Canada lacks an overarching strategy, long-term planning, policy continuity and other key ingredients for success in its innovation ecosystem compared with places like the United Kingdom, Switzerland and the European Union.

That was the main takeaway from an international panel at Research Money’s annual conference in Ottawa, during a session titled “Global Perspectives on Governmental and Organizational Transition.”

“Canada takes a pretty short-term approach [to its innovation ecosystem],” said Lawrence Zhang (photo at right), head of policy at the Ottawa-based Centre for Canadian Innovation and Competitiveness. “It’s very short-term, it’s very focused on being fair, regionally, equitably.”

“We spread peanut butter [funding support] over time and over space. It’s because of federalism and we have a very limited budget,” he said.

Canadians are proud of the Canadian Institutes for Health Research (CIHR), for example. But funding for the National Institutes of Health in the U.S. is six times larger per capita than the CHIR’s funding, Zhang said.

Funding under the Chips Act, which is just one small tranche across the entire spectrum of the U.S. policy arm, is two times greater per capita than all of Canada’s Strategic Innovation Fund.

Compared with Canada, funding for research and development in Switzerland is both high and stable, with the country spending 3.1 percent of its GDP on R&D. Canada’s R&D spending is 1.7 percent of GDP.

Switzerland has been the world’s leading innovator country for 14 years in a row, according to the Global Innovation Index, said Urs Obrist (photo at right), senior science and technology counsellor at the Embassy of Switzerland in Ottawa.

“The reality is we have moved from Heidi to high-tech,” he said, referring to the cultural icon and tourism mascot that represents Switzerland’s natural beauty, authenticity and traditional values.

When it comes to science investment, Switzerland is the No. 1 investor in the U.S., with over $15 billion, Obrist said.

Switzerland has a unique system of direct democracy and consensus-based governance, with no prime minister but seven executive leaders that rotate as president every year.

As a result, “Switzerland’s government is carried by a consensual motive with the idea that the governments need to work together to find solutions,” Obrist said.

“It’s a huge difference to what we see here in Canada with a constant turnover from one party to the next or the continuation of one party over a long time,” he added.

As the federal government changes in Canada, it’s common for the new government to scrap the policies of its predecessor – including policies that work.

In Switzerland, Obrist said that the underlying political base helps to formulate a strategic plan that gets renewed every four years in the areas of science, research, education and innovation. The plan defines clear strategic goals such as in digitalization, cleantech and international collaboration.

“Stability is actually a good element for innovation,” Obrist said. “It’s not that we change government and suddenly science is cut out from the [budget] of ministries.”

In the U.K., a recent comprehensive strategic review of long-term economic and defence security led to the nation’s coining the phrase of being a “science superpower.”

The U.K has four of the top 10 universities in the world and is second only to the U.S. in the number of Nobel Prize winners, said David Prodger (photo at left), deputy high commissioner in Ottawa for the British High Commission.

Studies show the U.K.’s research effectiveness is 57 percent greater than the U.S. and six times better than China, he noted. “We’re No.1 in field citation impact and No. 1 in research quality in the G7 for more than 10 years.”

“It is a real reality that we’re good at science and innovation,” Prodger said.

The U.K.’s strategic review led to the creation of UK Research and Innovation (UKRI) that brought together the country’s nine research councils, which have set out a strategic plan from 2022 to 2027.

Other countries put innovation at the heart of their economic security

Prodger said this year’s budget for the UKRI is £8.8 billion (about Cdn$15 billion). The UKRI leverages at least $2 in private investment for every $1 of government investment, he said.

In comparison, the total annual budget for Canada’s Tri-council of three research funding agencies is $1.8 billion over five years, starting in 2024-25, with an ongoing commitment of $748 million per year after the five-year period, according to Budget 2024.

The Tri-council doesn’t have a specific metric to track how much private investment its research funding leverages, although it does track the number of researchers funded, publications, patents and commercialization activities.

