The Weirdest Chart in Canada’s Innovation Ecosystem

7 hours ago
3 min read

There is a really striking chart that’s been making the rounds in Canadian innovation policy circles over the past decade or so. It says that between 2020 and 2022, 73 percent of Canadian businesses were engaged in innovation, putting the country at the very top of the OECD. In the 2018 to 2020 cycle, Canada had an even higher rate of 83 percent.

83 percent of firms. Innovating. In Canada.

The next best performing country in 2020-2022, Belgium, had 65 percent of businesses classified as innovating, while Germany, Finland and Switzerland reported rates of 55 percent, 54 percent and 48 percent and ranked 7th, 10th and 17th, respectively. According to the data, the United States had innovation rates less than half the Canadian rate. Let that sink in. A randomly selected business in Canada is twice as likely to be innovating as a business in the United States. Or so the data suggest.

What exactly is going on? How do we square this data with Canada’s otherwise mediocre innovation performance, as documented by the Council of Canadian Academies’ State of Science, Technology and Innovation in Canada assessment and the World Intellectual Property Organization’s Global Innovation Index, for example?

Source: OECD Business Innovation Statistics, 2025. www.oecd.org/en/data/insights/data-explainers/2026/04/oecd-business-innovation-statistics-unpacking-key-trends-and-findings.html

Short answer? Canadian businesses lead the world in saying that they innovate. When the OECD aggregates data on innovating firms, they rely on national surveys. And, at least on this question, those national surveys simply take firms at their word when asking whether they are innovating in some capacity, such as developing a new product or service or substantially improving existing offerings, adopting a new technology, or improving business processes.

When we look at more objective measures of innovation inputs, activities and outputs, there is a substantial gap between what Canadian firms’ say and what they are actually able to do:

Business R&D spending is barely 1 percent (as a share of GDP), putting us 21st in the OECD and below the OECD average of 1.5 percent.
Canadian firms’ investment in technology puts us next to last in the G7.
We lag far behind other countries in generating intellectual property from innovation: Of 139 countries ranked by WIPO, Canada ranks 32nd on PCT patents (per billion $PPP GDP), 85th on trademarks ( per billion PPP$ GDP), and 95th on industrial designs (per billion PPP$ GDP).

This is not to say that Canadian businesses are trying to deceive surveyors or themselves about their innovation activities. They might genuinely think that they are innovating given the definition provided. Many are making a sincere go at it, but face a range of barriers that explain the gap between ambition and achievement.

Still, why Canadian firms are more likely than others to tell people conducting surveys that they’re innovating is a bit of a puzzle. Is there something unique about Canada’s domestic innovation discourse that prompts firms to use the word more often? Do firms in other countries have a better grip on reality? Are there structural incentives that prompt Canadian firms to fake it, whether or not they can subsequently make it? There is a lot to unpack here and we don’t (yet) have the answers.

In the meantime, an easy corrective to the global discourse would be to more accurately label the charts that present these results. Instead of the very objective sounding “innovative and innovation-active enterprises,” the OECD and others should might consider “enterprises that say they innovate” or “firms that self-report innovation” or even “we aggregated data from national surveys that asked a bunch of firms what they’re up to and here’s how many said they’re trying to innovate, but please check other data to get a complete picture.” We know, we know. But you get the point.

For data nerds like us, the lesson is to always look behind the curtain to see whether the ways data are presented faithfully reflect how they are collected and what they really mean.