From Polite to Powerful

Canada's Shot at Global Innovation Glory

Photo by Morgan Petroski

Okay, so Canada's been playing the role of the well-mannered guest at the global economic potluck for a while now. We bring the polite smiles and maybe a decent dish (butter tarts, anyone?), but when the real games start, we're often just watching from the sidelines. But hey, with the world in a proper kerfuffle, tariffs flying around like angry wasps and enough global jitters to make your teeth chatter, maybe, just maybe, it's our time to step into the spotlight. Can we ditch the "nice" act and become truly "necessary"? I'm betting we can.

The Good, The Bad, and The "Could Be Better" of Canada's Economy

Alright, let's not pretend the Canadian economy is a total disaster. We actually managed to keep inflation somewhat in check throughout 2024, which is a small victory in this topsy-turvy world. And jobs? We've been pumping them out, with wages even managing to keep pace with those ever-climbing prices. Our debt situation? Surprisingly, not the absolute worst in the G7 gang.

But hold your horses. Before we start throwing a national "we're doing okay" parade, let's face the moose in the room, affordability. It's still a major pain in the toque for Canadians, and 2025 isn't exactly screaming "relief." Immigration, which has been giving our growth numbers a bit of a boost, is also expected to take a breather. And here's the real kicker: our productivity is… well, let's just say we're running on the hamster wheel, not exactly inventing a better wheel. Plus, that household debt? Crikey. It's like we're all walking a financial tightrope with a strong wind blowing.

Then there's our buddy down south. With Trump back in the Oval Office, the threat of tariffs on our exports is hanging over our heads like a persistent rain cloud. And considering about 80% of our exports head south, that's a whole lotta potential economic drizzle. That's like relying on your neighbour for your entire Wi-Fi – convenient until they decide to change the password. Even the mere thought of these tariffs is making businesses and consumers twitchy, leading to some serious "should we or shouldn't we?" moments on investments and spending. We've slapped some retaliatory tariffs back in the past, but that just means everyone ends up paying a bit more for their stuff. Good times, eh?

We're tough, sure, but our long-term growth is about as stable as a toddler with a sugar rush, all thankst o our sluggish productivity and our slightly unhealthy obsession with the US market. Time to branch out, folks.

Sector Performance and Growth Potential

Some sectors showed a bit of get-up-and-go in early 2025, like mining, oil & gas, and even a bit of manufacturing. But guess what? Those are often the very sectors that would get walloped by those pesky US tariffs. Looking ahead to 2025-2026, the "fastest growing" industries are projected to be things like glasses and contact lens manufacturing, auto parts wholesaling, market research, and… gambling. Interesting, perhaps, but hardly the kind of groundbreaking stuff that screams "global innovation leader," right?

Glasses Manufacturing

8.2% projected growth

Auto Parts Wholesaling

7.5% projected growth

Market Research

6.8% projected growth

Gambling

6.3% projected growth

Mining

5.7% projected growth

Oil & Gas

5.2% projected growth

We can't just keep digging stuff out of the ground or crossing our fingers for a lucky spin of the roulette wheel. We need to get serious about the future-focused, innovation-heavy hitters like clean tech, AI, and biotech.

Making Friends (and Maybe Some Power Moves): Canada's Alliance Strategy

Here's a bit of good news, eh? Canada's not exactly a hermit on the world stage. We've actually got 15 free trade agreements with 51 countries, giving us a potential customer base of around 1.5 billion people. That includes some pretty big players like the US (thanks to CUSMA), Europe (via CETA), and a bunch of countries in the Asia-Pacific (all thanks to CPTPP).

We've also got a surprising number of science and tech agreements with countries all over the map, China, India, Japan, you name it. And programs like Alliance International help our brainy university researchers team up with other brainy folks across the globe.

There are some countries that look particularly promising for deeper collaborations, especially those in the EU like the Netherlands, Germany, and the UK, as well as innovation dynamos like Finland, Israel, and South Korea. We've even got our sights set on building stronger connections with countries in Africa.

