Alan Bernstein is president and CEO of the global research organization CIFAR. Meric Gertler is president of the University of Toronto, chair of Universities Canada, and past chair of the U15 Group of Canadian Research Universities.
U.S. President Joe Biden recently signed into law two sweeping bills aimed at enhancing America’s innovative capacity and tackling climate change. These bills represent a striking embrace of activist industrial policy, inspiring The Wall Street Journal to declare “the muscular arm of Washington replaces Adam Smith’s invisible hand.”
And with good reason. The CHIPS and Science Act pledges US$280-billion to support research and innovation in artificial intelligence, robotics, quantum computing and biotech. The new health and climate law – the Inflation Reduction Act – commits US$161-billion to spur private-sector investment in clean electricity technologies such as solar and wind, and US$37-billion to help manufacturers switch to green energy.
The U.S. initiatives demand a commensurate response from Canada both in size and breadth. Otherwise, our economic performance will continue to lag behind other advanced economies.
Our response must address three key features. First, Canada’s innovation policy must embrace the entire innovation ecosystem, from fundamental and mission-driven research to new products and companies. Second, that policy should differentiate, not conflate, the distinct but complementary roles of the public and private sectors. Third, a comprehensive research and innovation strategy should address increased business competitiveness, public priorities and global threats.
Innovation starts with fundamental research, but only governments can support it. The timelines are too long, the risks too high, and potential benefits too widely spread for private firms to invest in fundamental research. Further, there will always be public priorities that make public investments in research essential: recent examples include vaccine development and global pandemics, the clean energy transition, and growing income inequality.
And research starts with people. The bedrock of any country’s successful innovation strategy is the development of scientific talent and support for fundamental research. Hence, Canada’s investments in research funding, research infrastructure, and graduate and postdoctoral fellowships must keep pace with other countries. The CHIPS and Science Act doubles the annual budget of the U.S.’s National Science Foundation to US$19-billion within five years. Canada’s support for fundamental research must catch up to international levels, or we’ll risk another brain drain.
At the same time, investment in market-oriented research and development by private firms is critically important. Private-sector investment leverages the research of our universities and turns discovery into new products and new companies that create employment and prosperity. Canadian companies have chronically underinvested in R&D, so much so that we rank last among G7 countries in dollars spent. While there are many structural reasons for this, the net result is that chronic underinvestment creates a deficit in both industry readiness and the risk capital needed to recognize outstanding ideas from our universities that could be transformative in the marketplace.
This year’s federal budget committed $1-billion to a new Innovation and Investment Agency to support innovation in high-tech and traditional sectors. Until the details of this new agency are revealed, however, the jury is out about whether it will have the mandate and leadership needed to “fix” our innovation deficit.
Government, academia and the private sector are all essential partners in a robust innovation ecosystem. But turning this partnership into reality will require both political and private-sector leadership. Leadership to invest for the long term, to take risks, and to understand that Canada’s historic advantage of abundant natural resources, traditional manufacturing industries and ability to trade relatively freely with the world’s largest economy is gradually slipping away.
Fortunately, Canada has great success stories from which to learn. CIFAR’s early support for Geoffrey Hinton and his colleagues at the University of Toronto kickstarted the worldwide revolution in artificial intelligence, with rapid recognition by both government and industry that talent is key to Canada’s future success in an AI-driven private sector. This led directly to the world’s first national AI strategy – the Pan-Canadian Artificial Intelligence Strategy – which was developed and implemented by CIFAR and funded by the federal government with the objectives of advancing AI research and promoting the uptake of AI across the economy. Five years on, Canada is home to three national AI institutes, nearly 1,000 AI startups, and hundreds of top AI researchers.
Canada’s success in AI has taught us that innovation can flourish when public and private-sector investments complement each other, rather than duplicate them; when government and business are prepared to take risks; and when public funds are strategically deployed to support high-risk, high-reward research and develop the scientific and entrepreneurial talent needed to drive a thriving knowledge economy. Now we need to expand on what we’ve learned from AI as the basis for a comprehensive and ambitious research-and-innovation policy.
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