The document summarizes Canada's research and development system and performance before and after the COVID-19 pandemic. It finds that Canada invests less in R&D than other developed countries and has seen declining expenditures over time. COVID-19 impacted both supply and demand in the economy. The government responded with over $386 billion in direct support, tax measures, and liquidity programs for businesses, individuals, and public health to address the crisis. It established new committees and advisory bodies to coordinate recovery efforts going forward.

1. Canada’s
R&D/Innovation
System in a Post-
COVID-19 World
Presented September 24, 2020 by:
David B. Watters, President & CEO
Omer Kaya, Associate Partner

2. CONTENTS
PART 1
Canada’s R&D Today
PART 2
Impact of COVID-19
PART 3
The Road Ahead
1. Canada’s R&D/Innovation Performance
2. A Closer Look at Canada’s R&D/Innovation Ecosystem
3. Context: A Pandemic-Infected World
4. Canada’s COVID-19 Economic Response Plan
5. Developing a New Sustainable Economic Growth and Jobs Strategy
6. New Directions from the Speech from the Throne

3. Part 1: Canada’s R&D/Innovation
Performance

4. 4
Global R&D Context
Source: R&D Magazine 2019
Global R&D Funding Forecast
• Global R&D totals $2,300 B
• Global R&D is dominated by US, China
and Japan
• Canada contributes only about 1.5% of
global investments in R&D ($35.5 B of
$2,300 B)
Canada’s Challenge:
How to access the other 98.5% of
new knowledge from R&D,
…in order to meet Canadian needs?

5. 5
Major Flows of R&D Funding 2019
Six (6) Sources of
R&D Funding
Four (4) Performers
of R&D
Total R&D in Canada: $35.54 B
2 Primary Performers of R&D in Canada are the Higher Education and Business Sector

6. The function of research is “to
acquire new knowledge”
6
OECD, Frascati Manual
“Research is the process that turns money into
knowledge…. and innovation is the process that
turns knowledge into wealth.”
Kevin Lynch

7. 7
Private Sector companies are the creators of wealth
1. Funders of New Knowledge
3. Creators of Wealth
2. Creators of New Knowledge

8. Canada’s Declining Gross Expenditures on R&D (GERD, 2004-2019)
“A decade and a half of darkness”
8

9. Research and Innovation context:
A “decade and a half of darkness”
• Canada’s National R&D expenditures are 36% below the OECD average, and continuing to decline
• Canadian Business R&D expenditures are over 50% below the OECD average
• Canada’s Higher Education R&D expenditures are 59% above the OECD average
• A persisting issue in Canada’s innovation system is our inability to turn innovation inputs into outputs
9
Global Innovation Index (GII): 17th
(WIPO, 2019) C -
Total Business R&D/GDP OECD Ranking:
24th
/36 (OECD, 2018) D -
Total Canadian GERD/GDP OECD Ranking:
20th
/36 (OECD, 2018) D
GII Inputs Ranking: 9th
(WIPO, 2019) B +
GII Outputs Ranking: 22nd
(WIPO, 2019) D
Canada’s R&D Innovation Score CardCanada’s Declining Expenditures on R&D (2004-19)

10. 10
How much more money would Canada need to spend on
R&D each year to become an average OECD performer?
$34.5 B
$52 B
$66 B
$100 B
CANADA OECD AVERAGE GERMANY SOUTH KOREA
GERD($B)
• To achieve just the OECD average
gross expenditure on R&D (GERD),
Canada would have to spend an
additional $18 B
• To reach Germany’s GERD rate,
Canada would have to spend $32 B
more
• To achieve South Korea’s world
leading R&D, Canada would have to
invest $66 B more across the
ecosystem
Do Canadian R&D/
Innovation leaders
understand that Canada is
an R&D laggard?!!
Do they care?

11. Efficiency Rank: 61st out of 120 countries
How well does Canada convert its excellent
innovation inputs to innovation outputs?
….very poorly, we rank 61st in the world
Countries that are ahead of us: Mongolia,
Montenegro, Moldova, Malaysia, Malta, Estonia,
Iceland, Latvia, Lithuania, Croatia, Kuwait, all
our major trading partners, etc.
The pressing issue in Canada is the inefficiency of
transforming innovation inputs into outputs
Outputs (Rank 22th )
1. Knowledge +
technology outputs
2. Creative outputs
Inputs (Rank 9th)
1. Institutions
2. Human capital +
research
3. Infrastructure
4. Market sophistication
5. Business sophistication
11

12. Canada’s actual
innovation
performance
Federal rhetoric
of Canada’s
innovation
performance
12

13. Council of Canadian Academies: State of R&D in Canada (April 2018)
Canada produces 3.8% of the world’s research but has declined from 7th to 9th
Psychology &
Cognitive Science
Public
Health &
Services
Philosophy
& Theology
Earth & Environmental
Sciences
Visual &
Performing Arts
Our 5 areas of research strength from the 2018 CCA report are:
“The loss of innovative start-ups to foreign buyers, and the inability to grow a sufficient number of start-
ups to scale, means that Canadians do not fully capture the social and economic benefits stemming from
Canadian research advances.”
13

