Dr Kamiel Gabriel

Advantages of an innovation-driven economy

By Kamiel Gabriel

The World Economic Forum's Global Competitiveness Index, the most comprehensive and authoritative assessment of the comparative strengths and weaknesses of national economies, is categorical: traditional factors such as abundant natural resources, low production costs, and the efficient deployment of existing technologies can no longer be expected to provide an economic edge. For advanced economies like Switzerland, the US, Singapore, Germany, and Canada, competitive advantage lies in innovation or the ability to create, harness and effectively mobilize knowledge to compete in global markets.

A Global Emphasis on Innovation

Increased global emphasis on innovation is the consequence of a profound transformation that has been underway in advanced economies for several decades: the shift from an industrial-based to a knowledge- based economy.

Industrial economies make and move things — such as floating timber down a river to make furniture. Knowledge economies apply knowledge to knowledge — such as manipulating massive amounts of genomic data over high performance computing networks to better understand, and ultimately treat, genetic-based diseases. It's a fundamental shift with encyclopaedic implications.

In a knowledge-based economy, citizens need different skills to succeed and the economy needs different physical — and social — infrastructures to flourish. What's more, industrial economies are highly visible. Timber is easily seen floating down a river. Knowledge-based industries frequently offer few visual cues. For example, how many citizens know that high performance computing networks exist, or why? And what it means to their standard of living today and that of their children in the future?

Every advanced economy has placed a premium on innovation. But, it is a long-term proposition: an innovation can take a decade or more to move from research to retail. High profile breakthrough technologies like the BlackBerry are far from overnight successes. They have long, often non-linear development cycles and can take several decades before they become "household items".

In an economic process, strategically animated by pure and applied research, it is the interplay of the research and business communities that powers innovation-driven economies. The particulars of that relationship vary widely from jurisdiction to jurisdiction — and within national and regional economies. What works in Singapore, Sweden, and the US is not necessarily appropriate in Canada.

"The absolutely decisive ‘factor of production' is now neither capital nor land nor labour. It is knowledge."

— PF Drucker,

Post-Capitalist Society.

And what Kitchener-Waterloo could provide by way of innovation is vastly different from what the prairies or eastern Canada can contribute to their respective regions. In addition, innovation has a cultural dimension to it which adds to the uniqueness of how it is deployed and employed in different countries around the world or regions within a jurisdiction. Fundamentally, innovation is about people: their openness to change; their ability to forge new relationships, and above all, their willingness to take risks.

public sector holds unique levers

In a mixed economy, the public sector has unique levers at its disposal for effective development of an innovation-driven economy. For example, the United States uses government procurement to facilitate the development and adoption of new technologies in areas of highest importance to the nation (e.g., homeland security, armed forces, health, etc.). The same could be done in Canada. Joint initiatives between jurisdictions can materially improve the lives and health of Canadians and the sustainability of our environment. Social and economic goals can be furthered with technological problem solving and strategic procurement — as demonstrated for example by the Ontario Green Energy Act. This is an example of what a province can do in collaborations with other provinces and other levels of government to support regional programs in achieving the best possible outcomes for Canada.

Burgeoning Competitive Advantage for Canada

To build on Canada's strengths and target systemic issues, there is a need to address the disproportionally low rates of private sector engagement in R&D; access to risk capital; and the need to enhance the ICT infrastructure by moving quickly to adopt broadband transmission. There is a need to target the well-documented financing gap experienced by spin-off, start-up and early stage companies. We also need to attract skilled entrepreneurs with international experience.

"The most important job for economic policy is to create an institutional environment that supports technological change," notes Paul Romer, senior fellow, Stanford Institute for Economic Policy Research, Stanford University.

Research initiatives, business programs, access to capital funds do more than encourage innovation — they are simultaneously aimed at developing the professional skills of scientists and entrepreneurs. They are also deliberately delivered in ways that build the different social networks and infrastructures — something that is crucially important for the knowledge-based innovation economy to flourish.

Clusters of excellence, rooted in local communities, and its ability to interact effectively (and regularly) with research institutions, businesses and municipal governments must be deepened and broadened. The old tendency to concentrate on small-scale local initiatives is giving way to a more confident sensibility. They increasingly aspire to collaborate on large-scale programs to solve global issues, and are comfortable initiating new relationships across the province, the country and around the world.

Dr Kamiel Gabriel is the founding associate provost of Research & Graduate Studies at the University of Ontario Institute of Technology, Oshawa ON. Over the past year, Gabriel was seconded to Ontario Ministry of Research & Innovation as its ADM Research and first science adviser.