Contents
A quick overview
- Canada has strong innovation assets—like top-tier research institutions and a skilled workforce—but struggles to convert these into productivity and high-impact innovation.
- The Triple Helix model, which promotes collaboration between government, academia, and industry, offers a strategic framework to better align efforts and support innovation-driven growth.
- Public-Private Partnerships (PPPs) in Canada need reform; current approaches are often fragmented and lack feedback loops, coordination, and long-term vision.
- Global examples from Germany, Denmark, and Singapore show how structured innovation clusters and state-supported coordination can lead to stronger commercial outcomes and global competitiveness.
- Canada’s path forward includes adopting mission-based innovation clusters, boosting translational research, modernizing procurement, and treating innovation as foundational infrastructure—not just policy.
Introduction
Our past studies have shown that Canada possesses substantial innovation assets, including a well-educated workforce, globally recognized research institutions, and a wealth of natural and technological resources. Yet, despite this strong foundation, the country continues to face structural challenges in translating these inputs into sustained, high-impact innovation as well as a higher yield in productivity.
What Is the Triple Helix Model and Why It Matters for Canada’s Innovation Ecosystem
The Triple Helix model, which emphasizes systemic collaboration among government, academia, and industry, presents a promising framework to address this gap. Countries such as Germany, Denmark, and Singapore have embraced this approach to strengthen innovation ecosystems through tightly coordinated public-private partnerships (PPPs), mission-driven research, and institutional innovation clusters. Canada has opportunities to learn from and adapt these strategies to better align public and private efforts, support knowledge translation, and increase national innovation capacity.
The Role of Public-Private Partnerships in Innovation Ecosystems
While Canada maintains numerous PPPs across research and technology domains, many are siloed, underfunded, or limited in long-term coordination. Current models often lack formal structures for feedback, performance measurement, or policy alignment.
To improve outcomes, PPPs should evolve beyond project-based collaboration into platforms for shared experimentation, risk mitigation, and applied problem-solving. This includes:
Sector-Specific Innovation Clusters
Developing sector-specific innovation clusters that coordinate public research, private
investment, and civil society actors. The framework and infrastructure must be set up so industries
can achieve this; regulatory alignment will be a step in the right direction.
Feedback Mechanisms for Responsive Policy
Embedding feedback mechanisms to ensure that innovation policy is responsive to both market
signals and public interest. More incentives exist, with private companies leading the charge and
driving the cluster forward.
Academic Grants for Translational Institutions
Creating academic grants tailored towards supporting translational institutions that help bridge
the gap between basic research and applied, market-ready solutions.
Moreover, some policy tools commonly used to incentivize innovation, such as patent boxes have had mixed results. While effective in rewarding intellectual property ownership, these measures often benefit established firms with advanced legal and R&D capabilities without necessarily fostering inclusive or collaborative innovation ecosystems. As such, they may be better positioned as complementary to—rather than replacements for—more holistic and participatory models of innovation governance.
International Models of Triple Helix and Cluster Implementation
Several jurisdictions have developed mature Triple Helix systems that can serve as models for Canada. Their experience demonstrates that innovation thrives when institutional collaboration is formalized, targeted, and supported by strategic coordination. The goal is not necessarily to follow the exact formula implemented by our global peers but to focus on creating a system that allows us to increase our productivity as a nation.
Germany: Applied Research Through Fraunhofer Institutes
Germany’s Fraunhofer Institutes represent a globally respected applied research model that directly serves the industry’s needs. Funded through a combination of public and private sources, the institutes work closely with small and medium-sized enterprises (SMEs) to develop new technologies, prototypes, and industrial applications. This model has contributed significantly to Germany’s global leadership in high-value manufacturing and engineering innovation [1].
Denmark: Global Co-Innovation via Innovation Centres
(Image: University of Copenhagen Botanical Garden)
Denmark supports a network of Innovation Centres that facilitate collaboration between Danish universities, startups, and global partners. These centres function as soft landing zones for international co-innovation, allowing Danish companies to access global research networks while exporting domestic expertise in fields such as renewable energy, biotechnology, and health technology [2].