15 Free Trade Agreements

Covering 51 countries and 1.5 billion potential customers

Science & Tech Partnerships

Agreements with major innovation leaders worldwide

Academic Collaboration

Programs like Alliance International connecting researchers globally

We've got a solid foundation of international buddies already. Now we need to actually use those connections, especially with the innovation frontrunners in Europe and Asia. And let's not forget the growing potential brewing in Africa.

Canada's Foreign Policy Priorities

Our foreign policy for 2024-2025 is all about trying to shape the international rulebook and waving the flag for democracy and human rights. That includes keeping our relationship with the US strong (even if it feels a bit like a rollercoaster sometimes). We're also trying to get closer to the Indo-Pacific, support Ukraine, deepen our ties with the EU, and keep a watchful eye on the Arctic.

Speaking of tricky relationships, things with the US are... well, let's just say complicated, mostly thanks to the tariff threats and the general "will they or won't they?" of economic arm-twisting. Our relationship with China? Let's just say it's gone from a friendly "你好" to a slightly more tense "你好... maybe we need to talk" with both sides throwing tariffs around.

But our relationship with the EU? Now that's a different kettle of fish. Strong, based on shared values, and we actually cooperate on a whole bunch of stuff, from trade (thanks, CETA!) to climate action (Green Alliance) to all things digital (Digital Partnership). There's even been some chatter about Canada maybe, just maybe, joining the EU club down the road. Stranger things have happened, right?

US Relations

Complicated by tariff threats and economic uncertainty

• 80% of exports go to the US

• Tariff threats creating investment uncertainty

• History of retaliatory measures

China Relations

Increasingly tense with mutual tariffs

• Agricultural sector facing Chinese tariffs

• Diplomatic tensions increasing

• Trade relationship under strain

EU Relations

Strong partnership based on shared values

• CETA providing trade framework

• Green Alliance on climate action

• Digital Partnership fostering tech cooperation

Given the current global state of affairs, we need to lean heavily on our strong relationship with the EU. And maybe explore some deeper friendships with other like-minded nations to avoid putting all our maple syrup in one Uncle Sam-shaped bottle.

Unleashing Our Inner Genius: Clean Tech Innovation

Here's where things get interesting, eh? Canada actually has some serious chops in the industries of the future. We're ranked 2nd on the Global Cleantech Innovation Index for 2024. That's right, second! The global clean tech market is about to explode, so this is a massive chance for us to shine. We're already committed to cutting emissions and investing in clean technologies. And global trends in 2025 are all about renewable energy, the circular economy, and tech-driven sustainability.

2nd

Global Ranking

On the Global Cleantech Innovation Index for 2024

$13.3B

Market Size

Of Canada's clean technology sector

30%

Growth Potential

Projected annual growth in global clean tech market

The clean technology sector represents one of Canada's greatest opportunities to establish global leadership. With our abundant natural resources, strong research institutions, and growing government support, we're well-positioned to become a clean tech powerhouse. The global transition to sustainable energy and circular economy principles aligns perfectly with our existing strengths and values.

We're sitting on a potential goldmine in clean tech. Now we need to stop being so darn polite andac tually dominate this sector. That means fixing our weaknesses and riding those global trends like a champion dogsled team.

Artificial Intelligence: Canada's Hidden Strength

We're also surprisingly good at artificial intelligence. We were the first country to have a national AI strategy. The government keeps throwing some serious loonies at the AI sector to keep us ahead of the game. AI could seriously boost our GDP and make us way more productive. Global trends in 2025 show AI getting even more woven into our work lives, with smarter AI systems and more human-AI teamwork. The catch? We're a bit slow on the uptake when it comes to businesses actually using AI, and we struggle to turn all that AI research into actual, sellable stuff.

First National AI Strategy

Canada pioneered government-led AI development with the Pan-Canadian Artificial Intelligence Strategy, becoming the first country to create a comprehensive national approach.