Prodger noted that in the U.K., the prime minister now chairs the national science and technology councils. “The significance of science and technology and innovation to the UK can be writ large, is now such that it’s chaired by the prime minister, it is a full cabinet committee.”

“This is no longer seen as something that is dealt with by one of the line departments or ministers. This is absolutely core to the political landscape of the U.K. now,” he said.

In comparison, Canada’s previous Liberal government under Justin Trudeau had a minister of innovation, science and industry. The Mark Carney government has a minister of artificial intelligence and digital innovation – suggesting a narrower scope of focus than a minister of innovation also responsible for the science and industry portfolios.

Prodger also pointed out that the U.K. soon will release its new industrial strategy, the country’s first industrial strategy in more than a decade. The strategy will focus on the growth-driving sectors of the economy, he said. “Science and tech will underpin all of those.”

Canada has no overarching, comprehensive industrial strategy, despite repeated calls from stakeholders in the innovation system to establish one.

As a result of the U.K.’s strategic review, Prodger said, “The big realization we’ve seen is that very clear continuum between academic excellence, the absolute imperative that science and innovation is at the very core of our economic and physical security, and the need to develop and build those international partnerships to deliver that jointly.”

The European Union does multi-year planning of research and innovation priorities and objectives through its Horizon Europe program, said Konstantinos Kapsouropoulos (photo at right), digital and science counsellor at the EU Delegation to Canada.

The 2025 work program for Horizon Europe was approved earlier this month, with a budget of  €7.3 billion (about Cdn$11.5 billion), he said. Horizon Europe’s associate members, including Canada and Switzerland, help shape the work programs.

“What I would like to stress and what is really unique in the EU is [Horizon Europe] is by essence co-created, the way the work plans are created,” Kapsouropoulos said.

Horizon Europe includes support for innovations with potential breakthrough and disruptive nature with scale-up potential that may be too risky for private investors. This is 70 percent of the budget earmarked for SMEs

The EU also plans to adopt the EU Startup and Scaleup Strategy, Kapsouropoulos said. The strategy aims to tackle persistent barriers faced by European businesses, including fragmented regulations, administrative burdens, limited access to finance and talent shortages.

The strategy outlines a set of actions across five key areas, combining new legal proposals, non-legislative measures and financial instruments to strengthen Europe’s startup and scale-up ecosystems.

To bridge the financing gap of deep tech scale-up companies, the European Commission will collaborate with private investors to establish a market-based, privately managed and privately co-financed Scaleup Europe Fund. This new instrument is intended to support high-growth startups operating in strategic sectors such as AI, cleantech and dual-use technologies.

Canada lacks a government procurement mechanism to “pull” innovation

Zhang said Canada “does a pretty good job” at supporting startups, with many of the 134 federal innovation programs tailored toward startups. However the labyrinth of programs is such that “a lot of these firms have to hire someone just to figure out what program they fit into.”

The approach is “very front-end loaded” and focused on trying to push innovation, he said. “But we have very few ways of actually pulling innovation out.”

The federal government doesn’t purchase much from innovative Canadian companies and neither do Canadian firms and large institutional players.

Canada lacks a procurement mechanism, unlike the U.S. that has several arms and tranches of its industrial policy – such as the Small Business Innovation Research program, the Department of Defence, the Defense Advanced Research Projects Agency, the Advanced Research Projects Agency for Health, and the National Institutes of Health – that are all mandated to buy innovative products and services from American companies.

The U.S. propagates a myth that government just needs to get out of the way and let the free market take over, Zhang said.

But in Canada there is no such free market, he noted. “There’s no purchase, there’s no pull from government, there’s no procurement mechanism.”

Instead, he added: “It’s the ledge right here and companies just go off the ledge. We say: ‘Good luck, have fun, bon voyage.’ And then they walk straight off the cliff.”

That’s why innovators in Canada decide they have to exit to the U.S. or do an initial public offering in the U.S., Zhang said. “In Canada, we’ve misunderstood what role everyone should play.”

