Implementing Canada’s Innovation Strategy:Implementing Canada’s Innovation Strategy:Engaging Stakeholders in Policy Learning ProcessEngaging Stakeholders in Policy Learning Process

A. Duff Mitchell

Manufacturing Competitiveness Directorate

Industry Canada

Six Countries Programme, Stockholm, Sweden

May 23, 2006

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Canada:

Who we are &

public policy challenges

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Canada is a prosperous & successful country

large, resource rich country …

relatively small, high income, bilingual & multicultural population …

federal political system & situated next to U.S.

Canada ranks high as place to live & do business:• United Nations Human Development Index – 5th among 177

countries in 2005

• World Economic Forum’s international competitiveness ranking – 13th in 2005

• OECD’s measure of living standards – real GDP per capita was 2nd highest in G7, 9th in the OECD in 2004

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Focused on three policy challenges & innovation

1. Increasing productivity growth on sustained basis

(objective: closing productivity gap vis-à-vis U.S.)

2. Improving human capital through education & training

(objective: one of best educated society/economy in world)

3. Enhancing global economic reach (objective: more

global FDI, deeper trade links in key markets, creating

stronger “Canada brand”)

Canada’s Innovation Goal: To be recognized as one

of the most innovative countries in the world

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Maintaining comparative advantage in competitive &

rapidly changing global marketplace requires:

quality of policies & institutions (& quality of human

resources & national endowments)

flexibility, adaptability & speed in policy formation &

delivery

continued alignment of government policies &

business strategies

Through “policy learning” success factors identified

Source: “Canada’s Success is No Accident”, Kevin Lynch, Policy Options, April-May 2006

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Why an Innovation Strategy?

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Canadian economy performance is mixed

15,000

20,000

25,000

30,000

35,000

40,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

United States

Canada

United Kingdom

France

Italy

Germany

Japan

GDP* per Person ($US) for the G7 Countries

Source: OECD Economic Outlook* Real GDP, 2000 constant PPP

2nd in G7 re GDP

2nd re GDP growth from 1991 to 2003

But productivity growth has lagged U.S. … & created income gap

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… and productivity challenges are mounting

Private sector R&D investment performance low

M&E investment as % of GDP lowest in G7

Productivity growth also lags main trading competitors

Source: “Canada’s Success is No Accident”, Kevin Lynch, Policy Options, April-May 2006

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Higher Energy Prices• price of oil & natural gas rose by 200% & 455%, respectively from 2001 to 2005

Appreciated Canadian Dollar• Canadian $ increased by more than 30% against US $ since 2003

Canadian industries also facing increasing pressures

0

5

10

15

20

1994 1996 1998 2000 2002

Exports to China

Imports from China

Emerging Countries China is now Canada’s 3rd largest trading

partner (total trade increased 555% between 1992 & 2004)

Increased competitiveness for value-added products

Canada’s Merchandise Trade With China ($Cdn billion)

Source: Trade Data Online.

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Canada needs to rank near top to compete successfully

But Canada’s innovation performance ranks near bottom in G7 – e.g., R&D, continuing education, regulatory environment & FDI

Benchmarks/PerformanceCanada’s

Rank (Out of 11*)

Investment in Research and Development (R&D)

Gross Domestic Expenditure on R&D (GERD) 7th

Business Enterprise Expenditure on R&D (BERD) 8th

Publication of Scientific Papers 5th

Commercialization

University/Industry Collaboration in R&D 2nd

Technology Balance of Payments 5th

Skills, Education and Training

University and College Graduates 1st

Adult Participation in Continuing Education 6th

Regulations and Reform

Economy-Wide Regulatory Environment 6th

Public and Business Confidence / International Recognition

World Competitiveness Rankings 4th

FDI Confidence Index 7th

*These 11 countries are Australia, Canada, Finland, France, Germany, Italy, Japan, Spain, Sweden, United Kingdom, and United States

Source: Conference Board, Exploring Canada’s Innovation Character, June 2004

Our traditional competitors rank higher than Canada in many areas

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Key innovation challenge areas:

knowledge performance challenge (R&D) – promote creation, adoption, & commercialization of knowledge (productivity growth)

skills challenge – ensure an adequate supply of people who create & use knowledge (human capital)

innovation environment challenge – ensure that Canada’s stewardship regimes & marketplace framework policies are world-class (global economic reach)

Canada recognizes innovation challenge

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The Federal Government Innovation Strategy Initiative

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National Innovation Strategy involved multi-pronged engagement process

National Engagement Process launched 2002:

February: released Innovation Strategy Papers – set directions for 2010

May – October: asked Canadians for views on targets, priority actions, recommendations

November – National Innovation Summit

Two overarching objectives:

mobilize Canadians to make commitments – and turn them into action – so that Canada becomes one of most innovative countries in world

examine Government’s Strategy to accomplish this goal – then tell us if we’ve got it right

http://www.innovationstrategy.gc.ca

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Engagement process resulted in extensive outreach

Source: Public Policy Forum, “Engaging Leaders: Lessons from the Innovation and Learning Strategy”

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Innovation Secretariat established

10,000+ Canadians participated in:

33 regional events

80 sectoral group meetings

40 expert, best-practice, and interest group roundtables

multiple streams, e.g. sectors, regions, youth, provinces

600+ online responses from individuals & SMEs

250+ formal submissions received from organizations representing hundreds of thousands of Canadians (posted on line)

key federal government departments involved

Knowledge Matters: Skills & Learning for Canadians

Achieving Excellence: Investing in People, Knowledge & Opportunities

Innovation initiative heard from all Canadians

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… and Canadians had a lot to say

