Competing in Robotics: A Canadian Strategy for Economic Sovereignty
The global robotics market is projected to reach $154 billion by 2033 and is currently dominated by two economic giants: the United States and China. In the United States, the Trump Administration is leveraging trade tariffs in a bid to restructure the global trading system and rejuvenate American manufacturing. In China, President Xi has doubled down on research in AI, quantum technologies, biotech, and batteries with the purpose of becoming the world’s technology leader. Recognizing that economic power translates into geopolitical influence, both countries are provisioning the necessary investments to drive new industries linked to artificial intelligence (AI) and robotics.
Canada, however, remains without a national robotics strategy. While we have world-class AI research and best-in-class innovation infrastructure, Canada lacks focused industrial execution. Our economic future, threatened by weak productivity, shrinking demographics, and foreign technology dependency, demands an urgent response. Canadian planning must now shift from a fragmented, research-first model to an execution-driven, whole-of-government approach to robotics.
In this article, we analyze key lessons from China’s industrial strategy and the ongoing global impact of geopolitical competition between the United States and China. Examining how industrial manufacturing is changing, we offer strategic recommendations with regard to how Canada might leverage its inherent advantages to reclaim our political sovereignty and economic dynamism.
The Robotics Revolution
There are some four million robots installed in factories around the world, with new robots increasingly being deployed across construction, mining, logistics, health care, and the military. Unlike previous waves of automation, the convergence of advanced robotics and AI means machines will increasingly perform complex tasks autonomously. Analysts warn of self-reinforcing cycles of recursive innovation: AI-driven robots manufacturing ever-more intelligent robots, driving down unit costs and improving quality in recursive cycles of feedback and improvement. Each iterative improvement strengthens the production flywheel, making it ever harder for fast followers to compete.
The implications for the future of manufacturing are profound. Indeed, we stand at the threshold of a revolution in robotics that is set to fundamentally alter the nature of labour. Countries at the forefront of this revolution will drastically increase their productivity, and less technologically advanced nations will lose their competitive advantage. Given China’s lead in manufacturing, robotics could soon remake the country’s entire economy. The Chinese market now accounts for more than half of global industrial robot installations. By contrast, the US leads in software, finance, and cutting-edge research. While it is true that the US has struggled to coordinate national policy in order to fully commercialize domestic production, America remains rich in venture capital, scientific research, and entrepreneurial talent.
With both the US and China aggressively expanding their robotics industries, Canada must act strategically to secure a globally competitive position before it’s too late. Indeed, as Canadian policymakers now realize, targeted industrial policy is no longer optional—it is essential. Emphasizing strategic policy incentives, targeted value-chain segments, and smart international collaborations, we consider a new economic strategy for rebuilding Canadian manufacturing and maintaining Canadian sovereignty over this decade and the next. Like the US and China, a new generation of Canadian leaders must focus on a National System of Innovation. What is now clear is that the rapid convergence of AI and robotics represents an enormous opportunity to catalyze the Canadian economy.
A New Geopolitical Reality
We face a critical moment in Canadian history. Canada’s productivity woes have resulted from, among other things, weaknesses in strategic planning. This includes missed opportunities in electric vehicles (EVs), high-speed rail, 5G (fifth-generation) telecommunications, clean energy, and now a new wave of commercial robotics. The hard reality is that Canadians need to get serious about long-term strategy. On a wage-adjusted basis, Asian nations now lead the world in robot adoption.
While Western companies still have the most advanced software models, Asia has become the centre of manufacturing. Building on dense supply chains, lower manufacturing costs, and strategic planning, China’s economy is now the world’s leader in infrastructure, renewables, batteries, and electric vehicles—all industries where strong manufacturing know-how is critical. Now, with automation technologies “catching fire,” China is leveraging its strengths to deploy robots at scale. Chinese robot makers now account for nearly half of the country’s domestic market (up from 30% in 2020) and will soon match Western incumbents at the higher end of the robotics industry.
China’s technological rise has triggered a robust response from the United States, leading to a geopolitical rivalry that is now reshaping the global order. Both the US and China recognize that whoever leads in fields like AI, quantum computing, and biotechnology will “tip the global balance of power” in their favour. To effectively navigate between these two technology giants, we propose a Canadian strategy that leverages Canada’s main strengths—advanced AI research, skilled labour, and specialized robotics expertise—as features of a larger strategy to rejuvenate Canadian innovation. By concentrating on niche areas of strength—space, robotics, and healthcare, Canadian firms can establish a significant competitive advantage in higher-value segments of the global robotics value chain.
A Strategy for Canadian Rejuvenation
Notwithstanding the enormous affluence inherited from generations past, our economic future now faces significant headwinds. If we fail to prioritize the tools and technologies needed to support Canadian businesses as they move up the global value chain, we risk being sidelined by Asia’s growing leadership in advanced manufacturing. By expanding the size of Canada’s robotics market and significantly increasing industrial adoption across Canadian industry, we advocate for positioning Canada as a top global robotics hub. This includes state planning and investment in order to carve out a niche in the global robotics markets, particularly in AI-driven robotics software and healthcare robotics, with the long-term goal of creating tens of thousands of high-skilled jobs while boosting national productivity.
