Three provinces rank among North America’s 10 most competitive jurisdictions: new report

Three provinces – Ontario, British Columbia and Quebec – are among North America’s 10 most competitive and innovation-ready subnational jurisdictions, according to a new report from a U.S. think-tank.

The Washington, D.C.-based Information Technology & Innovation Foundation (ITIF) assessed how prepared 92 states/provinces in Canada, the U.S. and Mexico are to compete in today’s increasingly innovation-driven economy.

“A state’s competitiveness in the innovation economy stems from the extent of its involvement in the global economy, its capacity for innovation and its cultivation of a knowledge-based economy,” said the report’s authors, Stephen Ezell and Luke Dascoli. Ezell is vice-president, global innovation policy, at ITIF, and Luke Dascoli is an economic technology policy research assistant at the organization.

In Canada, the Macdonald Laurier Institute (MLI) think-tank collaborated on the report, providing its thoughts on data interpretation.

“Notably, for both human and physical capital, Canadian provinces tended to rank higher than American states,” Aaron Wudrick, director of MLI’s domestic policy program, told Research Money. “The real weaknesses are more cultural (business formation, patent filings) which are trickier challenges for policymakers to address.”

Some people see the cultural difference as a good thing, with Canadians not being Americans and having a different value system, Wudrick acknowledged. “But the reality is, if you’re looking at innovation, not having that . . . sort of world-beating attitude is going to put you at a disadvantage.”

The North American Subnational Innovation Competitiveness Index used 13 measures across three categories, adjusting for the size of each jurisdiction’s economy, to identify economic differences and quantify the extent to which each state’s/province’s economy is knowledge-based, globalized and innovation-ready.

Massachusetts, California, Ontario, Maryland and Washington were the top five North American states in the index. Canadian provinces were over-represented in the innovation economy, with British Columbia sixth overall, Quebec ninth, and Alberta 12^th – ahead of Connecticut, New York State and Michigan.

Ontario was the North American runner-up in foreign investment and has attracted national headquarters from tech giants such as Uber, Intel, LG and Samsung, said the report. Ontario also includes the Toronto-Waterloo corridor, Canada’s largest innovation hub with more than 15,000 startups and a world-leading quantum computing hub.

The report also ranked British Columbia highly due to its highly educated workforce and attractiveness to migrating knowledge workers. Vancouver is one of Canada’s strongest tech hubs and is home to nearly 100,000 tech workers, helping in the creation of R&D jobs and a high attraction of foreign direct investment.

Jurisdictions need to leverage each other’s competitive advantages

National innovation measures such as a country’s per-GDP expenditures on research and development and patents ranked the United States, Canada and Mexico in that order. However, the division of powers between federal and subnational governments enables states and provinces to experiment with a broader range of policy options to pursue different innovation strategies, the report notes.

It recommends that Canadian, American and Mexican jurisdictions leverage each other’s comparative advantages in different phases of innovation, to build North American global value chains that are cost-competitive with Asia.

“What was striking to me is that all jurisdictions in Canada did very well in the same areas and then weaknesses were also common,” said Wudrick. In terms of human infrastructure, one of Canada’s strengths is a skilled workforce, he added. “We just overall have a more educated population.”

When it comes to physical infrastructure, Canadian broadband coverage was rated extremely high.

“The good news is we have lots of the raw ingredients,” said Wudrick. “The things that we’re already doing well are kind of the things that I would put government in charge of – selecting migrants, building infrastructure, the education system.

“But in terms of the appetite for risk, I think Canada's a little bit behind the Americans on that . . . and so from a policy standpoint, that’s challenging,” he said. “If you don’t have the broadband, you just build more broadband but how do you create a culture where people are willing to start their own business – that’s a tougher nut to crack.”

However, there are some things, such as tax credits, that Canada can do to help overcome Canadians’ natural risk aversion, Wudrick suggested.

And at the micro level, there are bright spots for Canada when it comes to innovation, if governments look beyond computers and also focus on the potential in areas such as agriculture, life sciences and natural resources, he said.

“Canadians still have this image of the farmer in overalls, and the reality is some of these sectors are actually quite cutting edge,” said Wudrick. “In agricultural farming techniques and using technology to improve yields, Canada is a leader.”

From a policy standpoint, though, he is concerned that the federal government “is not focused on those things.”

“Part of it is just their orientation and part of it, frankly, is just a representation issue,” said Wudrick. “Sectors like agriculture are just not represented in this government. They don’t have anybody from those places in the government.”

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