Mitacs policy paper recommends actions for increasing foreign direct investment

Canada must act more aggressively in utilizing its key advantages for boosting industry R&D by promoting and attracting foreign direct investment (FDI), says a new policy paper by Mitacs, which supports post-secondary training. Produced in collaboration with the Public Policy Forum (PPF), the paper builds on interviews with executives of multinational enterprise subsidiaries (MNE) and other stakeholders to identify Canadian strengths and barriers to greater FDI.

The paper offers a series of recommendations for improving the R&D ecosystem including a rebalancing of direct and indirect support in line with findings by previous studies, developing a client-centric approach to incentivizing R&D and prioritizing and investing in highly educated and technically skilled workers.

"We've lost the narrative for innovation in Canada. It's become too negative … We need to emphasize our advantages in research and innovation to attract more foreign direct investment," says Dr Rob Annan, Mitacs' chief research officer. "We struggle with FDI a little bit in Canada and could do a lot better."

Entitled Leveraging Canada's Innovation Ecosystem: Opportunities to Increase R&D Investment in Canada, the paper complements a PPF paper released last year called Winning Global Mandates: Lessons from Canadian Leaders.

"We took an R&D and innovation focus with our paper although we designed the questionnaires together," says Annan, adding that both papers are "on the government's radar" in the lead-up to the next federal Budget.

Annan points out that Mitacs and other organizations have already initiated some of the activities recommended in the report. Its well-established Accelerate program — which received $56.4 million over four years in the last federal Budget (R$, April 30/15) — is now complemented by the pilot Converge program to build value chains by linking smaller firms with multinational companies and universities. Both provide direct assistance and are scalable.

"We proactively approach business and our experience has been overwhelmingly positive," says Annan. "Companies often have trouble thinking long-term. We help with that and link them into the university ecosystem."

One success Mitacs has had in generating FDI is through its collaboration with Ciena Corp, a Hanover MD-based telecommunications networking firm with a large R&D operation in Ottawa. Annan says a jointly conceived project through Mitacs' Converge program helped Ciena win a global product mandate for the firm's Ottawa R&D facility.

"We supported a public-private partnership for Ciena's bid for a global mandate and offered up a host of researchers from nine universities," says Annan.

Ciena has often turned to Mitacs for executing the fundamental research that underpins its suite of telecommunications products. Rodney Wilson, Ciena's senior director of external research, says the firm currently has 12 R&D projects involving students. He acknowledges the value Mitacs provided in winning a global mandate to develop network optimization tools for soft software-defined networks, as well as and engaging smaller Canadian firms in a potent R&D and commercialization ecosystem.

"We brought in students under the (Mitacs supported) program which will run for several years," says Wilson, adding that the company also uses Mitacs' Accelerate program. "We help (students) complete their degree and we receive validation from their research … Ciena was able to crystalize our research and products under the project of software-defined networking … and have also created a portfolio of work that we want undertaken with these smaller enterprises."

While it takes time and effort to properly structure research projects involving multiple partners, cash flow management and intellectual property rights, Wilson says the effort is ultimately worthwhile.

"Once in place, it's effective," he says. "Mitacs is a good program and I would recommend it to others … The key is, it's arm's length for skills development."

Direct support generates results

Establishing working relationships between industry and universities is time consuming and expensive but critically important, says Annan. Organizations with the potential for promoting increased FDI include Mitacs, programs of the Networks of Centres of Excellence, the Ontario Centres of Excellence, the Concierge service of the Industrial Research Assistance Program and business-facing programs of the Natural Sciences and Engineering Research Council.

"The federal government has powerful convening capabilities," says Annan. "Matchmaking is expensive to do but we have to make the investment. It also requires a culture change."

To help enact a cultural shift, the report says the task would be assisted if universities "incorporate innovation needs into their mandate for education and training". Such a move would help to improve Canada's weak track record of moving PhD graduates into industry.

"Lots of countries are struggling with this. The UK and Germany embed PhDs with industry although the outcomes are not clear yet," says Annan. "PhDs are not being utilized very effectively ... We need to bridge the cultural divide and align the needs of industry with universities to build a persistent set of relationships between professors and companies."

The Mitacs report also says much could be gained by having a strong, balanced regime for intellectual property. With more than 60 universities with unique IP policies, Annan says a single point of entry like IRAP's Concierge service would assist multinationals in finding the right partner to enhance efforts to secure global product mandates.

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