14. 1. “Canada’s international standing as a leading performer of research
is at risk due to a sustained slide in private and public R&D
investment”. (pg. 173)
2. “Canada is not producing research at levels comparable to other
leading counties on most enabling and strategic technologies”. (pg.
174)
3. “Canadian research is comparatively less specialized and less
esteemed in the core fields of the natural sciences and
engineering.”(pg. 175)
CCA – Competing in a Global Innovation Economy:
The Current State of R&D in Canada (2018)
14

15. Which countries have technology leadership (2019)
While the US is the
leader in a wide
spectrum of
technology areas,
China is improving
especially in ICT,
military/space
defence and energy
sectors
The report does not identify Canada as a leader or a runner-up in any technology area
15

16. “Without immediate and targeted
action that builds upon existing
strengths, addresses key gaps and
weaknesses along the innovation
continuum, and drives growth,
Canada will fall even further behind,
putting its high quality of life at risk.”
ISED’s 2019 Assessment of Canada’s Innovation Performance
ISED, “Building a Nation of Innovators” p.14, 2019.
16

17. The German Approach to
Competitive R&D/Innovation
17

18. The Canadian Approach to Competitive R&D/Innovation
Do we invest enough?
Do we have an R&D/innovation target?
Do we have sectoral targets?
Are we improving the performance of
our innovation system?
Do we claim to be a nation of
innovators?
Is this weird?
NO
NO
NO
NO
YES
YES!
18

19. Context: A Pandemic-Infected World

20. 3 “Uns”:
1. Uneven impact
2. Unravelling
assumptions
3. Unprecedented
uncertainty
Impact of COVID-19: “BOOM!”
20

21. COVID-19: Fundamental Changes
1. Working from home
2. Increased unemployment
3. Inequalities clearly exposed
4. Reduced travel and trade
5. Accelerating a new digital world
6. The expanding role of big government
7. Paying down debt – impact on future generations
8. Need for effective collaboration in facing a common threat
9. Extensive education restructuring
10. Redesign cities
11. Need multilateral risk identification and mitigation
12. Rise of economic nationalism and angry populism
21

22. Impact of COVID-19
22

23. Canada’s COVID-19
Economic Response Plan

24. How has the federal government organized for recovery?
• The current health and economic crisis caused by COVID-19 led to massive federal
government response including 80 new initiatives and the creation of new Committees
1. Cabinet committee on the federal response to COVID-19 (Minister Freeland)
2. COVID-19 Supply Council (Minister Anand)
3. Industry Strategy Council (Minister Bains)
4. Green Economic Stimulus Plan (Ministers of Infrastructure and Environment)
5. COVID-19 Expert Panel (Chief Science Advisor)
Office of the Chief Science Advisor
Annual Budget: $2 M (Budget 2018)
Providing advice on the latest scientific
developments in COVID-19 research or for
COVID-19 response to the Prime Minister and
the Cabinet
CanCOVID Network; COVID-19 Expert Panel
Cabinet Committees
Cabinet committee on the federal response to the coronavirus disease (COVID-19): Goal to ensure whole-of-government leadership, coordination, and preparedness for a response to the health and
economic impacts of the virus. Chaired by Minister Freeland.
“Green” Economic Stimulus Plan
Ministers of Heritage, Infrastructure & Communities,
and Environment & Climate Change: Their task, once the
COVID-19 crisis is over, is to produce an economic
stimulus plan that will increase the use of green energy
while reducing Canadians’ dependence on fossil fuels.
They are also expected to resolve Canada’s supply chain
challenges with respect to production of essential medical
equipment during a health crisis, as well as food security.
COVID-19 Supply Council
(PSPC)
Brings together group of leaders to
provide the government with advice on
the procurement and supply of critical
goods and services required as part of
Canada’s COVID-19 response and
recovery.
Industry Strategy Council
(ISED)
Advisory board to assess the scope and
depth of COVID-19's impact on
industries and inform the government’s
understanding of specific sectoral
pressures. Industry Strategy Council will
leverage the 9 Economic Strategy Tables.
24

25. COVID-19 hit both the supply and demand side of our economy
• The Federal Government responded with
massive investments including
• Businesses: provided with $168.1 B in
direct and tax support
• Households: provided with $131.5 B in
direct and tax support
• Public health and research: received
$25.3 B
• Indirect liquidity support: $686 B
• The Federal Government contributed 9
out of every 10 dollars spent as a
response to the pandemic
25

26. How big is the Government’s COVID-19 Budgetary Response?
Trudeau
#1
Trudeau
#4
Trudeau
#4
Harper #4
$1.7 B
Trudeau #1
$27.6 B
Trudeau #2
$0.0 B
Trudeau #3
$8.0 B
Trudeau #4
$13.9 B
Trudeau #5
$324.9 B
Budget 2015 Budget 2016 Budget 2017 Budget 2018 Budget 2019 COVID Budget 2020
The current COVID-19 economic response is more than 23 times larger than Budget 2019!
…these expenditures represent more than 2 decades of normal budgets!!
26

