Co-authored with Dr. Shiri Breznitz (University of Toronto). Published in The Hill Times, June 5, 2020. ---
In the midst of the COVID-19 pandemic and the shortage of personal protective equipment, ventilators, and related medical supplies, it has become commonplace to hear calls to reshore the manufacturing of these and far more items. As the global surge in demand for such products creates opportunities for new domestic suppliers, we should welcome this close-to-market opportunity that has put innovative domestic companies at the front of the line.
In so doing, however, let’s not get confused—“made in Canada” isn’t about replacing everything we currently import. Doing so is pure economic folly. With just over 37 million residents, our internal market for consumption is nowhere near big enough to allow us to maintain the prosperity we have become so accustomed to. Rather, “Made in Canada” is about prioritizing our ability to think, design, and produce high-value products that the rest of the world wants.
The rationale is simple: the most prosperous countries on Earth are those that trade the most. In particular, the residents of countries with high ratios of non-resource exports as a share of GDP, notably the Netherlands, Germany, Sweden and Denmark, all enjoy per capita incomes significantly higher than that of Canadians. What do they have in common? Their propensity to export is nearly 50 per cent greater than Canada’s.
Yet to export something of value, you need to hold the ability, that is to say, the rights to sell it. To borrow a trite phrase, “it’s the IP, stupid.”
As our work on the Government of Ontario’s Expert Panel on Intellectual Property chaired by Jim Balsillie highlighted, Canada has a significant IP rights deficit as compared to our global peers. Despite the fact that SMEs that hold IP rights are three times more likely to have expanded domestically and 4.3 times more likely to have expanded internationally, just two per cent of Canadian SMEs hold at least one. How are we to produce for, let alone sell to, the rest of the world, if we don’t own the rights to do so?
The response to the COVID-19 crisis by both Canadian researchers and Canadian industry should remove any doubt that we have the abilities and knowledge to invent solutions to this crisis and future ones. Moreover, that Canadian manufacturing companies have so quickly risen to the challenge of producing innovative solutions for testing, ventilators, and personal protective equipment serves to remind us that the capabilities that are required for long-term manufacturing innovation are still very much present. However, these positives won’t lead to long-term prosperity if we continue to ignore the need to better protect our investments and our knowledge base. With more than $1-billion now being invested by the federal government in COVID-19-related research, now is the time to start.
To do so, and to rebuild the chain of experience we require in our economy, we need to address several weaknesses in the ecosystem that connects knowledge and commercial activity in Canada. The findings of the Government of Ontario’s Expert Panel on Intellectual Property should be instructive.
First, we need to increase the pace at which we generate, protect and commercialize the knowledge that taxpayer funding contributes to. This will require enhanced IP education for our researchers, students and entrepreneurs, as well as enhanced access to the IP expertise required to effectively turn this knowledge into commercializable value.
Second, we should prioritize the translation of publicly funded IP into commercial outcomes for domestic firms. As one stakeholder highlighted during the expert panel’s public consultations, “Canada has become the world’s open-source factory for ideas.” Better enabling Canadian firms to scale and compete globally would be well served by more effectively connecting publicly funded IP to domestic firms through a provincial or national IP collective.
Lastly, given the rapidly shifting global political economy within which we operate, we need to rapidly diversify and deepen our trade engagement in the emerging and developing economies that are looking for the IP-rich goods and services in which Canada can lead globally, such as: medical technologies, life sciences, mining technologies, clean-tech and agri-tech.
COVID-19 has brought about an economic crisis that will hit many, if not most, Canadian households. While our immediate recovery is in the hands of our front-line personal, our longer-term economic recovery and the prosperity generations of Canadians will enjoy going forward, will be tied to our ability to recapture sovereignty over the ideas our most skilled develop and their translation into the production and sale to a world that needs solutions more than ever.
Dan Herman is a Toronto-based entrepreneur. Shiri Breznitz is a professor at the University of Toronto. They were members of the Government of Ontario’s Expert Panel on Intellectual Property.