Business and Economy
Reimagining the future Canadian economy in a changing world
Canada’s agriculture sector, which contributes approximately seven per cent of annual GDP and boasts some of the world’s most fertile farmland, has long emphasized raw commodity exports. (Pexels Photo)
Canada urgently requires a bold, cohesive economic strategy to navigate an increasingly volatile global landscape.
For decades, the country has functioned much like a resource-rich colony, exporting raw materials while lagging in value-added innovation and technological leadership. Recent geopolitical tensions, supply-chain disruptions and the accelerating demand for clean-energy technologies have amplified economic vulnerabilities worldwide and here.
However, these challenges also present a pivotal opportunity for Canada to reorient its economy toward greater resilience, productivity and global competitiveness.
Canada must shift from its historically risk-averse, fragmented investment model to a targeted, mission-oriented approach that concentrates on sectors where it holds inherent advantages: agriculture, forestry, energy and critical minerals. These sectors are not isolated. They form a synergistic ecosystem.
For instance, critical minerals enable AI-driven optimizations in agriculture, while sustainable forestry products can support energy-efficient infrastructure, bolstered by a skilled Canadian workforce. This interconnected framework amplifies return on investment, fostering technological sovereignty and intellectual property development.
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To achieve the required change in approach, the federal government must critically assess the shortcomings of its current strategy, draw lessons from successful international models and implement mechanisms that raise these sectors higher in the global value chain through big-picture, goal-driven investments focused on national priorities, rather than scattered short-term programs.
Previous federal governments have pursued a multitude of initiatives, such as carbon pricing and clean tech incentives, but often without sufficient focus or rigorous evaluation of outcomes, therefore yielding underwhelming results.
Saudi Arabia’s 2024 announcement of a US$10-billion AI venture fund underscored the limitations of Canada’s dispersed efforts, such as the $2 billion allocated to five global innovation clusters.
This “scattershot” approach – distributing modest funds across numerous areas – contrasts sharply with the concentrated, transformative investments made by competitor countries, thus perpetuating Canada’s lag in technological leadership.
Recent literature on innovation economics shows focused investments in high-potential areas yield superior outcomes compared to broad, unfocused spending because the former enable economies of scale, deeper knowledge accumulation and breakthrough innovations.
Moreover, the mantra that “the environment and economy go hand in hand” must evolve to explicitly incorporate technology as a third pillar. In contemporary economies, the triad of environment, economy and technology drives sustainable growth.
Canada’s prosperity thus depends on strategically deploying transformative technologies across key sectors to enhance productivity while addressing climate imperatives.
To overcome these challenges, Canada should diversify its economic base by prioritizing industries with comparative advantages, including agriculture, forestry, critical minerals and energy. Historically, Canada has exported these resources in raw form, missing opportunities to develop refined products, intellectual property and services.
However, worldwide demand for Canadian offerings in these areas is poised to escalate because of global population growth, trade disruptions intensifying and natural capital under strain – as noted by the International Energy Association and the United Nations’ global resources outlook highlighting the surging desire for clean-energy minerals.
By investing in upstream and downstream capabilities, Canada can capture greater value, bolstering resilience against external shocks.
Agriculture
Canada’s agriculture sector, which contributes approximately seven per cent of annual GDP and boasts some of the world’s most fertile farmland, has long emphasized raw commodity exports. Yet, initiatives such as Protein Industries Canada under the federal global innovation clusters program have demonstrated untapped potential, positioning the country as a leader in plant-based proteins through advancements in seed genetics, processing technologies and sustainable supply chains.
This cluster has advanced tools for inputs such as AI-guided crop monitoring and smarter farm equipment to meet global demand for sustainable food. But Canada invests far less than the U.S. and EU governments, which pour billions more into agri-tech. Without comparable funding, Canada risks losing its edge. Focused R&D here can generate patents and higher-value exports, not just raw food commodities.
Forestry
Canada’s forestry sector, which has long been a cornerstone of our natural-resource economy, faces mounting pressures because of climate change and global market shifts. Past efforts to make the sector more sustainable, such as the two-billion-trees program have been largely symbolic and insufficient for building resilience.
Instead, Canada should prioritize innovative solutions, including next-generation mass timber products for sustainable construction – addressing the housing crisis while reducing emissions – and drone-assisted reforestation.
The 2025 Woodrise Congress highlighted climate-resilient building – an area where Canadian advancements in cross-laminated timber position the sector for global leadership.
By shifting from raw exports to value-added products and technologies, such as advanced wood products and low-emission heavy machinery, Canada can create jobs, cut emissions and export intellectual property, avoiding hype-driven distractions such as uneconomical hydrogen pursuits – the dreams of which continue to be damaged by harsh economic realities.
Energy
While opportunities in wind and solar manufacturing have largely passed Canada by, the sector retains advantages in emerging and mature technologies amid the AI-driven energy surge. The immense power and cooling needs of data centres align with Canada’s abundant hydroelectricity and water resources, if managed sustainably.
Key areas include next-generation geothermal, which can leverage oil-and-gas industry expertise for job transitions and exportable skills; CANDU reactors, which produce valuable medical isotopes amid growing global demand; and small modular reactors, despite cost uncertainties in projects such as Ontario’s 2025 initiative.
Additionally, Canada’s global leadership initiative in direct air capture can offset emissions from hard-to-abate sectors, possibly including AI infrastructure. These technologies enable Canada to capitalize on the clean-energy transition.
Critical minerals
Canada is poised to supply the backbone of AI hardware, quantum computing and clean tech because it is endowed with vast reserves of lithium, cobalt, nickel and rare-earth elements such as neodymium and europium.
The latest IEA critical mineral outlook reports a 35-per-cent increase in demand in 2024, with projections soaring for AI and renewable applications.
The federal government’s updated critical-minerals strategy emphasizes domestic refining and manufacturing, enhancing sovereignty amid geopolitical risks. The June G7 critical-minerals action plan further supports diversified supply chains. By advancing value-added capabilities, Canada can transition from exporter to innovator in critical components.
A focused federal strategy must also partner meaningfully with Indigenous communities, ensuring they share in the economic benefits of mining and refining projects. This collaboration not only promotes fairness but also builds trust and speeds up project approvals, reducing the costly delays that often arise when communities are left out.
Conclusion
The overarching issue with both federal and provincial governments has been their reluctance to “pick winners” through heavy, targeted investments, opting instead for a “buckshot” model that dilutes impact. Empirical studies confirm that allocating resources to core and transformational areas outperforms scattered efforts in driving productivity and competitiveness.
To reimagine its economy, Canada’s federal government needs a “mission government” framework (with provincial support), as Mariana Mazzucato argues, directing targeted government interventions toward grand challenges such as climate resilience and technological sovereignty.
Uncertainty is inherent in transformative investments, but Canada’s risk aversion has perpetuated economic dependency. Under Prime Minister Mark Carney’s leadership since April – such as his nation-building projects plan and the One Canadian Economy Act – there is momentum for change. Decisive action now can position Canada as a global leader in cutting-edge technologies.
We recommend:
- adopting a mission-oriented strategy targeting agriculture, forestry, energy and critical minerals with strategic annual investments toward net-zero goals;
- enhancing existing economic sectors with focused funding for AI integration and IP development;
- partnering with provinces, municipalities and Indigenous Peoples for inclusive projects with strong social support and public benefit.
This reimagined economy will drive prosperity, unity and sustainability for Canada – not just now but into an increasingly uncertain future.
This article first appeared on Policy Options and is republished here under a Creative Commons license.
