Canada's Economic Future with Artificial Intelligence

Opinion by Georgia Evans.

The future of the global economy will be defined by the use of data and artificial intelligence (AI). AI is a disruptive technology, like the steam train or electricity, that will have economy-wide impacts. AI needs to be developed and used for good – Canada has an important role and a vested interest in ensuring that AI’s foundations are rooted in human rights, diversity, inclusion, innovation and economic growth. The Pan-Canadian AI Strategy (Strategy), the world’s first national AI strategy, has positioned Canada as an early lead in research and talent in AI and as a global leader in responsible AI [1]. While the Strategy has created a strong supply of AI talent and companies in the country, it has fallen short of creating the robust demand necessary for a balanced AI ecosystem. In order to ensure this demand, Canadians need better digital literacy or risk losing their AI talent and falling behind in the data-driven economy.


The Pan-Canadian AI Strategy: The Good, Bad, and Ignored

In 2017, the Government of Canada and the Canadian Institute for Advanced Research (CIFAR) launched the world’s first national AI strategy worth $125 million [2]. The Strategy’s objectives are to attract and retain world-class AI researchers, create a collaborative AI ecosystem across the country, advance national AI projects, and develop global thought leadership on the societal implications of AI [3]. While Canada has largely succeeded in retaining AI experts, with the third-largest concentration of AI experts in the world [4] and developing global thought leadership, the Strategy has not created a balanced AI ecosystem in the country. Canadian businesses have been struggling to adopt AI into their activities, with only 8% of companies planning to increase their spending on AI by more than 20% in 2021, which is 40% less than the global average [5]. A lack of domestic demand will influence AI’s adoption across the country and can serve as a barrier to Canadian companies being able to scale globally.


What Happens if Canada Loses its AI advantage?

The impact and projections of the Pan-Canadian AI Strategy demonstrate that demand for AI will catch up to the supply; however, this demand may not catch up fast enough in a data-driven economy where being the first mover matters. From 2017-2019, foreign direct investment in Canadian ICT grew 50 percent, with more than 45 companies investing in AI research labs in Canada [6]. AI start-up funding surpassed $600 million in 2019, and 34 start-ups have been acquired since 2017 [7]. Spending on technology in Canada is expected to be four percentage points higher than in the United States from 2018-2023 [8]. These statistics show a promising picture of Canada’s AI ecosystem.


There are several implications for Canada if we lose our AI advantage. The merits of AI largely rest on its ability to enhance the productivity of previously tedious tasks. As such, businesses that fail to adopt AI into their practices may find that their competitors are more efficient and have lower costs [9]. Today in Canada, the ScaleAI supercluster project estimates that their investments into AI training, projects and adoption will add $16.5 billion into the Canadian economy by 2028 [10]. The sectors the supercluster invests in, however, are largely limited to the sale and movement of goods. As a general-purpose technology, AI will affect every sector. If Canadian businesses struggle to adopt AI and use it skillfully, they will struggle to compete internationally against those that do.


As Canadian businesses struggle to adopt AI into their practices, Canada’s promising AI startups will continue to be acquired by foreign companies. Morgan Stanley acquired a Calgary-based Software as a Service firm and Square acquired a machine learning company in Ontario [11]. These acquisitions demonstrate that Canada needs to create a better strategy to maintain the AI companies it invests so much money into. If Canada is unable to stimulate demand for AI to a point that at least matches supply, then top Canadian talent will ultimately leave the country. Canadian investments in AI research will benefit other economies, while Canada’s economy struggles to catch up. The loss of Canadian technology talent will result in lost output economy-wide. Without a balanced AI ecosystem in the country, Canada risks a brain drain of its talent, falling behind in the data-driven economy, and enabling AI to proliferate across the globe without the ethical standards Canada has been a leader in creating. In short, the stakes are too high for Canada to get this wrong.


Invest in Digital Literacy

The best way to ensure robust demand in Canada’s AI ecosystem is to invest in the digital and AI literacy of the population. Investment in these skills has short-term expenses with long-term interests that will greatly benefit the Canadian economy. According to a study conducted by the Public Policy Forum, only 20% of Canadians have a “good understanding” of AI [12]. People cannot and will not adopt technology into their businesses if they do not know how to use it. Digital and AI literacy are necessary for public trust and buy-in to technology. Domestic demand will increase with improved digital and AI literacy. The Government of Canada, provincial and territorial governments, and the private sector need to improve digital and AI literacy in order to maintain a global lead.


A key focus should be on public education for AI literacy through primary and secondary education. While the Digital Charter has focused on improving digital literacy, only four provinces and territories have coding in their K-12 curricula [13]. The CanCode program reached over 1.3 million students to support Canadian students learning coding, data analytics, and digital content development [14]. The extension of a broad-based digital and AI literacy will be necessary for ensuring the easy integration of AI into society. An AI-literate population will trust their use of the technology, a key factor for its adoption and growth in society. Citizens that are informed about AI will also be able to direct policy-makers about how they want AI to be used. Without an AI-literate population, demand for the technology will not grow sufficiently in Canada to make the country competitive on the global stage [15].


