INTRODUCTION
On 24 October 1996, the Committee started a series of hearings into science and technology and the innovation gap in Canada. Science and technology (S&T) are key to our economic future. Our ability to increase productivity in existing industries and to create jobs in new industries depend on a healthy science community and a receptive innovative business community. We decided to hold our meetings in a roundtable format to stimulate a free exchange of ideas between witnesses from industry and science. The Committee held ten roundtables and heard from sixty-two witnesses. We are grateful that so many people set aside time in their busy schedules to take part in our roundtables.
Many of the witnesses we heard emphasized the need to look at Canada's innovation system as a whole. Robert McLean of the International Federation of Institutes for Advanced Study presented an informative diagram of the system as a whole with the linkages marked.
In its strategy, the federal government saw its role not merely to better direct and manage the federal research and development (R&D), but to be an agent to strengthen the Canadian innovation system.
Innovation is as much regional and local as it is national. A climate for innovation is created by the leadership and drive of clusters of firms in an industry, along with the financial institutions serving them; responsive education and training institutions; local research bodies; boards of trade; municipal, territorial and provincial governments; entrepreneurs; and many others.
Canada's challenge is to put our knowledge to work to create an effective and resilient innovation system that maximizes the synergies from activities performed at all levels and across all sectors and regions. This is critically important for a mid-sized country like Canada, which has more limited resources than its major trading partners, but equivalent competitive challenges. But our size should be no obstacle; smaller economies than ours have succeeded in creating innovation systems that work well for them. We must take a more deliberate approach to building the Canadian innovation system, by understanding how it functions, playing on its strengths and reducing its weaknesses, engaging all the participants, and getting the federal government's role right. This will be a cornerstone of the federal government's strategy in building a more innovative economy.1History provides examples of countries whose innovation systems were not up to the challenges presented by new technologies.
[W]e had the first industrial revolution, which was steam power. We know a bit about its effect. The second one was electricity for steam power. We know more about its effect. The third one you're in is not the information revolution; it's actually chips for neurons. I want to underline that it's the creation of low-level intelligence systems that function in society and make an enormous number of things possible, from genetics, etc., in the system to the flying of the aircraft I came here on.
A characteristic of these revolutions is that if you don't make the right investments, you'll lose out on them. The problem is that they take a long time. They do not occur in one year or ten years. We know that the second revolution took over 40 years to fully play itself out, with complex effects on society. . .
What you notice is that the per capita wealth of the United Kingdom in 1990 dollars. . . has slid from being first in the world in 1900 to being twenty-third today. It did so by neatly failing to do what is perhaps the single most important part of this story: to actually invest in the new economy.
As the roundtables progressed, it became clear to us that we should expand our mandate to cover the question of the level of foreign ownership in the Canadian economy and how this affects the innovation gap. As the OECD has noted, much more R&D is financed by foreign sources in Canada than in other OECD countries, but still, there might be a tendency for R&D to be undertaken at the headquarters abroad rather than in Canada. Many of the witnesses who addressed our fifth question on how well Canadian institutions are meeting the skill needs of high-tech industries voiced serious concern about the supply of engineers and computer science graduates. Good jobs are going begging, and wealth-creating projects cannot get off the ground. These questions need further consideration, and we shall be holding further roundtables before we present our final report.
This Interim Report summarizes what the Committee heard, and makes some recommendations to the Minister of Finance for the upcoming budget.
1 Science and Technology for the New Century - A Federal Strategy," March 1996, p. 4.