Innovation is at the centre of the current economic policy discourse in Canada. Innovation drives productivity and with it, standards of living. Innovation is the process of using ideas, typically in the form of intellectual property (IP), to offer new or improved products or services for the same or lower overall cost of production.
The preoccupation with innovation is driven by a number of factors, of which two are most significant. First, productivity performance in Canada has been disappointing: in 2015, it stood almost exactly where it was 30 years earlier in 1985. Other indicators also suggest a malaise in innovation. Canadian inventors living outside the country appear to be more productive than those living in Canada, and Canada’s emigration appears to be more innovation-rich than its immigration. In recent years, the contribution of total factor productivity as the measure of innovation to Canada’s economy has been zero or negative.