Singapore: State-Led Innovation Coordination
Singapore’s innovation system is built on high levels of state coordination, with government agencies such as A*STAR (Agency for Science, Technology and Research) playing a central role. These agencies actively broker partnerships between universities, multinational corporations, and startups, ensuring alignment between national priorities and research agendas. This structure has supported Singapore’s leadership in urban innovation, health technology, and industrial R&D [3].
Canada’s Current Landscape and Opportunities for Reform
The goal is not merely to increase funding but to align incentives and clarify roles within the innovation ecosystem. The Triple Helix model provides a practical framework for doing so, with the potential to deliver more coherent and outcomes-focused innovation strategies. Compared to Germany, Denmark, and Singapore, Canada’s approach to innovation collaboration tends to be broader in scope but less structured and less targeted. While existing programs aim to balance regional equity, academic excellence, and economic competitiveness, this wide mandate can dilute impact.
Canada’s innovation programs are less focused and structured than those of some other countries, which can lessen their impact. To improve outcomes, Canada should create mission-based innovation clusters, fund applied research centres focused on commercialization, prioritize long-term partnerships, modernize public procurement, and establish common evaluation frameworks.
Conclusion: Innovation as Infrastructure
Innovation should not be treated as a discrete policy area. It is foundational infrastructure, essential for economic competitiveness, public health, environmental resilience, and inclusive growth. The Triple Helix model, when effectively implemented, provides the institutional scaffolding needed to build a more coordinated, adaptive, and forward-facing innovation system. Canada has the intellectual capital, research depth, and policy imagination to realize this vision. By deepening collaboration across sectors and investing in shared platforms for innovation, the country can transform its existing strengths into a sustainable, system-wide advantage.
Sources
#InnovationCanada #TripleHelixModel #PublicPrivatePartnerships #RDIncentives #InnovationStrategy #CheckpointResearch #CanadianBusiness #ResearchAndDevelopment #EconomicGrowth #PolicyInnovation
At Checkpoint Research, we work with businesses that are pushing boundaries—whether through cross-sector collaboration, process innovation, or applied research. If your company is working with universities, developing tech-driven solutions, or simply solving tough problems in a smarter way, you might be leaving R&D funding on the table.
Let’s explore how your innovation ecosystem could be fuelling future growth.
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A quick overview
- Canada’s interprovincial trade barriers are a self-imposed obstacle to national economic growth—driving up costs, limiting mobility, and restricting business expansion.
- Regulatory inconsistency between provinces forces businesses to comply with multiple sets of rules, raising operational costs and reducing efficiency.
- Protected industries like dairy, alcohol, and poultry face outdated restrictions that inflate consumer prices and reduce interprovincial access.
- Labour mobility remains limited, as qualified professionals and tradespeople must re-certify across provinces, worsening shortages and delays.
- Provincial infrastructure and procurement policies often prioritize local players, stifling national competition and innovation.
- Despite the Canadian Free Trade Agreement (CFTA), many provinces retain exemptions, and enforcement remains inconsistent—though progress is underway in Alberta, Manitoba, and Nova Scotia.
Introduction
With pending U.S. tariffs on the horizon, concerns about Canada’s economic future are rising. Trade restrictions come in many forms, but whether they stem from U.S. tariffs or Canada’s interprovincial trade barriers, the result is the same—higher costs, reduced business competitiveness, and unnecessary obstacles to economic growth. The key difference? One is imposed by a foreign government, while the other is self-inflicted.
Interprovincial trade barriers refer to regulatory, legal, and economic restrictions that limit the free movement of goods, services, labor, and investment between Canadian provinces and territories. These obstacles increase costs for businesses and consumers, ultimately reducing economic efficiency (RBC Thought Leadership, 2024). Despite Canada’s strong commitment to free trade on the global stage, its internal trade system remains fragmented, making it easier in some cases to do business with the U.S. or EU than between provinces.
