In a scathing assessment that has reverberated through Ottawa’s policy corridors, leading innovation experts are demanding a complete reimagining of Canada’s approach to building a knowledge-based economy. The current system, they argue, has failed to transform billions in government spending into meaningful economic growth, leaving Canada increasingly vulnerable in a rapidly evolving global landscape.
“We’re witnessing a fundamental disconnect between policy intention and economic reality,” says Jim Balsillie, former BlackBerry co-CEO and founder of the Centre for Digital Rights. “Despite decades of well-intentioned programs, Canada continues to slide backward in productivity and innovation metrics while other nations surge ahead.”
The criticism comes as Canada faces mounting economic challenges. Recent data from Statistics Canada reveals that productivity growth has remained stagnant for nearly two decades, with business investment in research and development falling to just 0.8 percent of GDP—well below the OECD average of 1.7 percent.
Professor Dan Breznitz of the University of Toronto, who co-authored the influential “Innovation in Real Places,” points to structural issues at the heart of the problem. “Our current policies reward idea generation but fail miserably at commercialization and wealth creation within our borders,” Breznitz told CO24. “We’ve created a system where Canadian taxpayers subsidize research that ultimately generates profits and jobs elsewhere.”
The experts identify several critical flaws in Canada’s innovation ecosystem. First is the overemphasis on university research without corresponding support for commercialization. Second is the fragmentation of programs across multiple departments and agencies, creating bureaucratic labyrinths that startups struggle to navigate. Third is a tax incentive structure that rewards early-stage research but offers little support through the challenging “valley of death” where promising technologies must transition to marketable products.
“We don’t need more accelerators, incubators, or research grants,” notes technology policy analyst Viet Vu of the Brookfield Institute. “What Canada desperately needs is a coherent national strategy that aligns intellectual property protection, procurement policies, talent development, and capital markets toward building Canadian companies that can scale globally while keeping their headquarters here.”
The federal government has responded with promises to review existing programs. Innovation Minister François-Philippe Champagne acknowledged the concerns in a recent statement, noting that “we must ensure every dollar invested in innovation delivers maximum benefit to Canadian workers and companies.”
Industry groups, however, remain skeptical of incremental changes. The Council of Canadian Innovators, representing scale-up technology firms, has called for a comprehensive overhaul rather than piecemeal adjustments. “The world is not waiting for Canada to get its act together,” the Council’s president Benjamin Bergen stated in a recent policy brief. “While we tinker with program eligibility criteria, other nations are implementing comprehensive strategies to capture global market share.”
International comparisons paint a particularly troubling picture. Countries like Israel, Singapore, and Finland—with populations smaller than Canada’s—have successfully built innovation ecosystems that consistently outperform on measures of patents, company growth, and export market penetration. Their approaches share common elements: focused investment in specific sectors, strong intellectual property frameworks, and aligned educational systems that produce talent matched to economic priorities.
“Canada has all the ingredients to succeed,” Balsillie insists. “World-class universities, stable financial systems, and enviable quality of life to attract talent. What we lack is strategic coherence and the courage to reimagine how innovation policy translates to economic prosperity.”
As global competition intensifies and technological disruption accelerates, the stakes for Canada continue to rise. The question facing policymakers now is not whether reform is needed, but whether they can move quickly and boldly enough to reverse decades of underperformance before Canada permanently loses ground in the global innovation race.
