As the rapid expansion of artificial intelligence continues to transform various economic sectors, Canada stands at a critical juncture, facing a pivotal policy decision that could shape its future prosperity. The urgency to align AI initiatives with the nation's foundational industries has never been greater, as missteps risk relegating these efforts to mere branding exercises rather than substantive nation-building endeavors.
The Imperative for Sector-Specific AI Funding
Federal investments in AI must be explicitly linked to industries that are the backbone of Canada's gross domestic product and export capabilities, including energy, mining, and advanced manufacturing. Without this targeted approach, Canadians may increasingly grapple with trade deficits and inflationary pressures that are already biting sharply into the economy. It is essential to recognize that AI policy is inherently economic policy; if it fails to support the sectors that generate revenue and jobs, it loses its transformative potential.
Current Policy Gaps and Missed Opportunities
Ottawa's $300-million Compute Access Fund, designed to enhance computational resources for small and medium-sized businesses developing domestic AI products, is a commendable step. However, it lacks clear directives on prioritizing sectors crucial for long-term economic resilience. Recent consultations on Canada's AI strategy, with results released earlier this month, notably omitted discussions on aligning AI with core growth industries or their supply chains, highlighting a significant oversight in federal planning.
In an era marked by geopolitical instability, where government focus is shifting toward defence spending and supply chain security, it is imperative that leading economic sectors take precedence. For instance, energy industries—encompassing oil and gas, nuclear, and renewables—contribute approximately 10-12% of GDP and 20-25% of exports. Advanced manufacturing accounts for about 10% of GDP and up to 40-60% of exports, while metals and mining add around 5% to GDP and over one-fifth of exports, including key products like aluminum and steel.
Moving Beyond Assumptions to Applied Solutions
There is a growing misconception that merely expanding Canada's AI tech sector or channeling funds into emergency defence supply chains will automatically fortify the economy. However, supporting AI firms does not equate to economic growth. True competitiveness hinges on leveraging AI to enhance productivity within proven GDP-driving sectors, rather than dispersing investments without strategic focus.
Canada already showcases the potential of applied, export-oriented AI leadership. For example, through Ontario Tech University's Brilliant Energy Institute, researchers are collaborating with the International Atomic Energy Agency to develop AI tools for predictive maintenance and anomaly detection in nuclear power systems, including small modular reactors. This initiative not only improves safety and reliability but also bolsters Canada's global standing as a nuclear leader, demonstrating how AI can reinforce existing industrial strengths.
Prioritizing Applied AI for Economic Backbone
Instead of competing with global hyperscalers, Canada should concentrate on applied AI in sectors where it already possesses industrial depth, regulatory expertise, and export scale. Advanced manufacturing, supported by AI adoption and powered by the nation's energy resources, could form the foundation of an emerging defence supply chain, creating synergies that drive innovation and job creation.
Federal funding should prioritize strengthening industries where Canada already demonstrates global export leadership, earnings, and employment. For over two decades, the country has faced challenges such as declining research and development investment, underinvestment in applied AI within key sectors, and an overreliance on housing to fuel GDP growth. These weaknesses cannot be remedied through scattered AI funding or superficial summit discussions; they require a concerted effort to use AI as a tool for boosting productivity in the industries that define the economy.
The government need not arbitrarily pick winners and losers, as market forces have already signaled where strengths lie. A serious AI strategy should reinforce and amplify Canada's energy, mining, and advanced manufacturing sectors, rather than diluting their impact. While the long-term outlook holds promise, realizing this potential depends on making wise, targeted investments today to secure a prosperous future.
Dr. Steven Murphy is the president and vice-chancellor at Ontario Tech University, advocating for strategic AI integration in Canada's economic framework.
