Canada's innovation policies must expand beyond current focus on technology sector

Resource and financial services sectors ignored

Canada is neglecting the innovative capacity of its resource sector at its peril. A discussion paper released yesterday calls for the creation of an innovation manifesto and new innovation-focused research on resource industries to bridge the disconnect between innovation policy and the areas of the economy that generate the greatest wealth and prosperity.

Authored by Dr Richard Hawkins, the paper argues that Canada's innovation policy is heavily skewed towards the technology sector. Without a re-balancing, the potential for greater value-add in the oil and gas, mining, forestry and agricultural sectors could be squandered. It also contends that the financial services sector has been similarly neglected by the policy community.

"The innovation performance of Canadian industry is often misunderstood because many of the comparative indicators are not oriented to the characteristics of our most economically significant industries, most of which are situated in the natural resources and services sectors," states the report. "By acknowledging basic realities about Canadian industry, vast horizons will be opened up for strategic thinking in creating dynamic innovation policies that will provide Canadian industries, including technology industries, with genuine and sustainable advantages in an increasingly competitive world."

Hawkins — a Canada Research Chair in the Social Context of Technology, a professor of science, technology and society at the Univ of Calgary and a fellow at the Univ of Ottawa's recently established Institute for Science, Policy and Society (ISSP) — says the focus on technology is so entrenched that Canadian policy makers and governments may not even be aware of where we are translating knowledge into growth.

"That's the point of the paper … Traditional industries are critical and have enormous value chains. Either we exploit them intelligently or in a dumb way. We need to exploit the knowledge that's already there," says Hawkins, who returned to Canada seven years ago after working as a senior scientist in innovation policy at the Netherlands Organization for Applied Scientific Research. "Alberta has billions of dollars in technology exports every year and they're rooted in the resource extraction field, but there are opportunities in many other areas. We need to use our natural resources as a platform — as a value-added industry."

"What is truly shocking is how little of the accumulating knowledge about innovation appears to be inflecting the policy debate in Canada at the actual policy-making level. Policy attitudes and actions remain oddly wedded to a much earlier incarnation of the innovation conversation. Mostly, policy-makers pose the same old questions and, mostly, they get the same old answers … Canada's policy-makers appear to be moving steadily towards a more, rather than less, exclusive association between innovation and technology."

— Hawkins Discussion Paper

The domination of the tech sector in current policy extends to recent reports from the Council of Canadian Academies and the Expert Panel on Federal Support for Business R&D (the Jenkins Report). Hawkins says he has high regard for the work by both of those groups, particularly Dr Peter Nicholson, who was the principal author of both papers. But he finds it puzzling that the policy community has not incorporated more recent strands of innovation theory in their work such as entrepreneurship.

"I'm frustrated that the debate seems to be stalled where the Jenkins report put it. Both the Jenkins report and the CCA report (Innovation and Business Strategy: Where Canada Falls Short) succinctly state the problem as it's perceived in policy up to this point," says Hawkins. "But technology-focused input indicators are only a small part of innovation. We need to begin a serious dialogue and come up with some knowledge to support the role of innovation in the resource sector."

The paper argues that the development of innovation policy surged in the 1980s and 1990s "in an unprecedented environment of rapid and sweeping technological advance". The result was an inordinate emphasis on information and communications technology and away from its traditional focus on national and regional systems of innovation. And while the innovation policy field has broadened considerably since then, data collectors and policy- and decision-makers have been slow to adapt.

"Not only have policies reflected a very narrow segment of the innovation spectrum, they have been equally myopic about what constitutes R&D," states the report. "How economically significant are the excluded activities? We do not know. Until quite recently they were assumed to be of no value, nobody bothered to measure them."

More recently, several studies in Norway, the UK and elsewhere have undertaken historically contextualized, empirical investigations of national innovation systems with refreshing results.

Hawkins points out that Canada was once a leader in linking the social and economic foundations of the country with technology and geography. Organizations such as the former Science Council of Canada produced reports on innovation that remain highly relevant today.

"There's hardly an issue we're dealing with today that there isn't a Science Council report on it from 30 years ago. That's when the red flags went up," says Hawkins. "We need to do an audit of our knowledge.

"The majority of our most economically significant sectors — basically our resource and financial services sectors — are for the most part capital-intensive technology adopters, rather than R&D-intensive technology producers ... It is especially important for Canada to start thinking about innovation in these terms because our industrial composition and orientation differs substantially from economies like the U.S., Japan, Germany or Korea, and because it is the differences, not the similarities, that are likely to be our greatest source of future advantage."

— Hawkins Discussion Paper

In addition to undertaking a national audit of Canada's reservoir of innovation knowledge, the discussion paper asserts that new interdisciplinary research on all industrial sectors currently excluded from innovation policy is "required urgently". Hawkins says the granting councils — especially the Social Sciences and Humanities Research Council — are well suited to the task but are constrained by finite resources. Statistics Canada, Industry Canada or even Environment Canada could also take on the work but would most likely require additional resources. Industry groups should also be engaged.

"We need to learn to work together and create some knowledge projects, says Hawkins, adding that the oils sands must be a focus as it's the largest S&T-intensive industry in the country. "I'd prefer not to have the oil sands because they're hard to sell but they exemplify the hard choices that need to be made. We have to develop ways to minimize the harm or develop in a stupid way and become Venezuela."

To obtain a copy of the paper, go to www.issp.uottawa.ca.

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