27. Canada’s COVID-19 Impact Map (September 2020)
The arrows between stakeholders show the flows of People, Money, Information, and Materials
COVID-19 Response Federal Government
Provincial Government NFP’s and Granting Council
Higher Education Private Sector Canadian Household
Global Markets
Outcomes
27

28. 386.45
300.00
239.93
103.75 95.71 85.05
24.21
9.20 4.51 1.50 1.58
0
50
100
150
200
250
300
350
400
450
Liquidity
Support
through BoC,
CMHC, BDC,
EDC, and
Others
Liquidity
Support for
Banks
TOTAL -
Direct Support
Measures
TOTAL -
Direct
Business
Support
TOTAL -
Direct
Individual
Support
TOTAL - Tax
Support
TOTAL -
Public Health
Support
TOTAL -
Student
Support
TOTAL -
Sectoral
Support
TOTAL -
Indigenous
Support
TOTAL -
COVID-19
Research,
Vaccine
Development
and Academic
Research
Support
COVID-19 Liquidity/Direct Support Measures ($ B)
Total Direct Federal Support
R&D Spending
Research & Development spending accounts for 0.65% of the
federal government’s COVID-19 Emergency Response Plan
What is the R&D component of the Government’s
COVID-19 Response?
28

29. Granting Councils and TPOs in the Context of COVID-19
Total R&D expenditures: $1,234 M (2019)
Natural Sciences & Engineering Research Council (NSERC)
Grants Awarded (2018-19)
# of Awards
Canada
Funding
$1.3 B 26,753
Total extramural R&D expenditures: $1,185 M (2019) $492 M from GoC
through Discovery
Grants Program to 2.4 K
researchers to fund
study of viruses and AI
Total R&D expenditures: $793 M (2019)
Total extramural R&D expenditures: $758 M (2019)
Social Sciences and Humanities Research Council (SSHRC)
Grants Awarded (2018-19)
# of Awards
Canada
Funding
$410.4 M 9,678
Total R&D expenditures: $1,161 M (2019)
Total extramural R&D expenditures: $1,099 M (2019)
Canadian Institutes for Health Research (CIHR)
Grants Awarded (2018-19)
# of Awards
Canada
Funding
$1.3 B 3,926
Terry Fox Research Institute
Manages the cancer research investments of the
Terry Fox Foundation
$150 M over five years to establish a national
Marathon of Hope Cancer Centres Network,
starting in 2019-20 (Budget 2019).
Brain Canada Foundation (BCF)
Raises funds to foster advances in
neuroscience discovery research.
$40 M over 2 years for BCF’s Canada Brain
Research Fund (Budget 2019). Investment will
be matched by funds raised from other non-
government partners of the BCF.
Canadian Institute for Advanced
Research (CIFAR)
300+ researchers and 13 CIFAR research
programs under 4 interdisciplinary theme
areas:
1. Life & Health
2. Individuals & Society
3. Information & Matter
4. Earth & Space
$125 M to create a Pan-Canadian AI
Strategy (2018)
14 AI projects launched to address COVID-
19 through CIFAR’s AI and COVID-19
Catalyst Grants Initiative – grants of up to
$15 K each, $300 K in total funding for
program
Stem Cell Network
Supports research into stem cell therapies
and regenerative medicine treatments for
respiratory and heart diseases, spinal cord
injury, cancer, among others. Helps translate
this research into clinical applications and
commercial products.
Renewed funding of $18 M over three years,
starting in 2019-20 (Budget 2019)
Federal government provided $675 K
through SCN to fund a clinical trial and two
research projects as part of SCN’s COVID-19
Rapid Response Research Initiative
Perimeter Institute for Theoretical
Physics
Centre for scientific research, training and
educational in foundational theoretical physics
Canadian COVID Genomics Network
(CanCOGen) - $40 M initiative backed by
federal funding to coordinate and scale
national and international genomics-based
COVID-19 research in order to accelerate
public impact
$1.5 M in funding support available for
COVID-19 regional genomics projects
Genome Canada
Advances genomics S&T in order to create
economic and social benefits.
$100.5 M over 5 years (Budget 2019)
6 Institutes: BC, Prairies, Alberta, Ontario,
Quebec, Atlantic
Institute for Quantum Computing
$15 M over three years (Budget 2018) from the
federal government
CANARIE
Annual Budget: $22.7 M (2019)
Futurpreneur Canada
Measures to support business owners during
COVID-19 pandemic include temporary relief
on all outstanding loans, interest rate cuts,
national collaboration channel, digital
resource guide, peer-to-peer support
$10 K interest-free top-up loans with one
year of deferred payment
$38 M over 5 years, starting in 2019-20 (Budget
2019). Futurpreneur Canada will match these
investments with funding received from other
government and private sector partners.
Provides financing, mentoring, and support
tools to aspiring business owners aged 18-39.
Council of Canadian Academies
Annual Budget: $5.1 M (2018-19)
$9 M over 3 years (2018-21) from government
Mitacs
6,785 completed and active projects as of 2018
$221 M over 5 years starting in 2017 from the
federal government
$74 M anticipated budget for 2019-20
Builds partnerships between academia,
industry, and the world to create a more
innovative Canada.
$2 M from the Government of Quebec to
address the high demand for a workforce
qualified in AI
$40 M from the federal government to
support post-secondary students during the
COVID-19 pandemic
Mitacs will provide an award of $60 K to
SMEs developing solutions to COVID-19
SMEs responding to COVID-19 can
incorporate an Accelerate internship with a
reduced contribution of $3,750
SD Tech Fund Value: $915 M (2013-2020/21)
NextGen Biofuels Approved Funding: $250 M
(2007-27)
Sustainable Development Technology Fund
SDTC Seed Fund: Up to 100 companies will
receive up to $100 K each over the next year
(2020)
Sustainable Development
Technology Canada
Supports Canadian companies in developing
new environmental technologies that address
climate change, clean air, clean water and
clean soil issues
Canada Foundation for
Innovation (CFI)
$763 M over five years starting in 2018
from Federal government (Budget 2018).
Total R&D Expenditures: $423 M (2018-
19) 10% increase since 2017-18
Transfer payments by Industry Canada:
$389.3 M (Main Estimates, 2019-20) 17.7%
increase from 2018-19
$11 M in funding toward the Vaccine and
Infectious Disease Organization –
International Vaccine Centre (VIDO-
InterVac) to strengthen research and help
develop a COVID-19 vaccine
29

