ITIF President Questions Canada’s Political Will to Address Productivity Challenges

Robert Atkinson argues that Canada should adopt a mindset similar to that of successful small countries like Israel, Finland, and Taiwan, which have been able to innovate in government, take risks, and rally around a common vision. He believes that Canada should strive to become a global leader in regulatory innovation, particularly in areas such as drone regulation, autonomous vehicles, FinTech, and AI. Atkinson criticizes Canada's tendency to look to Europe for regulatory inspiration, suggesting that it should instead focus on streamlining regulations to attract innovators.

Regarding the lag in unicorn startups compared to the US, Atkinson identifies several factors. Firstly, he acknowledges that it may be easier to scale a company in the US due to its larger domestic market. However, he argues that with agreements like the USMCA, Canadian innovators should be able to access both the US and Canadian markets from the outset. He also suggests that some Canadian innovators may be content with building small to mid-sized companies, especially when they can benefit from R&D credits and grants. Atkinson speculates that there may be a cultural factor at play, suggesting that Canadian innovators may lack the "hunger, aggression, [and] killer instinct" needed to build global companies.

Regarding the federal government's proposal to increase the capital gains inclusion rate, Atkinson expresses concerns about its potential impact. He believes that such a move could send a negative signal to innovators, both domestically and internationally, about Canada's commitment to the innovation economy. Additionally, he suggests that it may limit the ability of small startup companies to retain and attract capital, potentially hindering Canada's competitiveness in the global market.