Unraveling Canada's Commercialization Deficit

  • National Newswatch

In today’s increasingly digital world influenced by complex economic conditions, discussions about the future of Canada’s economy and its impact on labour are vital. Last week, the Information and Communications Technology Council (ICTC) hosted public and private sector leaders in Canada at our annual conference, Economic Shifts and the Future of Work, to discuss critical issues shaping Canada’s path to economic growth. Main topics included Canada’s industrial strategy, productivity, competition, commercialization, and the crucial role of skills development and innovation policy in strengthening Canada’s position in the global economy.

While a favoured destination for international investment, Canada is facing a significant challenge in commercializing its homegrown innovations, services, and products into international markets. Canada imports far more than it exports. This commercialization deficit detracts from new revenue generation opportunities for Canadian firms, it slows local job creation, and it is a contributing factor to declining productivity and a widening trade gap with our global peers.

Trade agreements have opened market access for Canadian business. As Minister Freeland highlighted in Davos last week, Canada is the only G7 nation that benefits from a comprehensive trade deal with every other G7 nation. Canada is also home to a strong research and development (R&D) ecosystem that produces cutting edge IP. Nevertheless, Canadian competitiveness lags. Recent reports from the OECD and the International Institute for Management Development (IMD) have highlighted a decline in Canada’s overall economic output and efficiency.

Canada benefits from competitive advantages like social stability, top-tier education, a diverse and skilled workforce, leadership on the responsible use of advanced technologies, advantageous free trade agreements and a dynamic R&D ecosystem. There are over 43,200 companies in the Canadian ICT sector, the majority of which are small businesses.

To reverse Canada’s commercialization deficit and declining productivity, the government should prioritize innovation tax incentives like the "Patent Box" to support entrepreneurs and small businesses in their scaling journey. This will reduce corporate tax on income generated from Canadian IP and patented inventions. It will incentivize Canadian enterprise to enhance investments in R&D and boost commercialization. Enhanced government R&D investment is also vital as it serves as a platform for experimentation and encourages private investment. Healthy competition in the Canadian marketplace is additionally vital to boost businesses innovation, enhance consumer choice, and bolster the growth of Canada's enterprising economy at home and abroad. Educating Canadian businesses about the opportunities created by trade agreements, and providing timely market research, is equally crucial. Canada is privy to some of the most advantageous trade agreements in the world, yet Canadian companies lack awareness about how to leverage them. Recent ICTC research analyzing the impact of CETA on Canadian businesses identifies a concerning reality: despite the agreement being Canada’s most beneficial yet, exports from Canada to the EU have stagnated since ratification, while imports from the EU grew.

Canadian businesses also need to combat the country's risk-averse culture by equipping their teams with the necessary technical and business skills required to thrive in a competitive world. This includes accelerating technological adoption and harnessing the power of transformative advanced technologies like AI, data analytics and machine learning. By doing so, businesses can make informed decisions, streamline operations, and unlock unprecedented growth. Businesses must also prioritize integrating sustainable practices at their core to mitigate environmental impacts and ensure long-term viability. Sustainable business solutions not only contribute to a healthier planet but also appeal to consumers and investors.

In the dynamic landscape of today's global economy, empowering businesses to enhance their productivity, foster a culture of risk-taking, and optimize commercialization beyond domestic borders is the pathway to a more prosperous future for Canadian enterprise. How we get there is a collective responsibility. Government, educational institutions, and industry must work hand in hand to accelerate Canada’s competitive advantage and close Canada’s commercialization deficit.

In 2024, ICTC plans to hold discussions and publish policy papers to address these matters further.

Namir Anani is the President and CEO of the Information and Communications Technology Council (ictc-ctic.ca), he is the chief strategist and driving force in bringing ICTC’s world-class centre of expertise and services to industry, education and government; shaping Canada’s digital advantage in a global economy.