30. Support for SMEs
Over $101 B worth of federal support for small and medium sized enterprises
• $82.3 B for the Canada Emergency Wage Subsidy (CEWS): to enable employers with reduced revenues to rehire workers; provides a subsidy of 75% of pre-
pandemic wages, up to $847 per week until end of August 2020 and 100% recovery of contributions to Employment Insurance and pension plans
• $13.7 B for the Canada Emergency Business Account (CEBA): to provide zero-interest, partially forgivable loans to small businesses that have experienced
diminished revenues due to COVID-19 but face ongoing non-deferrable costs, such as rent, utilities, insurance, taxes and employment costs.
• $3 B for the Canada Emergency Commercial Rent Assistance (CECRA): to provide relief for small businesses experiencing financial hardship. It offers
unsecured, forgivable loans to eligible commercial property owners to reduce the rent owed by their impacted small business tenants
Sectors; Impact; Closures; CEWS; CEBA; Loan Guarantee Program; Co-Lending Program; 10% subsidy; RRRF; CECRA; Community futures; Summer
Jobs Program; Work Share Program; Tax deferral; Work Placement; MITACS; Aboriginal financial institutions; Business in the territories
82300
13750
2405 2080 675 287 250 15 15 12
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
Canada Emergency
Wage Subsidy
Canada Emergency
Business Account
Canada Emergency
Commercial Rent
Assistance
Temporary Business
Wage Subsidy
Alternative Credit
Support for Small
Businesses
Rural Businesses and
Communities
Early Stage
Companies
Woman
Entrepreneurship
Strategy - Ecosystem
Top-up
Northern Businesses Enhancements to
Work-Sharing
Program
Federal Direct Business Support ($ M)
30

31. PROVINCES

32. Harsh economic impact across all provinces
Prolonged Economic Hardship
• Provincial GDPs are expected to contract by an
average of 7% in 2020
• Provincial unemployment rates have skyrocketed to
an average of 13.65% in May
• Ontario and Alberta are projecting a budget deficit
of $20.5 B each, Quebec upwards of $15 billion,
and British Columbia around $5 B
• Prior to COVID-19, provincial governments had
over $700 B in outstanding debt
• Provincial debt is forecasted to increase by more
than $78 B in 2020-2021
Provincial Debt; Forecasted 2020 Debt; Provincial GDP Contractions;
NL PE NS NB QC ON MB SK AB BC CA
COVID-19 Economic Response in Provinces and
Territories (2020)
Provinces and territories have provided $66 B in direct support and
liquidity measures to support their communities in the time of COVID-19
32

33. HIGHER EDUCATION

34. Higher Education sector constitutes ≈ 2.4% of Canada’s economy, but it
produces talent for 100% of all economic activity
• Total economy: $2.2 T
(July 2020)
• Total education
services sector
(primary, high school,
and higher education):
$103 B
• Within the Education
Services part of the
economy, the Higher
Education sector
accounts for $52 B
• While the higher
education sector is
only 2.4% of Canada’s
economy, it produces
talent for 100% of all
economic activity
Source: Statistics Canada. Table: 36-10-0434-02
H.E.
sector:
$52 B,
2.4%
34

