Canada needs new paradigm for research and innovation
TheStar.com – Opinion – Canada needs new paradigm for research and innovation: Current funding model is proving inadequate at commercializing breakthroughs
August 26, 2009. Ron Freedman, CEO OF RESEARCH INFOSOURCE INC.
Forget the apocalyptic statements about “deep cuts” to publicly funded research that fuelled headlines across Canada this past spring. In fact, university and hospital research funding rose last year by 5.2 per cent, to $6.1 billion, maintaining 10 years of solid growth.
Those doom and gloom warnings mask a deeper malaise over the future of research in this country. The larger problem is that policy leaders have run out of new ideas about how to tap the creative potential of the country’s universities, colleges, research hospitals and, most important, companies.
Canada is stuck in a 20th century paradigm of research funding that is proving increasingly unsuited to the 21st. It’s main tenets are:
Public support should be concentrated at universities and research hospitals.
More such funding will produce more scientific discoveries, and thus new products, companies, exports and jobs.
Universities and hospitals should maximize their short-term returns through “commercialization” – selling technology and know-how to the highest bidder.
Alternately, they should create a new company to commercialize each new discovery.
Support of corporate research is best accomplished through tax refunds rather than direct investment.
We should ditch our “old industries” and shift resources to trendy new fields of science and technology.
Unfortunately, evidence is mounting that the paradigm is not working – or at least not as well as we would have hoped.
The facts are that commercialization of research at universities and hospitals has stalled since the early part of the decade. Corporate spending on research has flatlined since the tech bust of 2001 even as more companies are apparently doing research (albeit in small amounts).
Venture capital investment in technology companies is at a decade-long low. We are about to lose our largest single corporate R&D spender (Nortel Networks), and many other large companies are scaling back on their R&D.
Biotechnology and other emerging technologies (e.g. nanotechnology) as yet make no meaningful contribution to GDP and for various reasons, such as the lack of domestic multinational pharmaceutical companies, will not do so for decades to come.
Canada’s response to our innovation challenges and opportunities has largely been to create an alphabet soup of technology-push funding programs, each aimed at filling a perceived “funding gap” in a narrower and more esoteric area of science and technology.
Canada needs a new research support paradigm, one that will account for some new (and old) realities.
New reality: Canada’s economy is 68 per cent services and the service function is growing, while the goods-producing industries are shrinking in proportion.
Old reality: We still rely heavily on our natural resource and manufacturing industries and will benefit from them for the foreseeable future.
Here are some concrete research policy measures we can initiate today to improve our long-term competitive position and our standard of living.
Create a research strategy to commercialize our vast services potential, in everything from computer games to business intelligence products. We desperately need a commercialization strategy for publicly funded research in university social sciences, humanities, art and design.
Shift a large part of corporate research funding from the tax system to direct support of research through programs such as the National Research Council’s Industrial Research Assistance Program (IRAP). Direct support is far more valuable to firms – especially small companies with new ideas but tight cash flow. Fortunately, such a shift has zero net cost to the treasury because companies that get direct R&D support reduce their R&D tax claims proportionately.
Strengthen our areas of traditional comparative advantage: agriculture, forestry, mining, mineral processing, energy production and so forth. We have to replace our historical cost advantage in these areas with a quality advantage.
Develop a national strategy to support companies developing instrumentation. Most policy-makers are unaware that Canada excels at producing a wide range of instrumentation – everything from satellite components to medical devices. We are sitting on a gold mine of instrumentation talent and yet we have no national strategy for this diverse sector.
Modernize procurement policies to allow governments to acquire promising new technologies. Reinstate the “unsolicited proposal” program that allowed companies to get support for novel ideas that could be used by government. Many successful technology companies got their start through the abandoned UP program.
Too much government research funding is directed to “technology push” – pumping up university research in the hope that discoveries will find a market. Resources should be shifted to companies that have identified a market opportunity and need help to pay universities to develop their ideas.
Automatically give intellectual property rights to companies that pay for or perform government research.
Consolidate the alphabet soup of federal and provincial funding programs and make it easier for companies and individual researchers to navigate the program maze.
Develop broad university and college “business engagement strategies” and not simply narrow “commercialization strategies.” The business engagement concept aims to provide companies with a spectrum of university resources, from summer student internships and co-op placements, to executive education, in-service training, research contracts, collaborative research and technology licensing.
Develop a national software strategy. Canada is an international software powerhouse, producing everything from gaming to financial modelling software. Although we continue to toy with a strategy for information and communication technology writ large, we don’t have one for software.
Compensate for low levels of venture capital funding by applying the flow-through share model common in the energy sector to research-based companies.
The good news is that many of these measures can be implemented with little or no new spending.
There’s nothing so wrong with our current approaches that we should abandon them.
But we need some lateral thinking about harnessing Canada’s research potential.
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