E. Richard Gold is a Distinguished James McGill Professor at McGill University’s Faculty of Law, Faculty of Medicines and Health Sciences and the Bieler School of the Environment. He is also the chief policy and partnerships officer at Conscience, a non-profit building an open science drug discovery network.
Canadian research funding is failing to achieve our social, health and economic goals. Universities and colleges continue to produce world-class research, but that research too often yields no new product or service or is commercialized by foreign firms that sell it back to us at a profit. The result is dependence on the United States and slower growth.
The U.S. system relies on deep private capital markets, significant public programs supporting innovation and vast domestic demand – none of which Canada can replicate. To fix this, Canada must stop copying U.S. policies developed under circumstances of abundance and instead leverage its scarcer assets strategically.
Canada invests just $11.33-billion federally and provincially in research annually, or 1.8 per cent of GDP – well below OECD and EU averages and significantly less than U.S. federal R&D spending of $195.7-billion (3.45 per cent of GDP).
The situation is worse when it comes to private investment in Canada. Canadian venture capital and hedge funds invested $393-million domestically, compared with more than $1-billion from U.S. investors into Canada in the first half of 2025 – another sign of our dependence. This chronic underinvestment has left Canadian firms less able to scale, universities forced to chase funds rather than invest in research and the country vulnerable to intellectual property leakage.
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Canada’s innovation results are the worst of all. The Business Council of Alberta concluded that Canada’s innovation ecosystem “doesn’t get out what it puts in.” Canada ranked 20th globally in 2024 and roughly 75 per cent of patents from top AI institutes Vector and MILA have gone to foreign – mostly U.S. – firms.
For decades, governments have relied too heavily on the market to support innovation. Even the United States – where, for example, defence spending underpins civilian innovation – uses strategic policy and funding interventions. Canada’s global innovation clusters, meanwhile, have been mired in bureaucracy and regional politics.
Because Canada has less, it should be strategic by pursuing three goals: 1) leverage existing Canadian strengths; 2) ensure freedom to operate; and 3) reduce politics and bureaucracy.
Governments should encourage research that crosses disciplines, not by diverting funds from single-discipline science but by adding a mission-oriented funding and institutional layer. Instead of simply increasing quantum science and AI funding while decreasing other research, as the federal government did in budget 2025, it should fund mission-oriented research that focuses on the intersections of Canada’s research strengths, not only in AI and quantum, but also in health, gaming, aerospace, agri-food and energy. For example, we should focus on AI-assisted drug discovery, quantum tools for environmental monitoring, gaming technology used in aerospace guidance systems and energy innovation based on agricultural biotechnology.
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With U.S. firms holding large amounts of intellectual property – and the resources to enforce those rights – freedom to operate is critical for Canadian small- and medium-sized enterprises. This means ensuring that SMEs can develop and market new products and services without the constant risk of patent litigation.
There are several ways to achieve this, from patent pools (e.g., the recently topped-up Innovation Asset Collective or the proposed Sovereign Patent Pool) to stronger research and experimental use exceptions in patent law. But given limited resources, a more effective Canadian strategy is to build large, open data and material banks – free to use and resistant to foreign patent capture. Open resources not only reduce patent risk but also lower entry barriers for startups, allowing Canadian firms to innovate without costly licensing or litigation battles.
Canada’s efforts to engage in innovation policy making have too often been hampered by political need and bureaucratic necessity. Politics often drives support for today’s technologies rather than for tomorrow’s needs. Application processes prioritize box-ticking over genuine innovation. Even programs such as the New Frontiers in Research Fund, meant for high-risk projects, end up funding projects that present a low risk of failure.
To reduce politics and bureaucracy, independent organizations – not government agencies – should manage projects, data and partnerships under broad oversight, free to take real risks, including the risk of failure.
To grow our economy, governments need to leverage what we have rather than copy U.S. models based on abundance. Achieving Canada’s economic and social goals depend on made-in-Canada innovation policies that secure our sovereignty. Canada’s future prosperity will depend less on how much we spend and more on how intelligently we organize and protect the knowledge we already produce.