Canada’s innovation strategy lacks international dimension, says ITAC report

Guest Contributor
November 18, 2002

Canada’s innovation strategy lacks an international context and fails to account for the impact of an increasing number of nations adopting similar approaches to growing their economies, argues a comprehensive new paper prepared for the Information Technology Association of Canada (ITAC). The paper contends that the federal government has developed an innovation strategy largely isolated from the context of global competition, and has not dealt with how the nation will achieve the ambitious international rankings it has established as the strategy’s benchmarking goals.

The paper was written by Dr Charles Gastle, an international trade law and policy expert and associate with the Univ of Toronto’s Este Centre for Law and Economics in International Trade. Entitled Innovation and Entropy Within the Global Economy: Accelerating in a “Red Queen” Game, Gastle zeroes in on a possible paradox facing Canada’s innovation strategy which he dubs the “Red Game”.

“The quicker the pace of innovation, the faster the erosion of existing competitive advantage and one must run harder simply to stand still. This is the “Red Queen” game in which products co-evolve, with those that fail to do so progressively falling behind,” states the paper.

Gastle identifies two types of innovation :radical innovations, “an emergent process that is serendipitous, unpredictable, and vulnerable to many factors including business cycles”, and, process improvements, most often conducted by major corporations through routine R&D to exploit existing technology. At the heart of Gastle’s thesis is the concept of entropy and its origin in thermodynamics as applied to economic theory. In essence, entropy represents the erosion in temporary competitive advantage through the voluntary or involuntary sharing of information.

ITAC has endorsed Gastle’s findings, arguing that it indicates that Canada’s innovation policy requires further work before being implemented.

“Canada’s innovation policy must recognize the forces of international competition and the need for international collaboration as innovation systems cannot be confined within national borders,” states ITAC president and CEO Gaylen Duncan. “Canada’s innovation agenda needs further analysis and better strategic thinking in order to achieve the international ranking goals it has set out.”

“Developing innovation policy in a turbulent period is a difficult proposition.. Canada may have to look beyond its borders and integrate its innovation systems into those that exist in North America, Europe and Asia. Those developing public policy will have to investigate what the implications of such integration are for the Canadian objective of increasing the productivity of Canadian workers.”

— Innovation and Entropy within the Global Economy

ITAC has been at the forefront of the widespread analysis being subjected to the federal innovation strategy by academics and business associations. The Gastle paper is just the latest policy document produced or commissioned by ITAC, and follows an historical analysis of Ottawa’s telecom cluster (R$, October 21/02).

The Gastle paper is the most academic in nature, but its forceful argument for a more international approach to innovation is a valuable addition to the debate. It cites Finland and Japan as examples of how the international context is not only acknowledged but embraced from a policy perspective. The result has been the creation of diffusion channels to allow those countries to keep pace with the rapid pace of global innovation, building links for technology clusters across national boundaries.

“By studying the diffusion network and the manner in which innovation occurs, one should be able to identify gaps that might exist within a national innovation systems,” states the report.

Gastle also notes the increasing importance of innovation reconnaissance to innovation policy and suggests that the Department of Foreign Affairs and International Trade and Export Development Canada should play a more direct role in policy development FMI:


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