Brief History of Interprovincial Barriers in Canada
Interprovincial trade barriers in Canada have existed since the Confederation in 1867, despite the Constitution’s intention to create a unified economic market. Section 121 of the Constitution Act promised free trade across provincial borders, but in practice, provinces imposed their own rules, regulations, and restrictions on goods, services, labor, and mobility.
Over time, these barriers have taken the form of inconsistent licensing rules, product standards, transportation regulations, and alcohol distribution laws, among others—often to protect local industries or due to regulatory patchwork. Efforts to fix this include the 1995 Agreement on Internal Trade (AIT) and its 2017 successor, the Canadian Free Trade Agreement (CFTA), designed to reduce these barriers. That said, not all differences are arbitrary; in some cases, they reflect legitimate regional concerns. A province may be better equipped to set standards for local issues like water safety, environmental protection, or resource management—areas where flexibility and local knowledge are essential.
However, enforcement remains limited, and many barriers persist, costing the Canadian economy billions in lost productivity and investment yearly (CFIB, 2022). The issue continues to spark debate over federalism, economic integration, and national competitiveness.
Breaking Down the Cost Drivers Behind Canada’s Interprovincial Trade Barriers
Regulatory Differences
One of the most persistent trade barriers is regulatory inconsistency. Each province operates under its own rules and standards, creating challenges for businesses trying to expand nationwide. A product that meets Ontario’s packaging and labeling laws may require modifications before being sold in Quebec. Likewise, differences in safety and environmental regulations force companies to comply with multiple sets of standards, increasing both costs and delays. Instead of a single, unified market, businesses must navigate a patchwork of conflicting provincial rules that slow trade and stifle economic efficiency.
Industry Protectionism and Supply Management
Wine produced in British Columbia often never reaches dinner tables in Ontario, not because of quality or demand, but due to arcane provincial trade barriers and outdated regulations. Certain sectors remain heavily regulated, operating under provincial quotas and trade restrictions that limit competition. Dairy, poultry, and alcohol are some of the most protected industries, with strict provincial controls preventing businesses from freely selling their products across Canada. The dairy industry, for instance, is bound by supply management systems that dictate production and pricing, keeping farmers locked within their provincial markets. Similarly, liquor distribution remains tightly regulated, with government-controlled monopolies restricting cross-border alcohol sales. While these measures are designed to protect local industries, they also inflate prices and limit consumer choice.
Labour Mobility
Skilled workers often face barriers to practicing in different provinces, even when their qualifications are identical. Doctors, nurses, engineers, and other regulated professionals must frequently re-certify or meet additional licensing requirements before they can work in another province. The same holds true for skilled trades, where apprenticeship programs and certification rules vary significantly across jurisdictions.
While the Red Seal Program was created to allow tradespeople—like electricians, plumbers, and heavy-duty mechanics—to work across Canada without retraining, not all provinces recognize all Red Seal trades equally, and provincial regulations can still create friction. For example, a Red Seal-certified welder in Alberta may face additional assessments before working in Quebec or Nova Scotia, adding unnecessary delays and costs. These restrictions exacerbate labor shortages, making it harder for businesses to fill positions and for workers to seize opportunities where they are most needed.
Transportation and Infrastructure Barriers
Moving goods across provinces presents another layer of complexity. Trucking companies must adhere to different weight limits, emissions standards, and fuel regulations depending on the province, increasing transportation costs and disrupting supply chains. A truck traveling from British Columbia to Manitoba may need to adjust its load or switch trailers to comply with each province’s distinct regulations. These inconsistencies create inefficiencies that ripple across industries, making domestic trade more expensive and cumbersome than it should be (Canadian Chamber of Commerce, 2021; Macdonald-Laurier Institute, 2020).
Government Procurement and Localized Policies
Provincial governments often favor local businesses when awarding contracts, limiting competition from companies based in other regions. Construction firms, for example, may struggle to bid on projects outside their home province due to preferential procurement policies. Public sector contracts are often structured in ways that prioritize local suppliers, restricting competition and slowing innovation. While intended to support regional economies, these policies inadvertently create trade barriers that prevent businesses from expanding nationally.
