Canada’s branch plant mentality has to go
The government needs to overhaul its innovation funding programs to clearly support domestically-owned intellectual property within Canadian companies, say IP and tech experts.
“If Canada wants to stop being primarily a branch-plant economy and start scaling globally relevant, IP-intensive companies, our innovation funding must have clear strategic objectives,” Natalie Raffoul and Neil Desai wrote in the Globe and Mail. This includes creating high-value, sustainable jobs and increasing our taxable revenue within globally competitive, homegrown firms, they said.
“If innovation funding is intended to help scale the next BlackBerry or Shopify, then we need frameworks that focus on rewarding companies committed to staying, growing and contributing to Canadians. A modern, strategic definition of what qualifies as a Canadian company for innovation funding should incorporate IP ownership, revenue generation and corporate control and governance from Canada.”
Canada spends billions on innovation, but productivity is falling because much of the publicly funded research and intellectual property ends up controlled and commercialized by foreign multinationals, they said. The country suffers from a lack of mid-sized firms able to grow globally, because startups often hit scaling barriers and are acquired or move their IP abroad, undermining long-term economic returns.
“While Canadians have been at the forefront of incredible technological feats that were seeded by public funding like AI and lithium battery technology, they have not translated into a meaningful boost to the economy. A troubling contradiction lies beneath the surface. Many subsidiaries of foreign multinational corporations qualify as ‘Canadian’ despite the fact that the intellectual property (IP) they develop subsidized by our tax dollars can ultimately be owned and commercialized abroad,” they wrote, pointing to Huawei Canada. The company has done research at Canadian post-secondary institutions, using Canadian public funding, for which they’ve filed patents that will benefit China.
“This is not an isolated case. Other global IP-intensive companies such as Google owner Alphabet, Samsung, Sanofi and Siemens have run similar playbooks,” they said. “The question policymakers must ask is no longer simply, ‘Who conducts R&D in Canada?’ but ‘Who creates long-lasting economic value for Canada?’”
