Immigration and Innovation

Briefing Deck: The contribution of immigration to Canada’s innovation system

The Innovation System

Framework conditions of the innovation system include:•Public Research Support: support for high quality research•Public/Private Coordination: collaborations between private concerns and publically supported research to facilitate take up innovations i.e. commercialization•Finance: tax subsidies and incentives for private firms to conduct innovation related activities (e.g. R&D), as well as venture capital to support new enterprises•Market Conditions: access to technology, competition policy, savvy users to drive demand•Openness: to foreign investment in research

•All framework conditions are affected by these key drivers of innovation:

Money People (HQP) Research Activity (R&D)

Innovation in Canada: A SnapshotOverall, Canada is a middle of the pack innovation performer•In some critical indicators we fall behind the OECD average:

Business expenditure on R&D – Canada 1.05%, OECD average 1.59%M&E investment – 13th in OECDFirm collaboration for innovation – only 5% of large firms, as opposed to 45% for FinlandScience and engineering degrees as a % of all degrees - 21st in OECD

•In other indicators we fall behind our key competitors:Venture Capital / GDP – only ½ the relative size of US investmentResearchers in the workforce – 8.2 R&D personnel per thousand employed, as opposed to

9.6 for the USMasters and PhD graduate levels – lower than Finland, Germany and the UK

•In some indicators where Canada is (or appears to be) a leader, our position is not very strong:

Public support for higher education R&D – strong, but possibly reaching a plateauTertiary education attainment – Canada has high overall tertiary attainment, but lower

levels of university attainment

HQP – Highly Qualified Personnel

• HQP play key roles in every element of the innovation system as: Students Researchers Managers and Executives Entrepreneurs Venture Capitalists Policy Developers Intellectual Property Lawyers

Immigration as a Source of HQP

Immigration can contribute to the Canadian stock of HQP in two ways: (1) foreign & international students studying in Canada, and (2) skilled foreign workers relocating to Canada permanently or temporarily.

Canada has averaged approximately 250,000 immigrants a year over the last 5 years. Of these, approximately 150,000 (2008) were economic class migrants and their immediate family. Approximately 1/3 of the economic class are selected on the points system, the remainder are spouses or dependents.

Canada also allowed 370,000 (2008) temporary workers to fill short term labour market needs.

Foreign Students by Destination

Canadian Statistics•Canada welcomed approximately 62 000 foreign and international students in 2006, a growth of 5000 over the previous year•14.8% of all tertiary students are foreign citizens•39% of students in advanced research programs are foreign citizens (more than half of whom are not Canadian residents)•Canada is a destination country for foreign students, but not the top destination.

Source Countries of International Students in Canada

• Canada has shown growth in the number of foreign students attracted, but this growth still lags behind key competitors. (Year 2000 = 100) Year 2007: Canada – 140, Aus – 200, UK – 158

• Canada has a comparable or higher percentage of its international student population enrolled in Science and Engineering (S&E) and associated programs (26%).

• 11.4% of international students in Canada are in advanced research programs. This is lower than the US (15.9%), comparable to the UK (11.9%) and higher than Australia (4.1%).

• Canada has varied sources of its international students. The largest source continent is Asia (42.4%), followed by Africa (16%), Europe (15.1%), North America (12.1%) and South America (8.8%).

Competition for Foreign Students

• Canada has a strong need for foreign students, and we compete with many leading S&T countries to attract them. Canada competes primarily with English language countries for market share – The US, UK and Australia

• International students are drawn to magnet centers, and to recruit international students areas of education and research where Canada leads must be championed.

• International students tend to base their selection of international schools upon the quality of education. Only when educational opportunities are generally comparable does cost (tuition) become a factor.

• Finding a job after graduation may be a key consideration for international students. International students in Canada report significant difficulties in finding employment after graduation, and many intend to leave Canada for their home, or a third country, to pursue career opportunities. For international students in advanced degrees this may be compounded by lower demand for PhDs in Canada than in the US.

HQP Migration

• Canada relies heavily on immigration for population and labour force growth.

• Based upon the current structure of the resident population by 2015 the size of the 15-19 cohort (entering the labour force) will be only 80% of the 60-64 cohort (leaving the labour force). The growth rate of the Canadian born work-force has been projected to hit zero in as early as 2011.

• Immigration also contributes substantially to the stock of HQP. 31% of highly qualified personnel in Canada are foreign born.

• Immigrants contribute overwhelmingly to the number of advance degree holders in Canada, which is particularly important given Canada’s low domestic output in this category.

HQP MigrationBased upon 2001 census data:• Most PhD holders in Canada were not born here. Half (50.3%) of PhD

holders in Canada are immigrants. This grows to 60% when non-permanent residents are included.

• These PhDs are heavily concentrated in S&E. In 2000, S&E PhDs accounted for nearly 2500 of the approximately 3000 immigrant PhDs.