Switzerland, on the other hand, has a scale-up program called Kickstart Innovation where each year more than 100 entrepreneurs representing the 50 top-quality startups are selected for an intense, nine-week open innovation program to scale their businesses through deals with Kickstart’s partner organizations.

“Switzerland has one natural resource: it’s grey matter in between [our] ears,” Obrist noted. “There’s a common goal, notwithstanding who’s in political power.”

In the U.K., Innovate UK’s Catapult Network provides cutting-edge R&D facilities and world-class technical expertise to accelerate the application of research and further develop, scale up and commercialize new technologies. The network comprises nine world-leading technology and innovation centres with more than 65 national locations.

“You have to have innovation at the heart of your economic security or you’re not going to be able to compete,” Prodger said.

In Canada, despite the strong government support in the early stages for startups, as these companies scale and reach annual revenues of $50 million to $100 million, what typically happens is they get acquired by foreign entities, often in the U.S. The subsequent revenues, intellectual property and talent then flow to and benefit other countries.

 “We do have to make a better case, not only to government but to the Canadian people, why innovation matters” and how it benefits Canada’s economy, Zhang said. “We need to get everyone onboard with an innovation agenda.”

Canada needs to learn from other countries’ models

All the panellists agreed that in the shifting and uncertain geopolitical environment, collaboration on research and innovation with international partners that have like-minded values is crucial.

Switzerland and Canada have a joint statement on science, technology and innovation that was signed in 2018 and re-signed in 2023, Obrist said. The statement covers four key strategic areas; quantum, AI, life sciences and cleantech.

Switzerland also has started signing research agreements directly with Canadian organizations, such as one between the Swiss National Science Foundation and CIFAR.

Switzerland also has an agreement with Quebec on mutually recognizing each other’s diploma credentials. Obrist said Switzerland is open to having conversations on this issue with other provinces.

Kapsouropoulos underscored that Canada is an associate member of Horizon Europe and plays an active role in shaping and designing its annual work program. Canadian entities can now join and lead research consortia in tandem with at least two other countries (one from an EU member state and another one from an EU member state or an associated country).

There is also Canada-European Union Digital Partnership that focuses on concrete deliverables, he said. This partnership focuses on increasing cooperation on AI, quantum science and semiconductors; public policy related to online platforms; secure international connectivity; and cyber security.

Canada and the U.K. last year re-signed their memorandum of understanding on a science partnership that focuses on life sciences, engineering biology, biomanufacturing, agricultural technology, climate net zero, critical minerals, ocean science and technology, clean energy, arctic and polar research, quantum and AI.

The U.K. and Canada also have a history of nuclear energy development that is unsurpassed, Prodger noted. Both countries should build on that and collaborate more on nuclear fusion, small modular nuclear reactors and next-generation nuclear fuels, he said.

Give the shifting geopolitical situation, “I don’t think this is a race to the bottom or a win-lose situation,” Prodger said. “I think the challenge for us is to work out how we get the best from the partnerships we have.”

Zhang agreed that to build long-term economic and political stability, Canada has to find new international partners and allies and integrate the country into the new world.

He pointed to Germany, which has a phenomenon called Mittelstand, a group of medium-sized companies and family businesses – more than 99 percent of all companies in Germany – that make products indispensable to the global economy.

Germany’s Federal Ministry for Economic Affairs and Energy, the Association of German Chambers of Commerce and Industry, and the Federation of German Industries are together pursuing five key objectives to jointly secure the competitiveness, resilience and robust growth of the mid-size sector.

“We have to find our niche if we want to survive in this world,” Zhang said.

When it comes to building the components for a strong and successful innovation ecosystem, he said, “There are no structural or geographic reasons why Canada can’t also try to succeed in this regard. There are other parliamentary democracies that have achieved these things.”

Yet in Canada, innovation “is sort of last on the list” and it’s often a tack-on, Zhang said. But “it’s no longer a nice-to-have. AI s not a science project [and] innovation is not a buzzword.”

“We have to tie innovation to tangible outcomes. People need to see innovation actually working for them.”

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