DMZ Japan has released the Canadian Ecosystem Report, a comprehensive look at Canada's innovation landscape. This series covers the report one theme at a time. This article looks at the five sectors where the federal government is concentrating its investment.One of the hardest parts of entering a new market is deciding which sector to target. Market research alone rarely reveals where demand will sit several years out.Government investment priorities are one of the more reliable signals available, because where the federal government puts its money shapes grant programs, procurement contracts, regulatory attention and the direction private capital follows, all at once.This article sets out the direction the Carney government has taken and the five sectors it is prioritizing.Economic Sovereignty as National PolicyThe Carney government has placed economic sovereignty at the centre of its agenda: reducing dependence on any single trading partner, strengthening domestic industrial capacity, and becoming a country where companies from values-aligned nations can invest with confidence.Budget 2025 committed $90 billion CAD in new investment behind that agenda. Across the five sectors below, budget allocations and institutional structures are already in place.1. Defence and Dual-Use TechnologyIn early 2026, Canada released its first-ever Defence Industrial Strategy. Over the next decade, the plan is to spend $180 billion CAD on direct defence procurement and $290 billion CAD on defence and security-related infrastructure.The strategy is organized around a "Build, Partner, Buy" framework, which explicitly anticipates purchasing from allies and trusted international suppliers where Canadian capability is thin.The new Defence Investment Agency (DIA) is being set up to accelerate procurement, and BOREALIS, the newly established Bureau of Research, Engineering and Advanced Leadership, is coordinating defence R&D in AI, quantum, robotics and autonomous systems.Government defence R&D investment has increased by 85%.The most accessible entry point for international companies is dual-use technology, meaning solutions developed for commercial applications that can be adapted for defence purposes.Active areas include autonomous systems, cybersecurity, drone technology, secure communications, AI-enabled logistics and advanced materials. In many cases, technology already deployed in agriculture, mining or transportation meets defence procurement requirements as it stands.Two caveats apply: defence procurement carries additional regulatory requirements around foreign ownership and technology transfer, and the strategy prioritizes Canadian IP ownership in partnership arrangements.2. Critical MineralsCanada holds some of the world's largest deposits of the minerals needed for clean energy, electric vehicles, defence systems and AI hardware. Budget 2025 established a $2 billion CAD Critical Minerals Sovereign Fund to invest directly in mineral projects, alongside a separate $1.5 billion CAD fund supporting mining infrastructure.Through its G7 presidency in 2025, Canada led the creation of the Critical Minerals Production Alliance, a commitment among G7 nations to diversify supply chains away from China's dominant position. The first round, announced in October of that year, unlocked $6.4 billion CAD across 26 investments and partnerships with nine allied countries.What this sector is looking for is technology that makes mining smarter, cleaner and more traceable. Processing and refining, AI-enabled exploration, mine site electrification and supply chain traceability all meet active government support and willing industry partners.3. AI and ProductivityCanada was an early leader in AI, launching the world's first national AI strategy in 2017 and building three national AI institutes. It has, however, struggled to keep pace with more recent developments, and adoption among Canadian businesses remains low.To close that gap, the government is investing heavily in infrastructure for data sovereignty and in support for businesses implementing AI.A renewed national AI strategy is in development, with expected priorities including the move from pilots to full deployment, sovereign data and compute infrastructure, and AI literacy across the workforce.Put another way, international companies with practical AI tools built for real business operations have a clearly defined market to serve.4. The Clean EconomyThe federal government frames clean economy investment as a commercial opportunity rather than an environmental obligation.The centrepiece of the Climate Competitiveness Strategy in Budget 2025 is a suite of investment tax credits among the most generous in the G7: 30% for clean technology, 30% for clean technology manufacturing, 15% for clean electricity, and carbon capture credits extended to 2035.The government also carries a mandate to invest at least $20 billion CAD in clean energy projects.Federal priorities include grid modernization, offshore and onshore wind, clean hydrogen, small modular reactors, energy storage and interprovincial transmission.Where those technologies are wanted, however, differs sharply by region. Atlantic Canada leads in offshore wind and ocean technology, the Prairies in agricultural technology and energy transition technology, and Ontario and Québec in clean manufacturing and the EV supply chain.5. Housing and the Built EnvironmentCanada faces a serious housing shortage, with an estimated 3.5 million additional homes needed by 2030.The federal government has eliminated the goods and services tax on new homes for first-time buyers, launched Build Canada Homes, and directed federal procurement toward housing construction. The Housing Accelerator Fund, backed by $4.4 billion CAD across 230 municipal agreements, is driving zoning reform and faster permitting.The solutions needed span modular and prefabricated construction, low-carbon building materials, energy-efficient design, AI-enabled planning and permitting tools, and smart building systems.What These Priorities Mean in PracticeTreating this as a list of grant programs misses what is actually happening. In both defence and housing, most of the money in motion is procurement rather than subsidy. The Canadian government is not only a funder here; it is a buyer. Working backwards from who issues the contracts, and on what criteria, gets closer to the real commercial opportunity.There is also no need to reclassify your technology. Rather than rebuilding a product "for defence," start by checking whether what you already have meets what defence procurement is asking for. Agricultural drones and autonomous systems built for mining genuinely do overlap with defence interests. That is what dual-use means in practice.Finally, choosing a sector means choosing a region. Offshore wind means Atlantic Canada; the EV supply chain means Ontario and Québec. The partners and customers you will be dealing with are concentrated in specific provinces, so sector selection and location selection cannot be treated as separate decisions.ConclusionDefence and dual-use technology, critical minerals, AI adoption, the clean economy and housing. All five of Canada's priority sectors are already backed by budget allocations and institutional structures. What they share is Canada's own recognition that it cannot supply all the technology it needs domestically, and its active search for international partners. Government investment priorities remain one of the most reliable signals of where demand will concentrate over the next several years.The Canadian Ecosystem Report sets out how these five priorities map onto specific sectors and provinces, and lists the government agencies, funding bodies and accelerators that serve as entry points for each. You can download the full report below.Download the Report »