Despite having one of the most diverse workforces in the world, Canada was ranked 14th in the 2019 OECD Global Competitiveness Report; dropping two spots from the previous year, and scoring below the United States, Denmark, and Korea. Although we receive strong rankings in macro-economic stability (1st), sound financial system (9th), and labour market (8th), we have lagging performance in innovation (16th) and adoption of technology (35th). What is Canada missing?
To start, we could look to the country who has lead on innovation and start-up culture, earning themselves the title of “Start-Up Nation” - Israel. Though there are many different factors that may contribute to its success in innovation, one large factor is Israel’s government initiatives focusing on developing knowledge, supporting research and development, and prioritizing the creation and long-term survivability of start-up businesses. In the past, government initiatives were created to subsidize research and development projects, and to bolster venture capital interest through tax incentives and matching investments, hoping to share and mitigate the risk to investors. This fostered collaboration between not only academic institutions and private organizations, but also across local and global organizations. However, it should be noted that these initiatives are not without flaws, as the policies have been geared to high-tech industries, and consequently “other sectors seem to have been left out.”
These initiatives paved the way for the creation of the Israel Innovation Authority, an independent publicly funded agency, which provides support and incentives to entrepreneurs across different divisions like technological infrastructure, international collaboration, and societal challenges. The reverse innovation model is used, whereby organizations are encouraged to pitch real issues to entrepreneurs, and these entrepreneurs come to solutions by “understanding the challenge first, and then working backwards…[t]his promotes the formation of joint ventures (sometimes between competing firms) to address them.”
Overall, the takeaway is that government-led initiatives signaled confidence to investors and laid the groundwork for a venture capital friendly environment that both corporations and research institutions were able to participate in. For Canada to break through as a powerhouse in innovation and remain competitive on a global scale, we need thoughtful government-led initiatives that promote innovation across industries.
Author
Viewpoint Research Team