 2005 levels by 2030
• Develop and implement a federal carbon pollution pricing
system by January 1, 2019, which would apply to
provinces and territories either on request or which do
not have a system meeting the minimum stanndard
4. EQUITY AND DIVERSITY RESULTS
• Support for gender equality in economic and educational
opportunities, leadership positions and decision-making,
international politics, STEM and trades, skills, and
government initiatives (through GBA+)
• Elimination of gender-based violence and harassment,
with equal access to justice
• Improved equality for Indigenous Peoples in Canada’s
legal system
3. SOCIAL RESULTS
• Better support for seniors, youth, veterans, women, the
LGBTQ2+ community, first-time home buyers, Canada’s
Arctic and Northern communities, and visible minorities
• Advancing reconciliation by addressing past wrongs and
providing better services for Canada’s Indigenous Peoples
• Improved health through better food security, lower
suicide rates, mitigating the opioid crisis, and support for
Canadians living with chronic health issues or disabilities
48

Implications: Business and
Industry
49

50
A Closer Look at Business Indicators
Total full-time (FTE) Research Personnel in Private
Sector R&D: 141,290 (2016 Stats Can)
21,080 fewer Research Personnel from 2015
Business Expenditures on R&D
BERD: $17,929 M (Stats Can, 2018)
BERD/GDP: 0.81% (est. 2018) (2017 OECD avg: 1.67%)
BERD/GDP OECD Ranking: 22th
/36 (OECD, 2017)
1. Bombardier Inc.
2. Magna International Inc.
3. IBM Canada Ltd.
4. BCE Inc.
5. Pratt & Whitney Canada Corp.
6. Constellation Software Inc.
7. Valeant Pharmaceuticals Int. Inc
8. Rogers Communication Inc.
9. Open Text Corporation
10. Apotex Inc.
$
$
$
$
$
$
$
$
$
$
Main Corporate R&D Budgets (FY 2017)
*May include R&D performed abroad
M (down)
M (up)
M (up)
M (down)
M (up)
M (up)
M (down)
M (down)
M (up)
M (up)
1,603
678
525
514
513
475
469
459
366
364
*Source: Research Infosource, “Canada's Top 100 Corporate R&D Spenders 2018”
Software/Computer 18 21%
Aerospace 6 19%
Pharma/Biotech 25 16%
Telecom. Services 3 10%
Energy/Oil/Gas 9 8%
Telecom. equipment 11 8%
Automotive 3 6%
Sector # Companies in
Top 100
% of total R&D
Spending
Top Sectors in Canada's Top 100 R&D Corporate Performers (2017)
*Source: Research Infosource, 2018
95% of all Canadian businesses have less
than 50 employees - and their average size
is 8 employees
Number of Businesses (public sector excluded)
Note: The number of medium (100-499) and large (500+) businesses does not include NAICS 62 and 61
Number of Businesses (Statscan, June 2018)
SizeofBusinessby#ofEmployees

51
State of Canadian Business – Research Personnel
Where Research Personnel Work (2016)
NumberofResearchers
Total full-time (FTE) Research Personnel in Private
Sector R&D: 141,290 (2016 Stats Can)
21,080 fewer Research Personnel from 2015

52
Which countries have technology leadership? (2019)
While the US is the
leader in a wide
spectrum of
technology areas,
China is improving
especially in ICT,
military/space
defence and energy
sectors
The report does not identify Canada as a leader or runner-up in any technology area

53
State of Canadian Business – Risk Capital
• Media focus is on venture
capital flows
• However, private equity as
an asset class is about 6-10x
larger than VC in Canada
• Private equity also makes
longer bets than other asset
classes
• How can this sector be
leveraged by policymakers
to better support Canadian
industry?
Source: CVCA (2018) “VC & PE Canadian Market Overview”

54
How familiar are we with emerging technologies?

55
How familiar are we with emerging technologies?

56
The approaching tsunami of Industry 4.0 changes ….
Led by: AI, IoT, Robotics, 5G, Regenerative Medicine,
Synthetic Biology, Quantum Computing, Cyber Defence and Security, etc.
What will be the impact on:
• Job losses?
• New jobs?
• Skills training?
• Ethics + regulation?

58
Home Alone!
Canada is all alone in a scary world

Imagine a bar (“Trader Joe’s Bar”) with
199 people inside – representing every
country in the world, in proportion to their
national population.
A sole Canadian (the 200th person) walks
into the bar and what does she see?
• 37 Chinese in the back left-hand
corner toasting President Xi
• 35 Indians in the back right-hand
corner praising Prime Minister
Modi
• 9 Americans drinking bourbon
• 3 Mexicans drinking tequila
Canada has only 0.5% of the total world’s population
– what are the implications?
59

Market Size of Global Trading Partners
Market Size of Trading Partners
Canadian Markets
2.0% of world GDP
(World Bank 2017)
• Countries with the largest
consumer markets are China and
India, followed by EU and US
• # Canadian firms that exports
goods: 43,255 (2016, Chief
Economist)
• 97.4% of 43,255 firms are
SMEs (<500 employees)
• These SMEs account for 40.7%
of Canadian merchandise
exports by value
60Source: World Bank (2017)

