This chapter explores that can current policies for science, technology and industry (STI) continue to induce and support diversification as Canada acquires an increasingly specialised profile as an energy exporter. It looks at how the Canadian economy developed historically through interaction between its resource base and the emergence of value-added industries. The chapter discusses the evolution in the position of energy, focusing specifically on the role of the public sector in developing oil sands. It focuses on the diversity in the current Canadian economy in terms mainly of changes in the value-added composition of exports. The chapter explores the evolution of Canadian STI policy with reference to the declining efficiency of policy as it has shifted steadily away from creating industries towards subsidising firms. It concludes with an assessment of what needs to be done to ensure that Canada does not move irrevocably in the direction of becoming a 'hewer of wood and a drawer of water'.