35. What are the key issues for Higher Education to consider in the
light of COVID-19?
1. Issues affecting institutions 2. Issues affecting students 3. Issues affecting research
1
Potential reduction in public funding and
pressure of budgets
Loss of benefits of campus-based education:
face-to-face interaction, networking, and
socialisation
Possible decreases in federal R&D support as
austerity measures kick in
2
Potential reduction in fee income from
international students
Taking more control of their own learning
Increasing federal need for R&D to meet
“national” priorities
3 Changes in student mobility and choices Adapting to new course and exam formats Potential budget decreases from private sector
4
Changes in demand for different types of
courses and subjects
Difficulties completing experiential course
components
Focus on health sector research
5 Accommodating experiential course components Changing financial circumstances
Contributions to smart working and a smart
digital economy
6
Competition from online institutions (e.g. Khan
Academy, Udemy, etc.)
Perceived value of diplomas may change Developing clean and green tech
7
Organizational restructuring to respond to
changing student needs
Impact on post-graduation employment and
careers
Pressure to reduce time needed to bring
research to fruition
8 Potential downsizing, partnerships or mergers
Decision for some students to postpone higher
education
Increased need for commercialization of R&D
9
Continuing availability of funding for international
students
35

36. What are the 4 key risks that higher education institutions need
to manage?
1. The quality and benefits of higher education may be reduced
• More Canadian students studying in their own city/province, resulting in provincial
silo effects?
• Fewer Canadian students going overseas
• Inflows of international students, and their dollars, likely to decrease
• Competition with elite foreign institutions for distance-based courses
• Reduced interaction between students, and between students and academics
• Less exposure to different cultures and opinions
• A demand for more skills-focused courses?
2. Institutions may not survive
• Pressures on budgets
• Increased competition for students
• Potential need for collaboration between institutions
3. Research may be reduced
• Pressure on research budgets
• Research more focused on supporting the national interest
• Challenge of operating socially-distanced labs
4. Outputs to the provincial and national economy may be constrained
• Potentially fewer graduates
• Numbers of mature students increase, looking for job-related courses
• Potential changes in demand for full-time and part-time courses
• Potentially fewer jobs for graduating students
Canada risks losing its edge and its global standing
36

37. Revenues and expenditure, 2017–18
Total revenues of universities and degree-granting colleges $39.5 B
Total expenditures of universities and degree-granting college: $38.4 B
Profit Margin: $ 1.1 B
Total revenues of community colleges and vocational schools $12.1 B
Total expenditures of community colleges and vocational school $12.1 B
Profit Margin: $ 0 B
Are Canada’s Higher Education business models sustainable?
Post-secondary educational institutions play a key
role in developing a highly skilled workforce and
ensuring the successful labour market outcomes of
graduates.
However, they operate in a low profit-margin
environment (even pre-COVID-19), hence are very
susceptible to abrupt systematic disruptions such as
the ones caused by the COVID-19 global pandemic.
Statistics Canada. Table: 37-10-0026-01; Table: 37-10-0027-01; Table: 37-10-0028-01; Table: 37-10-0029-01
Revenue
Breakdown
for Colleges
and
Universities
37

38. Are Canadian universities and colleges currently running on a
deficit basis?
International Students
• 14.1% (296,469) of all post-secondary enrolments are international
students (2017–18) (almost doubled since 2012–2013) from over
200 countries
• Just over half of all international students were from China (28.1%)
or India (22.8%)
Average tuition fees/student, 2019–20:
• Canadian undergraduates $6,463
• International undergraduates $29,714
• Canadian graduates $7,056
• International graduates $17,744
Revenue for tuition from international students is estimated at $6 B
(President of Universities Canada, 10 Apr 2020)
Overall economic impact of international students over $22 B
Sources: International student enrolments; China and India; Tuition fees; Uncertainties; Manitoba; Revenue and economic impact;
The impacts of COVID-19 are already being felt:
• 54% of international students intend to defer admission by a year
and 15% no longer plan to come to Canada
• Reduced provincial income and healthcare priorities are already
resulting in Manitoba in cuts for Canadian student grants in 2020–21
38

39. Federal support for R&D at Canada’s universities and colleges
Federal support for university R&D: $3 B Federal support for college R&D : $75 M
= $25 M
Source: Global Advantage Budget 2019 analysis
Need to add to college R&D from new funding
39

40. Business and Industry

41. Major companies in the aerospace/aviation, automotive and retail
sectors saw significant layoffs due to the pandemic, as a result of travel
restrictions and widespread shutdowns
Major layoffs by large companies
Source: CTV News; Maclean’s Canada
*Includes both full and part-time staff. As of April 30, 2020
Company Number of
layoffs
Sector
Bombardier 12,400 Aerospace
Cineplex 11,000 Film entertainment
Toyota Motor
Corp.
8,000 Automotive
Ford Motors Co. 6,900 Automotive
New Flyer
Industries
6,500 Manufacturing
Reitman’s 6,000 Retail
Cirque de Soleil 4,679 Entertainment
General Motors 4,000 Automotive
Leon’s 3,900 Retail
WestJet 3,333 Airlines/Aviation
Porter Airlines 1,400 Airlines/Aviation
Irving Shipbuilding 1,370 Manufacturing
• The Canadian government announced the Canada Emergency Wage Subsidy (CEWS) to
provide qualifying businesses with a salary subsidy of 75% of an employee’s wages. The
program is intended to hep businesses retain and/or rehire their employees
• Companies which recalled laid-off employees due to the CEWS program:
• Air Canada: Rehired 16,500 laid-off workers (20,000 laid off)
• Sunwing: rehired 1,800 employees (1,500 laid off)
• CAE: rehired 1,500 workers (1,500 laid off)
• Flair Airlines: Rehired 130 employees (130 laid off)
• Indigo: Rehired 545 workers (5,200 laid off)
• Bombardier: rehired 11,000 workers (12,400 laid off)
*Air Canada recently announced layoffs of at least 19,000 employees,
which could go as high as 22,800, by June 7.
Bombardier is also
Canada’s largest funder
and performer of
business enterprise
research and
development pre-
COVID-19 (FY2018)
If more layoffs become permanent, the severe recession
we’ve slid into would likely last longer, the recover
would be slower, and the toll on laid-off workers
harsher.
41