Confirmed major directions set out in Innovation Strategy papers

Suggested modifications to certain targets & milestones

Move faster in key areas (e.g. regulatory reform)

Modify performance measures in key cases (e.g. R&D intensity)

Provide more clarity (e.g. cluster strategy)

Pointed out deficiencies (e.g. insufficient focus on commercialization efforts; skilled trades)

Recognized that many stakeholders must collaborateGovernment cannot act alone; innovation is everybody’s business; role for all key stakeholders

Demonstrated sense of ‘readiness’ to move forward – Canadians mobilized; ready to commit; wanted ‘fast action’

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Canadian views captured for policy analysis

Views summarized in Canadians Speak on Innovation and Learning

Analysis of key issues & recommendations by stream

2000+ recommendations; 5 key horizontal issues with 93 recommendations for prioritization at National Summit (National Summit Discussion Guide)

http://www.innovation.gc.ca/gol/innovation/

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Agreement reached on 18 priorities across 5 themes

1. Improve R&D & Commercialization

research capacity commercialization outcomes access to capital

2. Enhance innovation environmentsupport innovation in tax systemspeed regulatory reformmodernize IP system

3. Strengthen Learning Outcomesaccess learning opportunitiesinnovation in learning systemcareers in skilled tradeslifelong learning

4. Build an Inclusive & Skilled Workforceincrease labour force capacityintegrate immigrants in workforceinvest in workplace training

5. Strengthen Communities …

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…and Government commitments announced

accelerate timetable for regulatory reform

review of foreign ownership restrictions in telecom sector

benchmark Canada’s innovation performance

reconvene in 2 years to assess progress & determine next steps

Results published in Summit Summary Report

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Government followed up with timely actions

Budgets 2003, 2004 & 2005 delivered on most priority recommendations:

Increased funding for research (e.g., CFI, Granting Councils)

Expanded support for successful programs (e.g, IRAP)

Improved business environment (e.g., tax measures, risk capital)

Improved financial assistance for students, foreign credential recognition

Increased funding for RDAs, CFDCs, Atlantic tech clusters, social economy

External Advisory Committee on Smart Regulation provided recommendations in September 2004; Report on Actions & Plans tabled March 2005

CBOC benchmarking report released in September 2004

Auditor General audit of Innovation Strategy (November 2005)

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Policy learning from engaging stakeholders in

Innovation Strategy

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Post-Summit review of engagement strategy mixed

Engagement process achieved “core” objectives: consensus obtained on innovation challenge & need for actiongovernment delivered on most commitments & responded to priority recommendations (e.g., Budgets 2003, 2004, & 2005)themes identified at Summit continue to resonate in public policy discussions & program funding decisions

But … not all expectations realized

… and many private sector stakeholders did not develop action plans

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External assessment critical of process

Public Policy Forum (PPF) observations based on interviews of only 23 Summit “leaders”:

“…National Summit was not successful in achieving its goals of creating a national action plan or in securing commitment from all sectors to participate in its implementation because of flaws in the process, agenda, participants, timing and outcomes.”Source: Public Policy Forum, “Engaging Leaders: Lessons from the Innovation and Learning Strategy” (pg., 11)

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PPF focused on “perception” of coordination issues

National Summit Process:pre-set course of actiondominated by universities who monopolized debatecomplicated by having two-leading departments (Industry Canada & HRSDC)politicized by “politics of the day”

National Summit Agenda:too large to be meaningful (500+ leaders over 2 days)mix of priorities & ideas (& too many ideas)some themes poorly defined (e.g., Strengthening Communities) Insufficient time for full discussion of issuesnot national enough in scope (especially re private sector)

Post-Summit:little awareness of follow-up actions“taking stock” Summit not held two years lateroutcomes too high-level & too government-centricfocus more on National Summit event than continued stakeholder engagement

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Overall conclusions from innovation strategy …

1. importance of innovation was never in question

2. government actions must correspond to advice received during engagement process

3. communities & sectors were ready to move, but were waiting for government to act as well

4. resources needed for follow-up work

5. approach must be integrated

6. partnerships must be established with enterprises & communities

7. a Summit can gave credibility to Innovation Strategy, but just

beginning of implementation process

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… and lessons learned for future engagement

federal co-leads on horizontal files can result in increased workload for stakeholders, imposes coordination challenges for departments & can lead to an “accountability vacuum”

focus on a short list of national issues to produce viable plan. Develop jointly with private sector to ensure they share responsibility to implement

engage for implementation of action plans as well as development, using networks developed during consultation

better communication of follow-up actions required

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Building on

stakeholder engagement process

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Industry launches national consultation on future

Canadian Manufacturers & Exporters’ (CME) Manufacturing 20/20:challenges & changes affecting manufacturing

future of manufacturing in Canada?

98 meetings held in 2004/05, involving 3,500+ manufacturers & stakeholders

input from 15 industry associations

survey of 942 manufacturers in 2005

National Manufacturing Summit (February 2005)

Reports: innovation, workforce capabilities & international business

www.cme-mec.ca

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Commercialization Expert Panel addresses key issue

People and Excellence: The Heart of Successful Commercialization (April 2006):11 recommendations

focus on development of business-led Commercialization Partnership Board (CPB)

would create new role for private sector as full partner in charting course for, & developing policy related to, commercialization

www.strategis.ic.gc.ca/commercialization

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Government to advance innovation in Budget 2006

“Over the coming year, the Minister of Industry will be developing a science and technology strategy, in collaboration with the Minister of Finance, that will encompass the broad range of government support for research, including knowledge infrastructure. The Government will also undertake a review of the accountability and value for money of the granting councils’ activities.”

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