Assignment 1: Canada’s Productivity Problem

In the December 2014 publication of the Canadian Chamber of Commerce’s: Manufacturing Innovation (2014), The Global Competitiveness Report issued by the World Economic Forum states that Canada ranks 22nd in the “capacity for innovation” category, falling behind countries like Qatar and Malaysia. Executives are asked the question “In your country, to what extent do companies have the capacity to innovate?”, and are ranked based on their responses. (Manufacturing Innovation: Driving Canada’s biggest sector through disruptive technologies p.3, 2014)
When Canada is even mentioned alongside countries such as Qatar and Malaysia in terms of productivity or innovation, that raises several questions, one of which can be “How can Canada improve productivity?” One solution can be to increase research and development spending. Research suggests that a sustained increase of 0.1% in Business Enterprise R&D to GDP spending would eventually translate to a 1.2% higher GDP per capita. These results were found from a multi-country study conducted by the OECD, as summarized by the Conference Board (2015) website. As the website suggests, to improve Canadian innovation and productivity, business leaders must realize the risks associated with lack of spending on R&D are greater than if they actually just spent money researching and developing innovations. Canada is 15th among 16 peer countries in this case, receiving a “D” grade, spending just below 1% of their GDP on research and development initiatives.

By having more of a focus or emphasis on research and development within an organization, this can promote a culture of innovation, where employees and businesses as a whole are not afraid to take calculated risks and try to improve their own processes or products, which can lead to significant increases in revenue, or decreases