P3 collaboration essential to solving the productivity gap – Canadian Government Executive

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September 17, 2012

P3 collaboration essential to solving the productivity gap

It can happen, and it’s noteworthy when it does. Government, business and academia can work in concert to meet important economic and social needs, which is what is happening through a new $210-million research and development network in Ontario.

The new network combines federal and provincial government investment with researchers from a consortium of seven universities, led by the University of Toronto and Western University, and IBM to focus on solving the most pressing problems within our cities, healthcare, energy and water management systems. The centre will help build home-grown software and engineering skills to accelerate the commercialization of Canadian-led research and development and act as a catalyst to help Canada further excel in global markets.

Public-private sector collaboration initiatives like this are essential because Canada has been sliding down the global productivity rankings. According to the Conference Board of Canada, the Council of Canadian Academies, and several other respected organizations, Canada has been going the wrong way in this regard for most of the past two decades. An OECD report released in June 2012 identified “sluggish productivity growth as the main long-term challenge facing Canada’s economy.”

Canada has lagged behind the major economies of the world in raising productivity because of under-investment in research and development, as well as an under-investment in machinery and equipment, specifically, investment in information and communications technology (ICT). As a result, Canadians born today are at risk of being the first ever with a lower standard of living than their parents.

The cause and effect is straightforward. Lack of R&D chokes innovation, which stymies productivity because companies aren’t applying innovative processes and technologies. Faltering productivity, especially in today’s globally competitive world, results in less competitive companies and a less competitive marketplace. Markets that aren’t competitive don’t thrive. We end up with higher unemployment, lower tax revenues, and an overall degradation in standard of living.

Of course there are complexities. For decades the relatively weak Canadian dollar hid slipping productivity and countries such as China, Brazil and other emerging economies weren’t yet major competitive threats. Without a pressing need, Canadian businesses in all sectors systematically under-invested in ICT.

A cynic might argue that Canada, reliant on its resource-based economy, lacks the critical mass of domestic business to support a meaningful R&D culture.   

However, the top private sector spenders on R&D in Canada continue to execute several important global mandates that have returned significant benefits to this country. These companies spend hundreds of millions of dollars on R&D within Canada, and generate billions of dollars worth of exports to the rest of the world.

Of course, attracting others to that kind of investment is a chicken-or-egg proposition. There are many strong examples of Canadian innovation at play, but to drive that, Canada needs more highly-educated, knowledge workers who are attracted to or stay in places where their innovation talents are most valued. Projects like this new research and development network will serve as magnets for the world’s best R&D talent. These kinds of investments create highly-skilled jobs and serve as innovation clusters with ancillary benefits beyond new employment and investment.

This kind of collaborative work is growing in global markets. There are several instances where other countries are collaborating across sectors to help drive improvements. Examples are extensive around city systems – London, Stockholm, Madrid, New York, Singapore; in Ireland they have focused on Galway Bay to learn more about water systems; in Israel and Australia they are collaborating across R&D focus areas that they believe are key to their future.

Assembling the public-private sector partnerships required to address Canada’s challenges will facilitate new made-in-Canada commercial solutions and act as a catalyst to help Canada successfully address its innovation and productivity deficit.

In crafting innovation policy, everyone has a role to play. Governments are continuing to make strategic investments in skills, R&D and innovation, and business and industry are being asked to step up and help turn around Canada’s innovation and productivity performance. Every sector must continue to do its part. By working collaboratively, we can move Canada back up the league table of global competitiveness.
 

John Lutz is president of IBM Canada.

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