News from the IPL
INTRODUCTION
This newsletter is published by The Innovation Policy Lab at the Munk School of Global Affairs, University of Toronto, and sponsored by the Ministry of Research and Innovation. The views and ideas expressed in this newsletter do not necessarily reflect the views and policies of the Ontario Government.
ANNOUNCEMENTS
New Coalition Aims to Increase Philanthropic Funding of Basic Science
Advancing Science, Serving Society (AAAS)
Seven foundations have formed a coalition with the aim of increasing support for basic science among the nation’s philanthropists and foundations, Robert Conn, president of The Kavli Foundation, announced on 2 May. The group hopes to double philanthropic support in this area of U.S. science within a decade. The new coalition plans to help focus non-government resources on “high risk/high reward” research in complement with government programs. Philanthropic organizations often have more freedom in their operations than do government agencies, and they can help fill this hole in science funding.
Editor's Pick
Manufacturing for Growth: Strategies for Driving Growth and Employment
World Economic Forum (WEF)
A previous report series identified a number of factors that will shape the future of competition between countries and companies. Three areas rose to the top as the most critical: human capital and talent development; innovation and technology advancement; and strategic use of public policy emphasizing collaboration between policy-makers and business leaders. This series of Manufacturing for Growth reports addresses these key competitive factors and defines ways to drive economic growth and high-value job creation through manufacturing industry sectors.
Innovation Policy
Just the Facts: The Economic Benefits of Information and Communications Technology
ITIF
A prominent economist once stated, “computer chips, potato chips, what’s the difference.” The short answer is “a lot.” Fifty-five years after the invention of the integrated circuit and 28 years after the first dot-com website was registered, information and communications technology (IT) remains a central driver of innovation and prosperity. This fact sheet lists 53 documented economic benefits of IT, from jobs and output to competitiveness and innovation.
Why “Low Risk” Innovation is Costly: Overcoming the Perils of Renovation and Invention
Wouter Koetzier and Adi Alon, Accenture
While one in five (18%) of the executives responding to a recent survey rate innovation as their top strategic priority, and two thirds say their company depends strongly on innovation for the success of its long-term strategy, more than half feel the firm has a sluggish innovation process. This report surveys more than 500 executives in the US, UK and France, and reveals that, in spite of a growing stated commitment to innovation, plus extra funding and organisational accountability, many companies are disappointed by the returns they are deriving from their investments. The result is that they tend to adopt a low-risk approach to innovation, which yields very little in the way of improvement, while it risks opening up the business to competitors from both inside and outside their industry. The report argues that putting a formal system in place to manage innovation will help companies to prosper in the new markets they manage to create.
Cities, Clusters & Regions
Cities of Tomorrow: Action Today
URBACT
In October 2011, the European Commission published a far-reaching report called Cities of Tomorrow – Challenges, visions, ways forward (European Commission, DG Regional Policy 2011). The economic and financial crisis had clearly intensified many urban problems and exposed the limits of existing policies. In particular, the limits of sectoral policies in seeking to preserve the polycentric, balanced, socially inclusive and culturally sensitive European model of urban development had become clear. An integrated, cross-sectoral and territorial approach, based on two decades of European experience on urban policy was called for. In this context, the aim of the report was to examine the possible impact of a series of major trends on different types of European cities in the coming years. The report identifies four main threats to the European urban development model: demographic decline, threats to economic development and competitiveness, growing social polarization and the depletion of natural resources. These threats are global rather than urban and they are serious enough to put in question whether Europe will be able to maintain its relatively balanced and socially inclusive urban structure in the face of the megacities of the East and Latin America and the more ‘disposable’ cities of the USA. In response to these threats URBACT put together a series of reports that present a vision of the opportunities and potential of European cities. These reports insist on the crucial role that cities themselves can play in finding solutions and thereby contributing to the goals of the Europe 2020 strategy.
Building the Illinois Innovation Economy: Summary of a Symposium
Charles Wessner, The National Academies Press
This publication is a study of selected state and regional programs to identify best practices with regard to their goals, structures, instruments, modes of operation, synergies across private and public programs, funding mechanisms and levels, and evaluation efforts. This report reviews selected state and regional efforts to capitalize on federal and state investments in areas of critical national needs. The review includes both efforts to strengthen existing industries as well as specific new technology focus areas such as nanotechnology, stem cells, and energy in order to improve our understanding of program goals, challenges, and accomplishments. As a part of this review, The Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives is convening a series of public workshops and symposia involving responsible local, state, and federal officials and other stakeholders. These meetings and symposia will enable an exchange of views, information, experience, and analysis to identify best practice in the range of programs and incentives adopted. Building the Illinois Innovation Economy summarizes discussions at these symposia, fact-finding meetings, and commissioned analyses of existing state and regional programs and technology focus areas, the committee will subsequently produce a final report with findings and recommendations focused on lessons, issues, and opportunities for complementary U.S. policies created by these state and regional initiatives.