42. What might be the impact of COVID-19 on business R&D?
• Source: Statistics Canada; Bombardier - 800, boulevard René-Lévesque West, Montréal; P&W - 1000 Marie-Victorin Blvd., Longueuil; BCE Inc. - Carrefour Alexander-Graham-Bell, Montréal
The top three funders and performers of R&D post-COVID-19, who, in 2018, made up roughly 10% of Canada’s 2019 BERD, exist in sectors
which are severely impacted by the economic lockdown.
• Business Expenditures for R&D (BERD) was $18,253 M in 2019 (Statistics Canada)
• BERD as a percentage of GDP: 0.79% (2019). OECD average was 1.7% in 2018
• Business Enterprises employ 61.4% of R&D personnel (144,570) in Canada
• The top three corporate performers of R&D in Canada are in the sectors of aerospace, automotive parts manufacturing, and energy, which all
were hit hard by the pandemic
1. Bombardier Inc.
2. Magna International Inc.
3. Suncor Energy Inc.
4. Constellation Software Inc.
5. Pratt & Whitney Canada Corp.
6. BCE Inc.
7. Bausch Health Companies Inc.
8. IBM Canada Inc.
9. Shopify Inc.
10. Open Text Corporation
Main Corporate R&D Budgets (FY 2018)
**May includeR&D performed abroad
M (down)
M (up)
M (up)
M (up)
M (up)
M (up)
M (up)
M (down)
M (up)
M (up)
1,472
762
635
585
552
537
535
512
454
419
*Source: Research Infosource, “Canada'sTop 100 Corporate R&DSpenders 2019”
Aerospace and
Aviation
Auto Parts
Manufacturing
Oil & Gas
We will likely see a decline in R&D investment as firms exercise caution to preserve cash flow
Aerospace and
Aviation
42

43. COVID-19 Impact on Industry — Summary of Key Insights
1. Every major industry is experiencing slowdowns; however the severity of the
impact varies by sector.
2. The hardest hit industries are retail, tourism, airlines and the energy sectors
3. Supply chains are disrupted in most industries, particularly in agriculture and
manufacturing
4. Major industry dynamics will change as business strategies and practices are re-
examined in light of weaknesses exposed by COVID-19
5. Rebound potential is dependent on an effective vaccine and managing public
health risks
6. Opportunities are seen in the e-commerce space, cybersecurity, delivery of
goods and a suite of other digital service businesses
43

44. Trade and Investments

45. Home Alone!
Canada is all alone in a scary and competitive global world
45

46. Canadian trade devastated in April
• In April 2020, production shutdowns in a number of manufacturing industries, falling
energy product prices, the closure of many retail stores, and weaker demand due to
physical distancing measures related to the COVID-19 pandemic, resulted in drastic
decreases in Canada's exports and imports.
• Canadian merchandise exports contracted by a deep 29.7% in April, dropping to its lowest
level in over 10 years
• Canada’s trade deficit grew from $894 M in February to $3.3 B in April
• Canada’s merchandise exports fell 29.7% to 32.7 B in April, the lowest level in more than
10 years. Total imports declined 25.1% to 35.9 B.
• These declines, in both absolute value and percentage, are unparalleled, as
monthly decreases of this magnitude have never been observed
• The value of merchandise imports dropped to a level last seen in February 2011, plunging
by 25.1% in April
• With exports and imports posting record monthly declines, Canada’s merchandise trade
deficit more than doubled from $1.5 B in March to $3.3 B in April
• With economies around the world starting to slowly ease restrictions and reopen their
economies in May, this should support greater trade activity in the coming months as
global demand starts to slowly pick up and production at plants and factories resume
Source: StatsCan ; The Conference Board of Canada
43
44
45
46
47
48
49
50
51
52
53
Exports Imports
Billionsofcurrentdollars
Canadian merchandise exports and imports,
Apr. 2019 – Mar. 2020
Both exports and imports were down approximately 10% year-over-year.
46

47. Market Size of Global Trading Partners (population, 2019)
• Countries with the largest consumer markets
are China and India, followed by EU and US
• # Canadian firms that exports goods: 43,255
(2016, Chief Economist)
• 97.4% of 43,255 firms are SMEs (<500
employees)
• These SMEs account for 40.7% of Canadian
merchandise exports by value
Source: World Bank (2017) 47

48. What does Canada export? (2019)
Plunging merchandise trade values signal initial breakdown in global trade caused by COVID- 19 mitigation policies.
The COVID-19 shock to the energy and motor vehicles and parts sectors may cause permanent changes to those sectors
through restructuring assembly lines, creating resilient and synchronous supply chains and transitioning to low-emissions
portfolios.
48