World-Class Research

Home to leading AI research institutions and talent, including pioneers like Geoffrey Hinton and Yoshua Bengio who have revolutionized deep learning.

Growing Investment

Increasing government and private sector funding has created thriving AI ecosystems in Toronto-Waterloo, Montreal, and Vancouver.

Adoption Challenges

Despite our research excellence, Canadian businesses remain slow to implement AI technologies, creating an innovation-adoption gap.

Canada's "Digital Ambition" plan aims to modernize our tech and use data smarter. We're also pouring some serious cash into AI infrastructure and trying to get businesses to jump on the AI bandwagon. AI is already popping up in finance, healthcare, agriculture, and manufacturing. But a lot of smaller businesses are still scratching their heads about AI, lacking the know-how and the resources to get started.

The government does offer some support programs for research and development, like the Innovation Employment Grant and NRC IRAP. But is it enough to really move the needle?

We've got the digital strategy, but we need to give our small and medium-sized businesses a real helping hand to get on the tech train. Tailored support and easier access to the right resources are key to making this happen.

Biotech: Canada's Scientific Frontier

And let's not forget biotech. Canada's got a solid biotech sector with a history of big discoveries and ongoing government funding. We've got biotech hubs popping up in Montreal, Toronto, and Vancouver. Global biotech trends for 2025 include personalized medicine, gene therapies, mRNA magic, and AI helping to find new drugs. We're particularly strong in areas like diabetes, stem cells, and even forestry biotech. Who knew we had such green thumbs in the lab?

Personalized Medicine

Canada is advancing treatments tailored to individual genetic profiles, particularly in cancer therapies and rare diseases.

Stem Cell Research

Canadian researchers have made groundbreaking discoveries in stem cell science, positioning us as global leaders in regenerative medicine.

Diabetes Innovation

From the discovery of insulin to modern continuous glucose monitoring systems, Canada continues to lead in diabetes research and treatment.

Forestry Biotechnology

Leveraging our natural resources, Canadian scientists are developing sustainable bio-products and advanced materials from forest resources.

The biotech sector represents a significant opportunity for Canada to leverage our strong scientific foundation and create high-value products and services. With the right support and commercialization strategies, we could transform our research excellence into global market leadership.

Innovation with a Heart: Social Innovation for Economic Gain

Canada's got a growing social innovation scene with organizations tackling all sorts of tough societal problems. Social innovation is becoming recognized as a super important way to build a fairer and greener future for everyone.

The government's even got a Social Innovation and Social Finance Strategy with programs like the Investment Readiness Program and the Social Finance Fund. Government policies can really help social innovation take off through supportive regulations and financial incentives. And public-private partnerships can be a powerful tool for driving social progress.

Identify Social Needs

Recognize community challenges requiring innovative solutions

Collaborative Design

Bring together diverse stakeholders to create solutions

Implementation

Test and deploy solutions with community involvement

Scale Impact

Expand successful innovations to benefit more communities

We've got a good start with social innovation, but we need to seriously ramp up our efforts and connect them more directly to our national innovation goals. More teamwork and targeted support are crucial here.

Strengthening Social Innovation Infrastructure

To really give social innovation a boost, we need government policies that make it easier for social enterprises to thrive. That means better access to different kinds of funding and support for sharing knowledge and best practices. Maybe even paying for actual results to really incentivize social innovators.

Community-led initiatives are super important for tackling local needs and using the knowledge that exists right in those communities, including Indigenous wisdom. And while public-private partnerships can be great for bringing innovation to public services, we need to make sure they're accountable and manage the risks properly. We've seen some wins and some losses with these partnerships in areas like housing and healthcare.