What does Canada export? (2017)
Total value of Canadian merchandise exports: $546 B (2017, Canada’s State of Trade 2018 Update)
61

62
Where does Canada export? (2017)
$415 B
$72.7 B
$23.6 B
$17.66 B $7.8 B
$5.2 B
$4.8 B $4.2 B $4.1 B
Total value of Canadian merchandise exports: $546 B (2017, Canada’s State of Trade 2018 Update)

Canada’s Service Sector
63
Manufactured
goods
47%
Commodities
36%
Services
17%
Services 75.8%
Canadian Economy Canadian Exports
Manufactured goods 7.2%
Commodities 17%

Foreign Direct Investments (2017)
• Worrisome trend of increasing outward FDI and
decreasing inward FDI levels
Reasons for decreasing inflows:
1. Global trend in declining FDI inflows,
especially for developed nations
2. Divestments from foreign-based companies
in Canada's oil sector
3. Onerous regulations for FDI, ranked second
worst among OECD after Mexico
• The gap between outward and inward FDI stock is
widening in favor of the former
64

65
Framework for Export and Company Growth
a. Adv Manufacturing
b. Agri-Food
c. Clean Tech
d. Digital Industries
e.Health/Bioscience
f. Clean Resources
g. Infrastructure
h. Transportation
#1 – Which companies will we support?
1. Europe (CETA)
2. US
3. China
4. India
5. Japan
6. Other
#3 – For sales in which countries?
© Global Advantage Consulting Group, 2017
#2 – For what categories of products?
1. Start-ups vs Scale-ups
2. Invention vs Adoption
3. Goods vs Services
4. Sectoral vs Platform Technologies

Developing a New Innovation
Strategy for Canada
66

“ If I had to select one sentence to describe the state of the world, I would say
we are in a world in which global challenges are more and more integrated,
and the responses are more and more fragmented, and if this is not reversed,
it’s a recipe for disaster.”
67
UN Secretary General – WEF Davos 2019
António Guterres
UN Secretary General
World Economic Forum, Davos
January 2019

“The lack of accomplishment in Argentina reflects a broader trend:
governments – individually and collectively – are increasingly unable to
respond effectively to many of today’s urgent issues.
But governments alone aren't getting it done. It’s time for others to step up –
not out of noble impulse, but because it’s in our interests.”
68
Michael Sabia
President and CEO, CDPQ
G20 Summit, Buenos Aires
December 2018
Michael Sabia – G20’s failure in Argentina, 2018

How could we integrate 4 Canadian strategies?
69
1. Where will you innovate?
• Start-up vs scale-ups
• Invention vs adoption
• Goods vs services
• Sectors vs tech platforms
3. For sale in which
countries?
• Trade diversification
• Accessing supply chains
• Implementing trade agreements
for hi-growth SMEs
2. For which priority
industry sectors?
4. With what new
skills?
• Sales
• Marketing
• Collaboration
• Research
• Negotiation
• Managing networks
• Superclusters
• Collaboration networks (e.g.
CECRS, BL-NCEs, NCEs, etc.)
• New SIF competitions
• Smart infrastructure
2.
Industrial
Strategy
3.
Trade
Strategy
4.
Skills
Strategy
Make Permanent
the Economic
Strategy Tables
• Business
• Governments
• Academic
1.
Innovation
Strategy

70
Six (6) Innovation and Commercialization Plans 2002 to 2017:
1. 2002 – Canada’s Innovation Strategy – Alan Rock (IC) and Jane
Stewart (HRSDC)
2. 2005 – Expert Panel Report on Commercialization – Joe Rotman
3. 2007 – Mobilizing S&T to Canada’s Advantage – Industry Canada –
Maxime Bernier (IC) and Jim Flaherty (Finance)
4. 2011 – Innovation Canada: A Call to Action, Review of Federal
Support to Research and Development – Expert Panel Report – Tom
Jenkins
5. 2014 – Seizing Canada’s Moment – Moving Forward in Science,
Technology and Innovation – Ed Holder (Minister of State S&T)
Harper
6. 2017 – Bains/Barton/Budget 2017
7. 2020… Minister “X”???

71
If the government can’t develop an effective
R&D and innovation strategy then…
1. Leadership: Why don’t we do it? Led by…
• Private sector
• Not-for-profits
• Universities and colleges
2. Mission: What would a pan-Canadian R&D and innovation system look like that produced talent, new
knowledge from research, and access to adequate funding to permit Canadian industries to be successful in
selling new products and services into global markets?
3. Approach: Identify current innovation stakeholders willing to contribute $5 K each to a Secretariat to develop
the analytical foundation for a new strategy and to convene interested stakeholders to work towards
producing a collective R&D and Innovation Strategy that achieves a collective impact.
4. Timing: Work would commence in late April, with stakeholder meetings, teleconference calls in May, June, and
early summer to refine a strategy for finalization in September 2019. The R&D and Innovation Strategy would
be presented after the October 21st election to a new Government and to new Ministers of ISED and Finance
Canada in November, in time for discussion and debate and possible inclusion in Budget 2020, in March 2020.

Thank you!!
To access our newly updated 2019 R&D and Innovation Ecosystem
Map and Briefing Deck please visit:
https://globaladvantageconsulting.com
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