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The Search For An Innovation Identity

More than a decade of declining business investment in research and development has left Canada without an obvious BlackBerry successor. Despite bright spots in Waterloo, Ont., and Ottawa, the country’s performance on most of the important benchmarks of innovation has been deteriorating for years.

Blame business. Governments have kept up their end of the bargain by bolstering research funding for firms and universities – to the point that Canada now ranks first among the Group of Seven industrial countries in higher education research. And the number of Canadian science and engineering PhDs has soared in recent years.

Yet, R&D performed at the corporate level keeps slipping. From 1.14 per cent of gross domestic product in 2006, private sector spending on R&D declined to 0.89 per cent in 2011. By that measure, Canada fell to 25th from 18th place among the 41 countries measured by the Organization for Economic Co-operation Development.

The result is an innovation bottleneck. An abundance of science is generated in university labs and startup firms but most of it never finds its way into commercial applications. Risk-averse banks and too many businesses of the bird-in-the-hand variety remain the weak links in Canada’s innovation system.

“We punch above our weight in idea generation,” observes Michael Bloom, who leads the Conference Board of Canada’s Centre for Business Innovation. “But the further you move towards commercialization, the weaker we get as a country.”