Canada must innovate or face domination by stronger nations

Canada can no longer rely on raw resource exports. Innovation is the only way forward to secure our economic future

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It’s time to face the stark reality: if Canada continues to export raw materials without adding value, we risk cementing our status as nothing more than a supplier to wealthier nations.

This is the existential threat facing Canada’s natural resource economy, and it must be addressed before it’s too late.

The “staples trap,” a concept introduced by political economist Harold Innis in the 1930s, describes the cycle in which a country exports raw resources—like oil, minerals and timber—without processing or refining them into higher-value products. This reliance on unprocessed materials leaves the economy vulnerable to fluctuations in global demand and prices.

Innis warned that, without a shift toward value-added production, Canada would remain locked in economic subordination, forever serving the needs of wealthier nations that profit from refining and using the finished products. His warning is as relevant today as ever.

While LNG Canada’s success in liquefied natural gas exports marks progress, exporting raw hydrocarbons alone won’t break the cycle of resource dependency. Canada must move beyond exporting raw materials and focus on creating products that drive greater economic value both domestically and internationally.

For example, Canada exports raw oil to other countries, where it is refined into gasoline and other products, which are then sold back to us at a higher price. This not only leaves Canada vulnerable to price fluctuations, but also prevents us from fully capturing the value of our own resources.

Canada can break free from this cycle by focusing on innovation and developing industries that add value to these resources. Investing in sectors like clean technology and advanced manufacturing will drive economic growth, create high-paying jobs and build a more resilient economy that benefits Canadians across the country.

However, Canada is currently struggling to keep pace with global innovation leaders. Ranked 14th on the Global Innovation Index, we have much work to do before we can claim technological leadership. The Carney government’s aspirations to lead the G7 can only be realized if we adopt innovation-focused policies that invest in education, research and development.

The stakes are high. Innis’s concepts of “core-periphery tensions” and “forward linkages” provide a roadmap for the future. Core-periphery tensions describe the imbalance between resource-rich countries and more developed economies that benefit from their resources, while forward linkages suggest that Canada should focus on boosting productivity through value-added processes before we export.

Public policy must prioritize value-added strategies, such as technological innovation, to enhance productivity and foster new industries within our resource sectors. Canada must align policy with innovation if it truly wants to become an energy superpower, not just a resource exporter.

Let’s redefine what it means to be an energy powerhouse. The future isn’t just about exporting raw materials—it’s about exporting the expertise and innovation that drive sustainable economic growth, job creation and prosperity. By fostering innovation across sectors like energy, agriculture and technology, we can ensure that our natural resources become a launching pad for broader economic growth.

If we fail to make this pivot, Canada’s economic future will remain tied to a vulnerable, resource-dependent model that stifles its potential.

Bill Whitelaw is a director and advisor to many industry boards, including the Canadian Society for Evolving Energy, which he chairs. He speaks and comments frequently on the subjects of social licence, innovation and technology, and energy supply networks.