• Between 1991-2000 there were nearly 23 000 immigrants with PhDs, representing 1.5% of the total immigration activity over the period.

• Between 1991 – 2000 China was the largest source of PhDs with 25.5%, up from only a 3.6% share over 1961 - 1970. The United States was the source of only 5.9% of immigrant PhDs, down from a high of 24% over 1971-1980.

Entrepreneurs and Investors• Canada competes to attract foreign investment into the domestic innovation system, as well as endeavoring to attract immigrant entrepreneurs and investors.

• Immigrants serve as conduits for foreign investment and trade by maintaining linkages with their countries of origin.

• Immigrants also contribute to the growth of another segment of the HQP stock in Canada – entrepreneurs.

• Studies have shown that along with higher levels of education, immigrants to Canada also have a higher propensity to become entrepreneurs. However, these entrepreneurs face challenges in conducting their unique brand of transnational innovation, such as financing and regulatory framework compatibility across countries.

The Impact of Immigration on Innovation

• It is difficult to quantify the impact of immigration on innovation – though it is clear that foreign born HQP are an indispensible part of the innovation-related labour force.

• HRSDC/SSHRC/Industry Canada research suggests that immigration, if properly targeted to attract and retain highly skilled personnel, could offset the decline in GDP that would otherwise result from the reduction (ageing) of the labour force.

• Certain international studies show that:– foreign students increase university research publishing in S&E – immigrants are over represented (2:1) in metrics such as founding leading high-

tech companies, patent applications and Nobel Prizes – International students, particularly at the graduate and post-graduate levels,

have positive spillover benefits for domestic students, and act as agents of knowledge diffusion throughout the innovation system

Policy Implications• The Canadian immigration process currently has four classes of economic immigrants under

which highly skilled workers may fall:- Federal Skilled Worker- Canadian Experience Class- Quebec Skilled Worker - Provincial Nominee Program

• The Federal Skilled Worker class has traditionally been the largest. However, it currently faces a serious backlog, and wait times averaging 63 months. In the coming years the Provincial Nominee Program (PNP) and the Canadian Experience Class (CEC) are projected to overtake the federal skilled worker program to account for the bulk of economic applications (if no changes are made to current programs). Citizenship and Immigration Canada projections for 2012 are 40,000 PNP and 26,300 CEC.

• The Canadian Experience Class fills a vital need to be able to transition temporary residents (e.g. international students and highly skilled foreign temporary workers) into permanent residents. However, the class is new, and it remains to be seen how effective it will be.

Programming

• Programs to attract world leading talent (e.g. Canada Research Chairs) have seen some tremendous success in recruiting international researchers and expatriate Canadian researchers – 31% of current chair holders were recruited from outside of Canada. Other programs, such as the Vanier Scholarships, attract world leading graduate students. A key drawback of these programs is their limited focus on the academic sector.

• The ability of highly qualified immigrants to enhance innovation in Canada is contingent upon recognition of their foreign earned credentials. New programs to assist applicants with foreign credential recognition in Canada have been undertaken. The development of a national framework in this regard is also underway. These initiatives, however, are recent and only beginning to be implemented.

Issues

• Some of Canada’s most significant innovation problems lie in the private sector. Lower demand for high-skilled individuals in Canada is indicative of this problem, as most HQP do work in the private sector. Immigration of high skilled individuals may not be able to address this issue directly.

• Immigrants face a negative mismatch rate of 60%, compared to 39% for Canadian born residents. This underutilization of immigrant expertise is likely detrimental to the national innovation system.

• There are serious gaps in the available knowledge of how immigration contributes to private sector innovation and entrepreneurship.

Questions for Discussion

Foreign and International Students

How can Canada better attract foreign students to study in Canadian universities, particularly in advanced research programs?

• Considerations:– Tuition, quality of education, language of instruction

What changes are necessary in order to encourage more foreign students to stay and work in Canada after graduation?

• Considerations– Post-graduation work permit process, lower demand for highly qualified personnel

means Canada loses potential immigrants to other countries, incentives for employers to hire international graduates

Questions for Discussion

Entrepreneurs

What can be done to attract and support immigrant entrepreneurs, particularly in innovation intensive sectors?

• Considerations:– Tax policy, federal/provincial co-operation on labour mobility and credential

recognition, transnational entrepreneurs

How can government programs which support innovation be more easily accessed by immigrant entrepreneurs?

• Considerations– Existing programs are general in nature, or support specific sectors or regions

Questions for DiscussionHighly Skilled Temporary Workers

What can be done to attract greater numbers of highly skilled temporary workers to Canada, and to encourage them to become permanent residents?

• Considerations:– Current system for processing temporary applications may not be internationally competitive

Identification of Priority Applicants

How can the immigration system be improved to ensure that the skilled immigrants Canada needs are accepted when they are most needed?

• Considerations– Using Ministerial authority to ensure that applications are processed to reflect the labour

market needs for skilled labour in Canada (i.e. frequently updating list of skilled occupations)