49. Canadian Top Export Destinations (2019)
$415 B
$72.7 B
$23.6
B
$17.66 B $7.8
B
$5.2
B $4.8
B
$4.2
B
$4.1
B
Total value of Canadian merchandise exports: $546 B (2017, Canada’s State of Trade 2018 Update) 49

50. Canada’s Services Export at Risk by COVID-19
The tourism and travel and transportation sectors were among the hardest hit during the
pandemic because of worldwide economic shutdowns and travel restrictions
50

51. Impact on Households (60% of
Canada’s National Expenditures)

52. COVID-19 Impact on Canadian Households – Summary of Key
Insights
1. Household spending in decline due to loss of employment and stay-at-home
limitations on activities and key markets
2. Consumer debt reached record high in March, making Canadian households
more vulnerable and less likely to spend
3. Women disproportionally harmed by the onset of the pandemic
4. Spending increases online amid opportunities for businesses to build
online platforms and limited access to brick and mortar stores
5. Increase in mortgage deferrals and bankruptcies tied to unemployment and
underemployment
6. Government measures helping to ease financial struggles, but cannot stave off
financial insecurity and unemployment for many Canadians
7. Consumer confidence levels at record low in May 2020
8. Households adversely impacted by uncertainty around education system post
COVID-19
52

53. Consumer demand remains tepid
Canadian Household Sector constitutes about
60% of Canada’s national expenditures!
What do
households
buy?
• Canadians are shopping only for
essential goods, and are foregoing
discretionary spending amid COVID-19
• Lower household spending on services
was attributable to food, beverage, and
accommodation services (-10.9%) and
air transport (-15.7%) resulting from
restrictions on travel and tourism
and shutdowns of restaurants and bars
Until a vaccine is delivered (1-4 years)
will consumer demand remain sluggish?
53

54. Failure to launch: Youth Unemployment at historic high
• Youth unemployment (ages 15-24) stands
at 27.5% in June 2020, down from
29.7% in May, the highest recorded in
Canada
• Student unemployment has reached
39.4% in May 2020, and dropped to
33.1% in June
• The Youth underutilization rate dropped
to 40.5% in June
• The summer job market is very
challenging for students. Cumulative
employment losses were 843 K, or
a 33% decline, from February to May.
I need a job!
Source: Statistics Canada 54

55. The Approaching Tsunami of Industry 4.0 changes ….
Led by: AI, IoT, Robotics, 5G, Regenerative Medicine,
Synthetic Biology, Quantum Computing, Cyber Defence and Security, etc.
What impact on:
• Job losses?
• New jobs?
• Skills training?
• Ethics + regulation?
55

56. Part 3: The Road Ahead: Developing a
New Sustainable Economic Growth
and Jobs Strategy

57. What are the components of the Canadian Economy?
Sources: Statistics Canada. Table 36-10-0434-06 Gross domestic product (GDP) at basic prices, by industry, annual average, industry detail (x 1,000,000); Statistics Canada. Table 14-10-0202-01 Employment by industry,
annual; Statistics Canada. Table 33-10-0105-01 Canadian Business Counts, with employees, December 2018; AAFC (2018) Ministerial Briefing Books (linked); NRC deck
Service-producing industries
Construction
Energy, natural
resources, and
agriculture
Manufacturing
0
200
400
600
800
1,000
1,200
1,400
1,600
0 2,500 5,000 7,500 10,000 12,500 15,000 17,500
GDP ($ billions)
Employment (thousands)
$1,365 B
13.33 M jobs
$235 B
0.76 M jobs
$203 B
1.6 M jobs
$142 B
1.0 M jobs
• Service-producing industries
account for over 75% of
the Canadian economy
• Canada’s private sector consists
of 1.2 M employer businesses.
Of these, 1.18 million (98%) are
small businesses, 2% are
medium-sized businesses and
only 0.2% are large businesses
(November 2019)
The contribution of each economic sector to GDP is noted on the vertical axis, and employment on the
horizontal axis. The number of establishments in each sector is shown by the size of the bubble.
57

58. The Canadian Approach to Competitive R&D/Innovation
• $950 M over 5 years for 5
Superclusters
• Total of 9 Economic
Strategy Tables
• Create a 7th
Economic Strategy
Table dedicated to
tourism (Budget
2019)
• Create 8th and 9th
Economic Strategy
Tables dedicated to
Transportation and
Retail (COVID-19
Response Plan)
58

59. 1. 2002 – Canada’s Innovation Strategy – Alan Rock (IC) and Jane
Stewart (HRSDC)
2. 2005 – Expert Panel Report on Commercialization – Joe Rotman
3. 2007 – Mobilizing S&T to Canada’s Advantage – Industry Canada –
Maxime Bernier (IC) and Jim Flaherty (Finance)
4. 2011 – Innovation Canada: A Call to Action, Review of Federal
Support to Research and Development – Expert Panel Report – Tom
Jenkins
5. 2014 – Seizing Canada’s Moment – Moving Forward in Science,
Technology and Innovation – Ed Holder (Minister of State S&T)
Harper
6. 2017 – Bains/Barton/Budget 2017
7. 2021… Minister “X”???
6 Innovation and Commercialization Plans (2002 to 2017)
59

