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Canada’s “branch-plant” economy has to change

May 19, 2009

Canada should be thrilled that we punch above our weight in a few research areas, but needs to evolve from a “branch-plant” economy if we want to see the economic benefits of our strengths. So says David Olive, business columnist for the Toronto Star.

Canada currently has a number of strengths, Olive points out, including excellent education of young people, a flexible immigration system, and a history of inventiveness. We also have a number of sectors where we are already world leaders in R&D, including auto parts, aerospace, telecommunications, and biomedical science. Olive suggests that these represent areas we should leverage to build world class research and development capacities. It is important, however, that we don’t short-shrift basic research. “We need to fund pure research, applied research, and the universities and other facilities (the “infrastructure”) in which the pursuit of breakthroughs takes place“, he says.

So what’s the problem? Why such a dearth in innovation? “Our business sector, in stark contrast with government, has long stinted on R&D“, Olive says. This stems from Canada’s role as a branch-plant economy. Too many major sectors of our economy are dominated by foreign firms who manufacture and assemble here, but concentrate their R&D in their home countries.

Olive proposes no solutions – indeed, though many commentators point out the same problems with our innovation system, few are proposing solutions. Nonetheless, all agree it is important for Canada to take R&D more seriously; Canada may not be able to compete with US spending on science, but surely we can compete with Sweden, Finland, Austria, and Denmark – all of whom currently spend more on R&D than we do. Becoming world leaders in R&D, though, is going to require more than spending – it will require the cooperative commitment of the business community and the research community.

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