Government Support

• Social Innovation and Social Finance Strategy

• Investment Readiness Program

• Social Finance Fund

• Regulatory frameworks that enable innovation

Community Initiatives

• Grassroots problem-solving approaches

• Integration of Indigenous knowledge

• Local expertise and context-specific solutions

• Building community capacity and resilience

Public-Private Partnerships

• Combining resources and expertise

• Sharing risk and responsibility

• Improving public service delivery

• Creating sustainable business models

We need a mix of government support, empowered community initiatives, and smart public-private partnerships to drive both social progress and economic growth. It's all connected, you know?

Playing the Global Game: Canada's Defence Capabilities

Canada's defence capabilities are a key part of our national security and our ability to have a say on the world stage. Our defence spending in 2024-2025 is around 1.37% of our GDP. That's an increase, but still a bit shy of NATO's 2% target, which we're aiming for by 2032. We're currently ranked 28th in global military strength.

We're a founding member of NATO and actively involved, even leading NATO's battlegroup in Latvia. We're also co-founders of NORAD with the US, keeping an eye on North American airspace.

Defence Spending

Percentage of GDP (2024-2025)

NATO Target

Goal to reach by 2032

Global Ranking

In military strength index

Canada's reportedly talking to the EU about buying more defence equipment from them to reduce our reliance on the US. Smart move, given the current unpredictable climate with our southern neighbour. Our renewed defence policy, "Our North, Strong and Free," promises increased spending and a focus on Arctic security and cybersecurity.

We're committed to our defence alliances, but we probably need to invest a bit more in our military to really boost our national security and be a more effective ally.

Diversifying Defence Partnerships

Diversifying our defence partnerships, especially with the EU, and focusing on Arctic and cyber security could really strengthen our national security and give us a bigger voice globally. This strategic shift comes at a critical time when traditional alliances are being tested by changing geopolitical dynamics.

Reduce US Dependence

Diversify defence equipment sources

Strengthen EU Partnerships

Deepen military cooperation with European allies

Arctic Security Focus

Protect Canada's northern sovereignty

Enhance Cybersecurity

Build resilience against digital threats

By strengthening our relationships with European defence partners, we can not only reduce our dependence on a single supplier but also gain access to different technologies and approaches. This diversification strategy aligns with our broader foreign policy goals of building stronger ties with the EU while maintaining our important relationship with the United States.

Diversifying our defence partnerships, especially with the EU, and focusing on Arctic and cyber security could really strengthen our national security and give us a bigger voice globally.

Canada and the United Nations: Our Global Voice

As a founding member of the UN, Canada has been a strong proponent of international cooperation. Our nation has made significant contributions throughout the organization's history, particularly in peacekeeping initiatives and the development of the Universal Declaration of Human Rights.

While Canada has served on the UN Security Council multiple times in the past, our recent candidacies have been unsuccessful, suggesting the need for a strategic realignment. Fortunately, our foreign policy objectives align well with many UN priorities, including human rights advancement and sustainable development goals.

Founding Member

Canada helped establish the UN and shape its founding principles

Peacekeeping Legacy

Historical leadership in international peacekeeping operations

Human Rights Advocacy

Contributed to the Universal Declaration of Human Rights

Security Council Experience

Previous terms on the UN Security Council, though recent bids unsuccessful

Our approach to the UN requires greater strategic focus, concentrating on areas where Canada can deliver meaningful impact. By strategically aligning our diplomatic initiatives with our innovation agenda, we have the opportunity to enhance both our influence and effectiveness in the global arena.

We support the UN, but we need to figure out how to be more influential there, especially on issues like innovation, economic development, and security.

LNG: Boom or Bust? A Case Study in Global Competition

The world's going to need a lot more liquefied natural gas (LNG) by 2040, mostly thanks to Asia's growth and the need to cut emissions in heavy industry. While the US is the top LNG exporter, Canada's just about to join the party with the LNG Canada project starting up in mid-2025.

We've got tons of natural gas and a shorter shipping route to Asia than the US Gulf Coast, which could give us a real leg up. Plus, our LNG projects are trying to be greener by using electricity and renewables. The economic benefits for Canada could be huge , GDP growth, jobs, and more government revenue.