Digital and AI literacy include cybersecurity readiness to prevent severe costs. 81 percent of AI early adopters in Canadian businesses reported major concerns over the risks associated with the use of the technology [16]. Canada ranks number three out of countries with the most data theft from 2013-2020 [17]. In 2018, cyberattacks cost companies an average of $12 million dollars in Canada [18]. Cybercrime is expected to cost the world $10.5 trillion a year by 2025 [19]. Digital and AI readiness include generating an understanding of cybersecurity risks and how to properly mitigate them, in order to avoid data theft and cyberattacks.


Digital and AI literacy is of utmost importance to help Canadian businesses scale and compete internationally. Investing in widespread digital and AI literacy for the entire population will increase domestic demand for technology and technology jobs. A technologically literate population will create more data, which fuels AI and thus the data-driven economy as a whole. It is also necessary for workers to be able to upskill and re-skill in order to remain productive and competitive in an automated workforce. Canadian businesses that adopt AI technology will save from lower production costs, have increased output, and be able to invest more. Increased revenue from this domestic demand, as well as Canada’s global reputation for responsible AI, will help Canadian businesses scale globally and compete on the international level. Canada has a promising future in the data-driven economy, and strategic choices by policymakers are necessary to ensure that Canadians can benefit from an ethical and thriving AI ecosystem.


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[1] Deloitte, “Canada’s AI Imperative: Public policy’s critical moment,” Omnia AI, 2020, https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/deloitte-analytics/ca-public-policys-critical-moment-aoda-en.pdf?icid=omniaseries


[2] Nabilah Chowdhury et al., “Pan-Canadian AI Strategy Impact Assessment Report,” CIFAR and Accenture, 2020, https://cifar.ca/wp-content/uploads/2020/11/Pan-Canadian-AI-Strategy-Impact-Assessment-Report.pdf.


[3] Canadian Institute for Advanced Research, “Pan-Canadian AI Strategy,” CIFAR, 2021, https://cifar.ca/ai/


[4] Deloitte, “Canada’s AI Imperative: From predictions to prosperity,” Omnia AI, https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/ca-175/prediction-to-prosperity/ca175-EN-prediction-to-prosperity-AODA.pdf


[5] Ibid.


[6] Nabilah Chowdhury et al., “Pan-Canadian AI Strategy Impact Assessment Report”


[7] Ibid.


[8] Ibid.


[9] Daniel Acemoglu & Pascual Restrepo, “NBER Working Paper 24196: Artificial Intelligence, Automation and Work,” National Bureau of Economic Research, January 2018, https://www.nber.org/system/files/working_papers/w24196/w24196.pdf


[10] ScaleAi, “ScaleAI,” ScaleAI, 2020, https://www.scaleai.ca/


[11] Nabilah Chowdhury et al., “Pan-Canadian AI Strategy Impact Assessment Report”


[12] Peter Loewen & Benjamin Allen Stevens, “Automation, AI, and Anxiety: Policy Preferred, Populism Possible,” Brave New Work, University of Toronto, July 2019, https://ppforum.ca/wp-content/uploads/2019/07/AutomationAIandAnxiety-PPF-July2019-EN1.pdf


[13] Government of Canada, “Canada’s Digital Charter in Action: A Plan by Canadians, for Canadians,” 2020, Innovation, Science, Economic Development Canada. https://www.ic.gc.ca/eic/site/062.nsf/eng/h_00109.html


[14] Ibid.


[15] Deloitte, “Canada’s AI Imperative: From predictions to prosperity”


[16] Ibid.


[17] Howard Solomon, “Cybersecurity Today – US, Canada among top countries for data theft, careless employees lead to data exposure and watch out for signs of data espionage,” ITWorld Canada, 2020, https://www.itworldcanada.com/article/cyber-security-today-us-canada-among-top-countries-for-data-theft-careless-employees-lead-to-data-exposure-and-watch-out-for-signs-of-cyber-espionage/439032


[18] Accenture, “Cybercrime Cost Canadian Companies More Than US$9M Last Year,” NewsWire, 2019, https://www.newswire.ca/news-releases/cybercrime-costs-canadian-companies-more-than-us-9m-last-year-according-to-report-from-accenture-and-ponemon-institute-854718196.html#:~:text=Cybercrime%20Costs%20Canadian%20Companies%20more,from%20Accenture%20and%20Ponemon%20Institute


[19] Steve Morgan, “Cybercrime To Cost The World $10.5 Trillion Annually by 2025,” Cybercrime Magazine, 2020, https://cybersecurityventures.com/hackerpocalypse-cybercrime-report-2016/