Innovation in Canadian Natural Resource Industries: A System-Based Analysis of Performance, Policy and Emerging Challenges

By Andrew Sharpe

Innovation is an important driver of productivity growth, which in turn is a major source of improvement in living standards. Given the growing importance of the natural resources sector in the Canadian economy, innovation in this sector is particularly relevant. This article, based on a much large study, using a systems-of-innovation approach, analyzes the innovation performance of the Canadian natural resources sector by comparing it to that of the Canadian business sector as a whole. The key conclusion of the report is that the overall innovation performance of the Canadian natural resources sector, especially the mining and oil and gas sectors, is strong and has improved in recent years.


The most important source of long-term improvements in living standards is productivity growth. One of the main drivers of productivity growth is innovation, in products, production processes, organizational structures, and management techniques. Similarly, negative externalities that have an adverse impact on living standards, such as environmental degradation, can be reduced through innovation. The bottom line is that innovation is crucial to the economic performance and social progress of Canada.

Innovation in the natural resources sector is of particular relevance given the growing importance1 of natural resources to the Canadian economy. In recent years, the natural resources sector has faced an array of issues which threaten its international competitiveness. The innovation performance of Canadian natural resource industries will be a crucial determinant of their future viability. Adopting new technologies and practices and acquiring the latest vintage of capital goods will ensure that Canadian resource firms remain strong in the face of emerging international competition while improving energy efficiency and environmental performance.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.