60. Do we support Vertical Industry Sectors
……or Horizontal Technology Platforms?
60

61. How could we integrate 4 core Canadian strategies?
61
3. How will you innovate?
• Start-up vs scale-ups
• Invention vs adoption
• Goods vs services
• Sectors vs tech platforms
2. To sell products in
what markets?
• Trade diversification
• Accessing supply chains
• Implementing trade agreements
for hi-growth SMEs
1. Which industry
sectors are priorities?
4. With what new
skills?
• Digital
• Network Management
• Sales + Marketing
• Collaborative Research
• Diversity Management
• Green Economy
• Digital Economy
• Smart Manufacturing
• Natural Resources
2. Trade
Strategy
4.
Skills
Strategy
Make Permanent
the Economic
Strategy Tables
• Business
• Governments
• Academic
1.
Sustainable
Industrial
Strategy
3.
R&D/
Innovation
Strategy

62. New Directions from the
Speech from the Throne

63. Do we have the
right balance
between
investing in
economic growth
and social
security?
…or is the cart
before the horse?
Canada is stuck in 1st gear…..and wondering why?
63

64. Government’s New Approach is based on 4 Foundations
1st Foundation:
Fight
the pandemic
and protect
Canadians
2nd Foundation:
Support
people and
businesses
through the crisis
“This pandemic is the most serious public health crisis Canada has ever faced.”
“Effectively dealing with the health crisis is the best thing we can do for the
economy”
• PPE, contact tracing, testing capacity. New Testing Assistance Response Team
• Vaccine Strategy: ensure Canadians will be able to get a vaccine once it is ready.
• “As long as it lasts, whatever it takes”. “This is not the time for austerity.” “Fiscal firepower”
• Create over 1 million jobs. Direct investments in the social sector and infrastructure.
CEWS extension. CEBA Expansion. CERB vs. EI.
• Support the hardest-hit industries (e.g. travel, tourism, hospitality, and cultural industries
• Scaling up Youth Unemployment and Skills Strategy
• Action Plan for Women in the Economy + Accelerate the Women’s Entrepreneurship
Strategy. A Canada-wide early learning and childcare system.
64

65. 3rd Foundation: Build back better
1. Resiliency agenda for the Middle-class, addressing gaps in our social systems (long-term care, resilient health-care system, firearms
policy, gender-based violence
2. Invest in all types of infrastructure, including public transit, energy efficient retrofits, clean energy, rural broadband,
affordable housing,
3. Universal Broadband Fund to ensure that all Canadians, no matter where they live, have access to high-speed internet.
4. Address food insecurity, support local food supply chains
5. Government will make the largest investment in Canadian history in training for workers.
1. New skills in growing sectors, education and accreditation. Knowledge economy.
6. Climate action is a cornerstone of this plan to support and create a million jobs across the country. Immediately bring forward a
plan to exceed Canada’s 2030 climate goal. Legislate Canada’s goal of net-zero emissions by 2050
7. Ensure Canada is the most competitive jurisdiction in the world for clean technology companies.
8. Support investments in renewable energy and next-generation clean energy and technology solutions. New Clean Power Fund.
9. Support manufacturing, natural resource, and energy sectors as they work to transform to meet a net zero future
10. Protect ¼ land, ¼ oceans in five years. Use nature-based solutions to fight climate change. Plant 2 billion trees. Ban harmful single-
use plastics next year. Modernize Canada’s Environmental Protection Act. Create a new Canada Water Agency.
11. Invest in the Blue Economy. Ocean economy to create opportunities for fishers and coastal communities
65

66. 4th Foundation: stand up for who we are as Canadians
1. Reconciliation,
2. Address systemic racism,
3. Protecting two official languages,
4. Welcome newcomers,
5. Canada in the World
• Create and maintain bilateral and multilateral relationships against a fragmented global order
• “We cannot eliminate this pandemic in Canada unless we end it everywhere”
• Stand up for human rights and the rule of law. Michaels must be brought home.
• Continue to promote free trade, including by leading the Ottawa Group to reform the WTO
• Upcoming this fall is an update to Canada’s COVID-19 Economic Response Plan. This will outline the
Government’s economic and fiscal position, provide fiscal projections, and set out new measures to
implement this Throne Speech.
66

67. Small businesses wanted a competitive tax environment
and a recovery plan that promotes economic growth
Source: CFIB
✓
✓
✓
✓
✘
✘
✘
✘
✘
67

68. Three Questions for you:
1. Does Canada need an integrated Post-COVID
R&D/Innovation/Industrial/Trade/Skills strategy?
2. Who could lead in developing it?
3. Would your organization commit time and resources
to developing it?
68

69. Thank you!!
To buy our newly updated 2020 COVID-19 R&D/Innovation Ecosystem Map and more
Please visit: https://globaladvantageconsulting.com
Or contact us at (613) 692-8383