1, September 2026

In 2026 THECIS celebrates its 25th anniversary. To celebrate this, we are running a 25th Anniversary Blog series where we ask prominent individuals to write a blog to provide perspective on a topic related to innovation and entrepreneurship. This Blog is by Dr. Robert Atkinson who was born in Calgary and was the founder of the Washington, DC-based think tank, the Information Technology and Innovation Foundation.

Blog 111:  Comfortable Decline: How Canada Chooses Stability Over Dynamic Prosperity.

Canada’s economic performance has been disappointing. Much of its manufacturing, including motor vehicles, has been lost. Productivity and per-capita income growth has stagnated and now lags significantly behind the U.S. Its global competitiveness outside the natural resources resource sector is abysmal. And its innovation levels are low by advanced nation standards. But to use an American phrase, other than that Mrs. Lincoln, how did you enjoy the play?

It’s not as if these problems are not known. Indeed, there is a cottage industry of analysis of the proximate causes of the problems: too little capital investment, too little university technology commercialization, limited government support for R&D and low levels of business R&D, few high-growth startups, lower levels of venture capital and more.

But these assessments just shift the goal posts. Why are these problems not seriously addressed? To be sure, there is no lack of assertions as to the causes of them, but most simply wrong, offered to achieve a political goal or supporting a strongly held ideology.

Case in point, Canada has too much industry concentration. The left loves this explanation because it provides backing for its anticorporate agenda. But the evidence for it is severely lacking.

Another cause is the damn Americans, whose tech giants squash Canadian-owned companies. Like the monopoly excuse this is equally lacking in evidence. Many other so-called causes likewise miss the mark.

But some identified causes do more validity. These include provincial trade barriers and an overreliance on small firms that invest less in R&D and are less productive. And the plethora of regulations that limit dynamism and growth, including long project approval times, a bankruptcy regime that favors creditors, and a labor market that limits needed layoffs.

So, why has Canada not responded with a greater sense of urgency? Why have policy responses been so anemic? One would think that Canadians just don’t care.

One factor is that much of the analysis of Canada’s techno-economic problems and challenges are relatively facile and, in many cases just wrong. For example, the high college education rate illusion. Sure, lots of Canadians go to college, but doesn’t really have an impact on technology-led growth, especially if few graduates are in STEM fields. Another is the green industry delusion that holds that Canada can revitalized by green industry. But green energy will never be big, its growth will come at expense of other in Canadian energy industries, and there is no reason to assume that Canada can succeed in this highly competitive industry. But it sure sounds good and indicates virtue signaling.

Better and deeper analysis of problems and causes; coupled with open, robust and civil debate, will go a long way to help steer policy more in the direction of solving critical problems with the right solutions.

But there is more at work than just limited analysis wrapped with ideological blinders. One factor appears to be the lack of a strong set of forces pushing for Canadian technology-based growth and transformation. The Canadian tech sector is relatively small and compared with the United States and it spends very little to shape policy. Banking and natural resources take up most of the policy oxygen. To the extent that there are voices for innovation, they come from universities whose sole goal is more government funding for basic research, including in the social sciences.

And most Canadian think-tank, academic, civil-society, and union voices are technology and business skeptics, if not downright opponents. Pro-innovation and pro-industry voices are limited, in part because Canadian business lobbying is underfunded.

On top of that the Canadian political economy is much closer to the EU’s than America’s, as it sees distribution and social/demographic issues as more important than growth and innovation. When the coalition for distribution is stronger than the coalition for growth, it should be no surprise that more focus will be on the former than the latter.

Making this even worse, Canadians value a stable life. Provincial income equalization. Limits on layoffs. Broad benefits. Regulation that tilts too much toward risk reduction at the expense of innovation. Entrepreneurs who exit early and live the good life off the proceeds. To those who say that Canadian culture is not part of the problem, I would invite them to do a bit more soul searching

And then there are the structural political challenges. The Canadian political system gives too much power to the provinces, making strong national action hard. And the Canadian state is cautious, largely the result of Canadian history and dependency on the shield of the United States. Canada never faced the kind of existential issues of states like Korea or Taiwan that forced bold action and sacrifice. Maybe Trump will serve as a wake-up call.

It is not too late for Canadians to turn their economy around. But it is getting close to a point of no return. If Canada keeps losing advanced manufacturing, especially to an aggressive Marxist-Leninist People’s Republic of China, it will be gone for good. Canada is on the path to become Australia, once a manufacturing economy, now a resource supplier to China. And if it can’t boost productivity, a much larger share of national income will have to go to social welfare benefits, not needed national investment in productivity and innovation.

This can be fixed, but it will require a large share of Canadian elites, in business, government, the media, academia, and civil society, to come together to jointly “break glass” and call, not for “free glass” or “let the market clean up the glass,” but rather a national strategy to turn this around. But I fear that Canada is like the proverbial frog in the boiling water, with the occasional report, article, or speech saying that the water appears to be getting warmer, with Canadians then going back to their pleasant apathy: at least we aren’t like the Yanks and we have universal health care. Alas, you are falling farther and farther behind the Yanks.