This strategic plan represents a realistic yet ambitious vision for Canada that leverages the country’s unique strengths while strategically positioning Canadian industry within the complex global robotics market. If executed successfully, Canada will transition from a modest player importing robotics technology to an influential exporter and innovator on the world stage. This roadmap underscores the urgency of coordinated federal-provincial action, significant investment in innovation, and a pragmatic approach to global supply chains to ensure Canada is not left behind in one of the 21st century’s most critical technological races. Most importantly, it advocates for a generational change in leadership.
Building on strong regional robotics clusters is another vital component of Canada’s strategic roadmap. Proposed clusters include an industrial robotics hub in Ontario’s Toronto-Waterloo corridor, AI-driven robotics and healthcare robotics in Montreal, humanoid and service robotics in Vancouver, agricultural and resource extraction robotics in the Prairies, and ocean robotics in Atlantic Canada. These clusters would concentrate talent, investment, and infrastructure, creating dynamic innovation ecosystems that continually generate new companies and attract international interest.
Harnessing a Canadian National System of Innovation
Nearly all robots in Canada are imported from abroad. With the exception of the automotive industry, Canada’s adoption of robotics is among the lowest among the Group of Twenty economies. Recognizing that Canada cannot realistically manufacture every robotic component domestically, the strategy pragmatically recommends leveraging China’s manufacturing capabilities for non-sensitive, high-volume parts while diversifying supply chains through a “China+1” model. This approach reduces geopolitical risk by encouraging Canadian firms to develop alternative manufacturing partnerships with countries like Mexico, Vietnam, or India, ensuring continuity in supply. However, the strategy firmly recommends establishing domestic manufacturing for critical, strategic robotics components—particularly those related to defence, healthcare, and space robotics. Such domestic capabilities would provide crucial security and resilience in supply chains.
Building out the tech platforms needed for advanced manufacturing involves three critical policy ideas:
1. Building a Domestic Robotics Manufacturing Strategy
First, Canada needs a manufacturing strategy that leverages disruptive technologies and global supply chains. Whether we aim to produce solar panels, semiconductors, or military equipment, Canadian firms will need to augment their labour force with AI and robotics. Doing so means incentivizing domestic industries to “buy Canadian.” By procuring AI and robotics from local companies, Canadian firms can help catalyze the tech sector while improving productivity for the economy as a whole. This also means developing robust international collaboration by deepening partnerships with European, Japanese, South Korean, and even Chinese robotics sectors. Such collaborations would facilitate shared research, reduce supply chain vulnerabilities, and open new market opportunities for Canadian robotics firms. For example, Canadian leaders might closely collaborate with Japanese leaders in combining Canadian AI expertise with Japanese robotics hardware.
2. A National Strategy for Financing Innovation
Second, Canada needs a national strategy for financing innovation. Like so many other countries that understand the relationship between risk and reward, Canada needs growth-themed investment funds dedicated to AI and robotics. These financial tools are commonplace in countries such as China, Denmark and South Korea, where strong robotics ecosystems have begun to flourish. Without generous public-private investment funds, none of these countries would enjoy the kind of success they now experience in advanced technology. Central to any strategy should be aggressive policy incentives inspired by the US’s Qualified Small Business Stock (QSBS) tax breaks. Canada is encouraged to introduce similar measures that significantly reduce or eliminate capital gains taxes for investors holding shares in robotics and AI start-ups long-term. Such incentives are expected to dramatically increase investment flows, enabling robotics start-ups to scale domestically rather than relocating abroad.
3. Consolidating Canadian Deep Tech
Last, Canada needs a coordinated strategy for expanding and consolidating the nation’s deep tech ecosystem. This means leveraging strategic government procurement and targeted provincial incentives to stimulate domestic robotics adoption. Governments at the federal, provincial, and municipal levels should serve as lead customers, driving initial demand and creating early success stories to attract further investment. Whether it be public institutions like hospitals or postal services, Canadian institutions should co-pilot Canadian robotics solutions, providing critical initial markets for the validation of Canadian technologies. Beyond hardware, Canada is uniquely positioned to capitalize on the lucrative robotics software market. Robotics increasingly depends on sophisticated AI systems for navigation, perception, and autonomous decision-making. Canada, already a global AI research leader, could dominate this high-margin sector by investing heavily in developing proprietary robotics software platforms, robot operating systems, and AI-driven applications.
Taken as a whole, we strongly advocate adopting “Robots-as-a-Service” (RaaS) business models, where robotics firms lease robots and provide ongoing maintenance, software upgrades, and data analytics services. This model creates continuous revenue streams, deep customer relationships, and opportunities for further innovation based on real-world data analytics. Canadian companies could excel in these service-oriented segments, differentiating themselves from mass-produced hardware competitors.
Canada’s Robotics Future
AI and robotics represent general-purpose technologies with the potential to completely reorder the global economy. Indeed, even as this new era of “physical AI” continues to blur the boundaries between digital and manual work, Canadians must decide whether we will lead this revolution—or be automated by nations who do. Harnessing a National Innovation System, Canadian leaders must stop treating robotics as a science project and start treating it as something closer to basic infrastructure. Without it, Canadian robotics firms will continue to build prototypes, only to see these technologies manufactured abroad.