In 2016, to ensure the leadership of the Israeli technological innovation industry on the international markets, the Israel Innovation Authority (IIA), a brand-new statutory entity, was created with the aim of building an authority for innovation, whose activities are faster, more efficient and more effective.
The IIA’s fundamental principle is the partnership between government and industry. The council reflects not only the government’s view but also that of companies, which are the authority’s target audience, through the industry’s public representatives on the council. This structure ensures an effective and relevant policy outline for the industry’s needs, alongside the promotion of government priorities.
Initiatives like the IIA benefit a number of technology ecosystem development drivers, among them the level of cluster development and the depth of the technology ecosystem. Based on the Global Innovation Index 2022,[14] while the number of joint venture/strategic alliance deals and university–industry R&D collaboration in Canada is high in the worldwide rating — first and ninth, respectively — in terms of cluster development, Canada ranks 19th globally.
International R&D collaboration is a key factor in innovation investment. The Canadian International Innovation Program (CIIP) supports Canadian companies pursuing international R&D collaborations with foreign partners, including Brazil, China, India, Israel and South Korea. However, the budgets are limited, and the calls for proposals are infrequent. Nonetheless, it is necessary to consider expanding the support mechanisms so that they allow the encouragement of innovation and collaboration in the industry and with overseas partners.
Clearly, Canada’s federal and provincial governments can do more to incentivize greater ecosystem development, collaboration and the enhancement of capital markets to support one of the key pillars of economic growth by stimulating innovation and productivity and accelerating these processes. More coordinated government support for the development of these ecosystems may now be beginning to emerge. For instance, a number of global original equipment manufacturers (OEMs) in the automotive sector (e.g., Volkswagen, General Motors, Honda, Ford, Stellantis and LG) have recently received significant support from Ontario through its investment fund and the federal government through the Strategic Innovation Fund to establish or expand their manufacturing facilities and plants in Ontario. This has resulted in a concentrated zone of advanced manufacturing and research and development capabilities in Southern Ontario which, in turn, has created thousands of direct and indirect jobs.
Recent announcements from the federal government are also bringing positive news. Finance Canada first announced a review of the Scientific Research and Experimental Development (SR&ED) Program in Budget 2022. Specifically, Budget 2022 revealed the government’s intention to examine if changes to eligibility criteria are warranted to improve program efficiency. The 2022 budget also stated that the government will consider the creation of a patent box regime to encourage the development and retention of intellectual property in Canada. Budget 2023 indicated that the review of the program is continuing and includes the engagement of stakeholders in the review process.
In addition, Budget 2022 first introduced the government’s plan to establish the Canada Innovation Corporation (CIC). Along with a number of new “green” refundable tax credit incentives, Budget 2023 highlighted the federal government’s plan to introduce legislation to create the entity. Although seemingly slow to get started, this new Crown corporation may be the first step in creating a more coordinated incentives effort in Canada.
With an initial budget of $2.6 million, the CIC has the mandate to increase Canadian business expenditure on R&D across all sectors and regions of Canada and help to generate new and improved products and processes that will support the productivity and growth of Canadian firms.
In addition to developing and delivering funding programs and providing advisory services, the CIC is also expected to integrate some key existing funding programs (e.g., IRAP) and complement other federal programs, including the Strategic Innovation Fund and the Regional Development Agencies.[15] Although there is no mention in its mandate to coordinate with provincial programs, it is definitely a step in the right direction towards both simplifying and strengthening the incentive landscape in Canada.
It is encouraging to see the beginnings of a more coordinated effort to achieve common targets that will further enhance the incentives. It is through this more holistic approach that the chances of addressing current and upcoming challenges, meeting growth targets and advancing competitiveness will be increased.
With a coordinated effort and a body capable of initiating, promoting and coordinating horizontal activities, it may advance the country’s objectives of promoting innovation and productivity in Canada. If the CIC can synchronize federal incentive programs’ budgets and performance indicators to optimize the results of these programs, Canada may be able to maximize the government’s ability to achieve innovation-driven growth.