Innovation in Western Canada ISRN Policy Workshop, 2004

1. Innovation in Western CanadaISRN Policy Workshop, 2004 J. Adam Holbrook, P.Eng., Centre for Policy Research on Science and Technology, Simon Fraser University Vancouver, BC 1 CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology

2. What are the objectives for innovation policy • To identify who are the innovators and what are the innovations • To differentiate between inventors, innovators and implementers • To establish public sector infrastructure to support innovation

3. Innovation in Western Canada • Studies of innovation have been carried out at the national level, but : • Industrial demographics skew results towards Ontario and Quebec, and towards major population centres in other provinces, tending to mask regional effects • Studies of innovation are usually tied to areas, “poles”, where there are significant levels of industrial activity. But what happens in areas where manufacturing is not the predominant sector? • For example, BC is moving from a resource-based economy directly to a services-based economy; outside the Lower Mainland the key actors are SMEs, federal laboratories and community colleges 05/14/99 2

4. Our regional policy challenges • How to apply current scholarship to regional economies and specific clusters that are rooted in resource industries and/or are based on lifestyle considerations? • Is it possible for an economy to move from a resource-based, labour intensive economy, to a services-based, knowledge based economy? • Are western Canadian economies and societies measurably different from those in eastern Canada? Are OECD studies and surveys relevant? • What is the role of Canada in the Pacific Rim?

5. Factors affecting innovation in a resource-based economy • From CPROST studies, high-tech firms tended to view in-house R&D, customers and marketing as important sources of innovation. • Resource-based firms tended to regard suppliers, management and production departments as more sources of innovation, possibly reflecting their interest in improving processes rather than products. • Innovative firms have common characteristics regardless of industrial sector (e.g. training programs). • Availability of financing was not seen as a hindrance to innovation (confirming an earlier StatCan result).

6. Necessary vs. Sufficient Cluster Conditions • What are the necessary and sufficient conditions that support the formation of a cluster in Canada? Are these region specific? • Necessary (common features): university, labs, government agencies, private firms, human capital (?) • Sufficient (conditions for continued existence): at least one private firm with a global reach (Porter), manufacturing resources, active/interventionist public sector (?) • Potential test – Catastrophic loss of a node/actor - can a cluster survive without certain nodes?

7. Selected initial results • Clusters in Canada have a large public-sector institution at the centre • High-tech clusters in the west often produce IP rather than manufactured products: biotech, new media; Vancouver has a higher number of biotech “stars” than Montreal or Toronto • Biotech in Saskatoon is different: much of the knowledge required for innovation and production is acquired through straightforward market transactions. • Major differences in labour structure between primary wood products sector and secondary wood products

8. Business spending on R&D ($M)

9. Number of firms performing R&D, 1994 and 2000 (data courtesy The Impact Group) • While spending has increased, the number of firms has declined in most provinces – Quebec is the exception • What is the explanation?

10. FDI in Business R&D, 2001 • Foreign-financed R&D is a major service industry in the Cdn. knowledge-based economy • In AB and BC it is an important component (in 2001, $103M in AB, and $151M in BC)