Canada

The artificial intelligence market in Canada is still in its early stages but is growing rapidly and becoming increasingly competitive. At this juncture, there is no clear evidence of market failure, substantial barriers to entry, or exclusionary practices that would necessitate intervention.

Canada needs a productivity commission. But instead of emulating Australia’s model, which is driven by orthodox neoclassical economics, it should take guidance from “productionists” with a deep understanding of firm, industry, and technology dynamics.

On the Australian Productivity Commission’s watch, productivity growth in Australia over the last two decades is at its lowest for 60 years, with accompanying real wage stagnation.

Watch now for ITIF's launch event for the Centre for Canadian Innovation and Competitiveness, an Ottawa-based ITIF affiliate focused on tackling these issues. The event featured an expert panel discussion on a new report from the Centre examining the how and why of Canada’s performance on key measures of productivity, innovation, and competitiveness.

Canada faces unprecedented challenges in innovation, productivity, and competitiveness. The first step in addressing them is to develop a clear understanding of the Canadian economy’s underlying structure and performance in each area. Policymakers must then tailor strategies for specific industries and technologies instead of focusing on principally on macro factors.

The word “innovation” appears a total of 97 times and “productivity” 63 times in Canada’s 2024 federal budget, and many measures targeted towards innovation and productivity reflect that focus. However, some of the funds being disbursed are tangential at best to actually addressing Canada’s declining productivity and supporting Canada’s innovation ecosystem.

The changes two bills are making to reduce market concentration in the Canadian economy pose grave risks to the future of the innovation that is essential to keeping Canada’s innovation economy from declining even more.

By changing the tax credit to be quasi-incremental, unifying the rates between small and large businesses, and simplifying the filing process, the government will be able to incentivize private R&D spending more effectively.

Instead of promoting and supporting Canadian content, the Online Streaming Act passes costs on to consumers. The government needs to modernize the way it thinks about supporting Canadian content and leverage technological innovation instead of fighting it.

If the proposed the proposed Artificial Intelligence and Data Act (AIDA) is implemented as is, Canada may not be able to fully realize the economic benefits that AI will bring.