Canadian LNG Projects Pipeline

LNG Canada Phase 1

• Location: Kitimat, BC

• Status: Near Complete

• Start Date: Mid-2025

• Capacity: 14 MTPA

Woodfibre LNG

• Location: Squamish, BC

• Status: Under Construction

• Start Date: 2027

• Capacity: 2.1 MTPA

Cedar LNG

• Location: Kitimat, BC

• Status: Construction Started

• Start Date: Late 2028

• Capacity: 3 MTPA

LNG Canada Phase 2

• Location: Kitimat, BC

• Status: Proposed

• Start Date: Early 2030s

• Capacity: 14 MTPA

Ksi Lisims LNG

• Location: Pearse Island, BC

• Status: Regulatory Process

• Start Date: Early 2030s

• Capacity: 12 MTPA

We have a real shot at becoming a major LNG player, thanks to our resources, location, and growing focus on cleaner production. We just need to make sure we can compete on cost and get these projects done efficiently.

The LNG Challenge: Competition and Environmental Concerns

But here's the catch: a lot of new LNG supply is coming online starting in 2025, which could lead to an oversupply and tougher competition. We'll be up against established giants like the US, Australia, and Qatar.

And let's not forget the environmental side of things. While LNG is cleaner than coal, it's still a fossil fuel and contributes to emissions, especially methane leaks. Fracking and pipelines also raise environmental eyebrows. Some experts even worry that investing too much in LNG could slow down the shift to truly renewable energy.

Market Challenges

• Potential oversupply starting in 2025

• Competition from established exporters

• Price volatility in global markets

• High capital costs for new projects

Environmental Concerns

• Methane leaks during production

• Environmental impact of fracking

• Pipeline construction disruption

• Potential to delay renewable transition

Canadian Advantages

• Abundant natural gas reserves

• Shorter shipping route to Asia

• Cleaner electricity for processing

• Strong environmental standards

While LNG offers economic opportunities and could be a transition fuel for some, we need to carefully consider its long-term viability and environmental impact, especially in a world moving towards cleaner energy. We need a balanced approach that aligns with our climate goals.

Canada's Playbook for Global Innovation Domination: The Real Talk

Alright, enough with the pleasantries. Here's the straight goods on how Canada can become a global innovation leader:

Seriously Boost Productivity

Invest in skills, infrastructure, and tech adoption

Diversify International Partnerships

Deepen connections with innovation leaders globally

Go Big on Future Industries

Focus resources on clean tech, AI, and biotech

Scale Up Social Innovation

Support initiatives that solve problems and boost the economy

Strengthen Defence Capabilities

Meet NATO targets and diversify defence partnerships

These strategic priorities represent a comprehensive approach to transforming Canada from a polite participant to a powerful player on the global stage. By focusing our efforts in these key areas, we can leverage our existing strengths while addressing our critical weaknesses.

Boosting Productivity: The Foundation of Innovation

Productivity isn't just about working harder—it's about working smarter. Canada needs to make significant investments in skills development, digital infrastructure, and technology adoption across all sectors of the economy. This is particularly important for small and medium-sized businesses that form the backbone of our economy.

Skills Development

Invest in education and training programs that prepare Canadians for the jobs of the future, with a focus on digital literacy, advanced manufacturing, and innovation management.

Digital Infrastructure

Expand high-speed internet access across the country, especially in rural and remote areas, to ensure all businesses can participate in the digital economy.

Technology Adoption

Create targeted programs to help businesses, especially SMEs, implement new technologies that can dramatically improve their productivity and competitiveness.

Regulatory Efficiency

Streamline regulations and reduce administrative burdens that slow down innovation and business growth without compromising standards.

By addressing these fundamental productivity challenges, we can create a stronger foundation for innovation across all sectors of the Canadian economy. This will not only make our traditional industries more competitive but also provide the resources and capabilities needed to excel in emerging fields.

