Innovation can be best defined as development or creation of new products and services and should stimulate income in the ventures being created. Innovation is critical in economic development but ought to be done in an effective and strategic manner in order to be successful. Prosperity on the other hand can be best described as flourishing or thriving condition in respect of financial stability; it is a combination of economic prosperity and social prosperity in terms of peace in the country and general financial well being. Social and economic prosperity are closely linked and are dependent on each other. Social prosperity consists of good health, job security, lifelong learning and citizenship while economic prosperity consists of job creation, fiscal availability and a robust economy. An alliance of the two creates long-term and sustainable economic development (Science, Technology and Innovation Council, 2012).
Canada is a country with a great potential for economic growth, but the records of innovation in that direction have been minimal and disappointing. Reports indicate that the Canadian private sector is almost at the bottom in terms of development and investments as compared to other international competitors (Passaris, 2011).
The 20th century was more of an industrial revolution that utilized resources under our feet, while the 21st century is more of information revolution that lay emphasis on new innovations. The pace of change between the two differs a great deal. Industrial revolution evolved over a number of years and required physical capital, information technology on the other hand occurs drastically and only requires human capital in terms of knowledge and information. The information revolution has led to improved productivity and organization as computers are able to do tasks that were previously labor intensive and costly. Firms can now manage production, marketing and inventories in a more systematic and cost effective manner.
The information revolution encompasses globalization of the production process, where a firm can have subsidiaries in different countries for different parts of the final product.
The economy in the 21st century is based on innovation, in terms of new knowledge that will create better products which will in turn add value to the quality of goods and services and will finally result to higher levels of productivity, quality products and an improved quality of life. The private sector needs to embrace innovation in order to ensure business success and this entails new investments in the sector. The sector needs fiscal support from the government in order to accomplish the innovations. The public sector should not be left behind, for in order to improve economic development innovation is critical especially in the current situation of soaring unemployment, increasing public debt and continuous expenditure. It must be adopted as a way to improve efficiency and effectiveness in the public sector (Flaherty, 2012).
Canada has experienced considerable structural changes over the years. There is a significant decline in the population of the labor force engaged in agriculture with an increase in those in tertiary sector; information technology revolution has also made an important contribution to the Canadian labor force as from the 1980’s.
In line with the innovation strategy Canada is investing in the higher education sectors which include universities and colleges through government funding and higher education expenditure. This is an important milestone as knowledge is the root of Canadian science, technology and innovation system. It will generate entrepreneurs who are informed in terms of production of new products, processes and will lead to a highly skilled workforce that meets the demand of the globalised economy in the 21st century. The entrepreneurs will at the same time be able to exercise effective leadership and develop competent business strategies that will improve economic growth (Passaris, 2011).
Canada has a huge asset in terms of talented Immigrants who are highly educated. The immigrants will create skilled entrepreneurs who will lead to creation of high potential companies. Policy makers should see the need to attract more international graduate students for this purpose (Flaherty, 2012).
Business innovation comprises of investment in Research and development, machinery and equipment and most importantly information and communication technology. Despite its macroeconomic advantaged Canada is not performing well as earlier mentioned. Canadian firms are not harnessing innovation strategies in order to counter the increased international competitiveness (Herman &Williams, 2013).
There is less entrepreneurial activity; Canadians are reluctant to persue new entrepreneurial ventures especially in the wake of global financial crisis. This has reduced the number of start-up companies’ further undermining Canada’s economic potential. Small firms tend to contribute to new ideas to the economy that could end up in making significant future growth and prosperity. There is need for policy adjustment and creation of incentives to ensure entrepreneurs and small business owners can realize their true economic potential. Policy makers should be able to enact policies that enable the small potential firms to grow. Young firms tend to create more jobs than old firms because the old or pre-existing firms tend to lay off workers when restructuring or in an event of technological advancement. Thus small firms should be greatly encouraged as they matter largely when it comes to job creation which clearly impacts on the economic development (Herman &Williams, 2013).
Canada has created an economic action plan that will provide fiscal stimulus to ensure economic growth. This has been done by reducing taxes for Canadians and job creating businesses, so as to encourage the business to make productivity enhancing investment that will lead to sustained economic growth. The government has provided resources to support training and skills development programs to help Canadians acquire additional skills needed in jobs in the 21st century. The infrastructure and research facilities of universities and other academic institutions have been improved; there is additional support for graduate students and internships as this is the core of a more prosperous economy in future (Science, Technology and Innovation Council,2012).
Adequate managerial skills are an important boost to growth and innovation. A report by the Canadian science, technology and innovation council notes that; “Management skills are a key component to skills in knowledge based economy”. Better managerial skills are associated with higher productivity and higher firm growth rate. Firms that make investments in the managerial sector in terms of staff training, exposure to technology and research and international markets have a higher success rates. Failure of the Canadian firms to invest in technology also acts as an obstacle towards innovation and economic growth (Herman & Williams, 2013).
There appears to be under-investing in innovation related technology in Canada as compared to other economies like The United States. Reports indicate there is a link between technology innovation and economic prosperity. Each percentage increase in technological advancement adds income to a country’s domestic product. There is a strong link between telecommunication and infrastructural investments to economic growth, the investments help in job creation and lay a basis on long term economic development (Flaherty, 2012).
Basic science research in education institutions needs to be incorporated in firms to bring about innovation; there is dire need for partnership private firms’ academic institutions and the government for it to be a success (Herman & Williams, 2013).
International trade is another imperative factor to affluence in Canada. With the country’s small market size, it benefits more than the larger economies like the United States. Trade opens up markets to good products and services. It leads to specialization, reduced production costs, increase varieties and creates an opportunity for innovation. There is need to develop trade innovations so that the process is more sophisticated as there is an increase in Canada’s global trade pattern. The population is more educated, more demanding and competition will end up being based on innovation and less on costs. Canada needs to improve the innovation capabilities in order to keep up with the current standards of living (Martin, 2010).
In conclusion, in order for Canada to have a prosperous economy, it is mandatory to strengthen the entrepreneurial ecosystem. This can be achieved through improving education institution that will empower the future entrepreneurs and innovators with the necessary information and knowledge. With strong entrepreneurship there will be more business ventures that will flourish all sectors of the economy. Start up firms must also be encouraged to flourish by provision of financial support by the government, formulation of favorable policies and reduced taxations so as to increase job creations. Lastly there is need to improve managerial skills through creation of programs that staff training especially on technological advancements.
Flaherty.J.M. (2012). Economic Action Plan 2012. The Stimulus Phase of Canada’s Economic Action Plan.
Herman, D., & Williams, D.A. (2013). Driving Canadian Growth and Innovation: Five Challenges Holding Back Small and Medium-Sized Enterprises in Canada.
Martin, L.R. (2010).Trade, innovation, and prosperity: Trade as an important stimulant to innovation and Canada’s prosperity.
Passaris, C. (2011). Make innovation a priority for New Brunswick. New Brunswick telegraph journal.A7.
Science, Technology and Innovation Council. (2012) Canada’s Science, Technology and Innovation System: Aspiring to Global Leadership.