Institut C.D. HOWE In stitute Essential Policy Intelligence | Conseils indispensables sur les politiques ECONOMIC GROWTH AND INNOVATION Measuring Innovation in Canada: The Tale Told by Patent Applications by Robbie Brydon, Nicholas Chesterley, Benjamin Dachis and Aaron Jacobs Patent applications are a good measure of the innovative spirit in a country. Patents reward the innovation and creativity that drive economic growth. Patents provide their holders the near exclusive right to benefit from an invention, for a set amount of time, in exchange for disclosing public information about the underlying innovation. Our Canadian patent data shed new light on domestic “value added” by sector, and show that Canadian innovative output – as measured by domestic patent applications – is high in utilities, construction and computers and electronics, relative to other sectors. However, the pharmaceuticals and medical equipment sector has a low share of Canadian inventors applying for patents for the Canadian market. Across Canada, Alberta and Ontario consistently outperform national averages in domestic patent applications per capita, while the Atlantic Provinces are dramatically below average; all provinces have seen a fall in patent application rates in the last decade. Innovation is often viewed as a talisman for economic growth. Innovation brings new products that can improve quality of life. Innovation can drive productivity and economic prosperity. But where is the innovative spirit strongest in Canada? In this E-Brief we examine which provinces and sectors have seen the most domestically applied innovation, by looking at trends in patenting by Canadians The authors wish to thank reviewers who commented on earlier versions of this paper. The authors retain responsibility for any remaining errors. Essential Policy Intelligence e-Brief November 28, 2014