Data Supply Chains Are a Missing Link in Canada’s AI Strategy

February 12, 2026 – Canada has invested billions of dollars in artificial intelligence (AI) talent, research, and computing infrastructure, but an important foundation for its innovation remains underdeveloped: strong, secure, and trusted data supply chains. Without clearer rules and institutions to support responsible data sharing, Canada risks constraining AI innovation and falling behind global competitors, according to a report by the C.D. Howe Institute.

In “The Missing Pillar of Canada’s AI Strategy: Data Supply Chains,” Anindya Sen shows how fragmented and non-standardized legal and institutional frameworks restrict firms’ access to the large, high-quality datasets needed to train machine-learning models. While recent federal initiatives have prioritized talent development, computing capacity, and AI safety, the report finds that data access has received comparatively little attention – despite its central role in AI-driven innovation.

“AI systems run on data,” says Sen, C.D. Howe Institute Fellow-in-Residence and inaugural Scholar in AI and Digital Policy. “Without reliable, secure, and well-governed access to large datasets, even the most advanced computing infrastructure and talent base cannot deliver their full economic potential.”

The report finds that Canada lacks clear, standardized rules for data sharing in AI development and has no formal social-benefit or cost-benefit tests to weigh innovation gains against privacy risks. As a result, data custodians often err on the side of caution, discouraging responsible data sharing and limiting opportunities for startups and scaleups that cannot easily replicate large administrative datasets.

Sen outlines a policy framework built on three principles: expanded but carefully guarded data access; the use of privacy-enhancing technologies; and transparent governance guided by cost-benefit analysis. Main recommendations include allowing carefully regulated, pilot-based private-sector access to selected confidential Statistics Canada datasets, accelerating the national production of high-quality synthetic data, embedding social-benefit tests in privacy legislation, and establishing supervised regulatory sandboxes aligned with regional economic strengths.

“Framing innovation and privacy as a choice is a mistake,” says Sen. “With the right institutions in place, Canada can expand data access while strengthening trust and protecting individual privacy.”

Read the Full Report

For more information, contact: Anindya Sen, Fellow-in-Residence and inaugural Scholar in AI and Digital Policy at the C.D. Howe Institute, and Professor of Economics and Associate Dean of Arts at the University of Waterloo; Percy Sherwood, Associate Editor and Communications Officer, C.D. Howe Institute, 416-407-4798, psherwood@cdhowe.org.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

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