Who’s in Charge of Fixing This?
Federal Progress: The CFTA in Action
Responsibility for dismantling these barriers falls on both federal and provincial governments, but progress has been slow. The Canadian Free Trade Agreement (CFTA), introduced in 2017, was intended to reduce trade barriers and align provincial regulations (Canadian Free Trade Agreement, 2024). While the agreement was a step in the right direction, many exemptions still exist, keeping restrictions in place. As of July 2024, the federal government had removed or narrowed 17 CFTA exceptions, with another 20 eliminated by February 2025, reducing federal trade restrictions by 64% since the agreement’s inception (Canadian Free Trade Agreement, 2024).
Provinces, however, have been inconsistent in their approach. Some, like Alberta and Manitoba, have made significant strides.
Provincial Action: Alberta and Manitoba
In 2019, Alberta eliminated 13 of its 27 exemptions under the CFTA, later reducing even more, making it the province with the fewest trade restrictions. Manitoba also removed six exemptions and narrowed another, signaling its commitment to a more open internal market (Canadian Free Trade Agreement, Wikipedia, 2024).
Nova Scotia’s Regional Cooperation Approach
(Image: Cargo ship travelling The Halifax Narrows in Nova Scotia, Canada.)
Nova Scotia has also taken steps in recent years to align with the spirit of the CFTA. While it maintains some exemptions, the province has engaged in ongoing reviews of its regulatory frameworks and has committed to greater transparency by publishing a regularly updated list of its CFTA exceptions. Additionally, Nova Scotia has shown support for regional harmonization through its participation in the Atlantic Regulatory Cooperation Council, which aims to reduce trade frictions among Atlantic provinces and create a more streamlined regulatory environment.
Some provinces have pursued bilateral agreements to harmonize specific regulations, but these remain piecemeal solutions rather than a comprehensive fix.
Conclusion: The Road Ahead
Despite these efforts, significant barriers remain. The CFTA still includes over 160 pages of exemptions, a clear indication that interprovincial trade restrictions are far from resolved (Canadian Free Trade Agreement, 2024). While there is broad recognition of the economic benefits of a more integrated internal market, political will and action may have finally aligned. Canada prides itself on being a nation of free trade, but unless meaningful reform takes place, businesses and consumers will continue to bear the cost of bureaucratic inefficiency and outdated regulations.
If Canada truly wants to unlock its full economic potential, breaking down interprovincial trade barriers should be a top priority. In this US imposed tariff environment, this is one of the low hanging fruits we can deal with to increase productivity and grow the economy.
The question remains—will policymakers step up, or will these obstacles continue to hold Canadian businesses back?
Sources
- UK Patent Box Regime – gov.uk
- Turkey’s Patent Box Regime – WIPO
- Netherlands’ Innovation Box – Wikipedia
- Ireland’s Knowledge Development Box – Irish Times
- OECD BEPS Action 5 – Nexus Approach
- Patent Box Regimes in Europe – Tax Foundation
- UK Patent Box Deduction Formula – gov.uk
- OECD Secretary-General Report to G20 Finance Ministers
- https://taxsummaries.pwc.com/republic-of-korea/corporate/tax-credits-and-incentives
#CanadianEconomy #InterprovincialTrade #EconomicPolicy #USTariffs #TradePolicy #BusinessGrowth #RegulatoryReform #InnovationStrategy #TradeBarriers #CanadaBusiness
Interprovincial trade barriers don’t just limit commerce—they add friction that slows innovation, productivity, and the commercialization of R&D.
At Checkpoint Research, we help businesses navigate regulatory complexity and build strong, fundable R&D strategies—especially when jurisdictional hurdles get in the way.
If you’re expanding across provinces or want to ensure your innovation efforts are fully supported by SR&ED or other funding programs, let’s talk. We turn complexity into opportunity.
8,500
Number of Projects
500M
Total Claim Expenditures
96.5%
Successful Claims