Diversifying International Partnerships: Beyond the US

While the United States will always be an important partner for Canada, our current level of dependence creates significant vulnerabilities. We need to strategically diversify our international relationships, with a particular focus on innovation partnerships that can help drive our economic transformation.

Strategic Focus

Target relationships that align with our innovation priorities

Deepen EU Connections

Leverage CETA and shared values for closer cooperation

Expand in Indo-Pacific

Build stronger ties with innovation leaders like Japan and South Korea

Explore African Opportunities

Develop partnerships with emerging innovation hubs across Africa

Strengthen Multilateral Engagement

Take a more strategic approach to international organizations

By diversifying our international partnerships, we can reduce our vulnerability to policy changes in any single market while gaining access to new ideas, technologies, and talent. This approach will require sustained diplomatic effort and a willingness to invest in building relationships that may not yield immediate returns but will strengthen our position over the long term.

Focusing on Future Industries: Clean Tech, AI, and Biotech

Canada has demonstrated significant potential in several industries of the future, particularly clean technology, artificial intelligence, and biotechnology. To capitalize on these opportunities, we need a coordinated national strategy that supports research, commercialization, and the development of innovation ecosystems in these fields.

Clean Technology

Build on our #2 global ranking to become a clean tech superpower, focusing on renewable energy, sustainable materials, and carbon capture technologies.

Artificial Intelligence

Translate our research leadership into commercial success by accelerating AI adoption across industries and supporting the growth of Canadian AI companies.

Biotechnology

Leverage our strengths in medical research, agriculture, and forestry to develop innovative biological solutions to global challenges.

Advanced Manufacturing

Integrate digital technologies, robotics, and new materials to revitalize our manufacturing sector and create high-value products.

Success in these industries requires more than just research excellence, it demands a supportive ecosystem that includes risk capital, specialized talent, regulatory frameworks that enable innovation, and strong connections between academia, industry, and government. By focusing our resources and attention on these high-potential areas, we can establish Canada as a global leader in the industries that will shape the future economy.

The Bottom Line: Time to Get Serious

Canada has the potential to be a real global innovation leader. We've got the smarts, some of the resources, and a reputation for being… well, agreeable. But agreeable doesn't always win the day. It's time to be strategic, bold, and maybe even a little bit assertive in pursuing our innovation goals. The world's changing fast, and if we play our cards right, Canada can go from being the polite guest to the one hosting the party. Let's get to it.

The chart shows Canada's steady improvement in the Global Innovation Index rankings from 2020 to 2024, moving from 17th to 14th place. While this progress is encouraging, our ambitious targets for 2025 and 2030 will require accelerated efforts and a more strategic approach to innovation policy. By implementing the recommendations outlined in this document, we can achieve these targets and establish Canada as a true global innovation leader.

References

The following sources were consulted in the preparation of this document:

Government Publications

• Statistics Canada. (2023). Research and Development in Canadian Industry. Government of Canada.

• Natural Resources Canada. (2023). LNG Export Opportunities and Environmental Considerations. Government of Canada.

• Department of National Defence. (2023). Defence Investment Plan 2023-2028. Government of Canada.

• Innovation, Science and Economic Development Canada. (2023). Canada's Innovation and Skills Plan: Progress Report. Government of Canada.

Research Institutions

• Global Innovation Index. (2024). Canada Country Profile 2020-2024. World Intellectual Property Organization.

• Conference Board of Canada. (2023). Innovation Report Card: How Canada Performs. Conference Board of Canada.

• Canadian Council of Academies. (2022). Powering Innovation: Improving Access to and Use of Clean Energy Technologies. Council of Canadian Academies.

Organizations & Associations

• CIFAR. (2023). Pan-Canadian AI Strategy Impact Assessment. Canadian Institute for Advanced Research.

• BIOTECanada. (2023). The Canadian Bioeconomy: Status and Future Directions. BIOTECanada.

• United Nations Association in Canada. (2022). Canada and the UN: Rebuilding Multilateralism. UNA-Canada.