Strong Cities, Strong Communities Initiative: 1st Annual Report
White House Council on Strong Cities, Strong Communities (SC2)
This report details the capacity-building efforts and successes of the past year. According to the report, SC2 has helped the pilot cities more effectively utilize $345 million in existing federal funding. In addition, SC2 has sparked the development of 130 cross-sector partnerships aimed at aligning resources to target the most pressing needs of the seven cities. Some of the other achievements outlined in the report include: the establishment of a data-driven Diagnostic Center in Youngstown aimed at improving public safety with help from the U.S. Department of Justice; implementation of improved transportation plans in Detroit and Fresno; and, collaboration between local and federal governments resulting in financial support for small businesses in New Orleans and Cleveland.
Statistics & Indicators
Can the Canada-U.S. ICT Investment Gap be a Measurement Issue?
Centre for the Study of Living Standards (CSLS)
In 2011, business sector investment per worker in information and communications technology (ICT) in Canada was only 57.8 per cent of the U.S. level, indicating an ICT investment per worker gap of 42.2 percentage points. Numerous explanations have been advanced to explain this gap, one of which is that the ICT investment data from Statistics Canada and the Bureau of Economic Analysis are not strictly comparable. The primary focus of this report is to analyze that hypothesis. The authors compare the methodology used to measure ICT investment in Canada and the United States and find that issues related to measurement account for approximately 4 percentage points (10 per cent) of the gap. Although software investment has been responsible for 90 per cent of the gap in recent years, seven out of 17 industries in Canada actually had greater investment per worker levels than the United States in both total ICT and software. A small number of ICT-intensive industries has been responsible for a substantial part of the gap. In particular, information and cultural industries accounted for 39.1 per cent of the total gap. This supports the conclusion that the Canada-U.S. ICT investment per worker gap is largely the result of industry-specific factors which affect software investment.
Research Brief on American Cities
National League of Cities
According to the nation’s city officials, the performance of local, regional and state economies have improved over the past year. Despite improvements, cities are still struggling in significant ways, signaling that growth is not keeping pace at a level that is needed for a sustained recovery. Even worse, economic indicators that reflect the condition of cities’ most vulnerable populations have resisted even a modest rebound in the face of broader national recovery. City officials report a recent and persistent skills gap that may signal structural challenges and present serious barriers to sustained growth for metros. Nearly nine in 10 city officials (88 percent) note that workforce alignment has not improved over the past year. A skills gap often suggests a much more complex set of trends relating to a host of labor-related factors, including a shrinking labor force, long term unemployment, underemployment and divergent hiring patterns.
LSECities
The Euro MetroMonitor examines data on economic output and employment in 150 of Europe’s largest metropolitan economies, from 1995 to 2012. See a summary of some of the data by the Atlantic Cities here.
Policy Digest
State of the Nation 2012: Canada’s Science, Technology and Innovation System
Science, Technology and Innovation Council (STIC)
The STIC has been mandated by the Government of Canada to produce a biennial report tracking, assessing and internationally benchmarking this country’s science, technology and innovation (STI) performance. In this third report, it tracks where Canada is making progress and identify areas where Canada must devote greater attention to enhancing performance. Understanding this picture contributes to advancing the national STI dialogue, building consensus around avenues for urgent action, and generating the will to work strategically and cohesively towards common goals. As in the 2008 and 2010 reports, this report examines Canada’s funding for research and development (R&D) in an international context and Canada’s performance on key indicators related to business innovation, knowledge development and transfer, and talent development and deployment. The findings reinforce much of what was learned in the previous reports: Canada has much to celebrate with respect to the high quality of talent and strength in generating new knowledge. However, there are vitally important areas where performance is lagging, where we must improve—in some cases significantly.
Business Innovation
Business innovation is an engine of productivity growth, increased international competitiveness and higher living standards. It is underpinned by investments in R&D, machinery and equipment (especially information and communications technologies (ICT)) and intangible assets. While we recognize that innovative activity is occurring that is not captured in official data, it is nonetheless clear that Canadian firms are not sufficiently harnessing innovation to make competitive gains. In international rankings related to business innovation, Canada continues to place in the middle of the pack on most measures and, on some indicators, Canada’s rank has declined.
Canada’s performance is particularly poor on measures of business enterprise expenditures on research and development (BERD)—that is, the R&D performed by firms. Although preliminary data suggest that BERD in Canada increased very slightly in both 2011 and 2012, BERD intensity (i.e., BERD as a percentage of GDP) has been in almost continuous decline for the past decade. Canada’s rank among comparator countries on BERD-to-GDP fell to 25th in 2011 (of 41 economies). Where Canadian business has performed better is in its funding of R&D in the higher education sector. On this measure, Canada ranked seventh among comparator economies, with significantly better performance than the U.S. and Japan.
Although Canadian business investment in ICT is growing, on the international measure of ICT investment intensity (i.e., ICT as a percentage of non-residential gross fixed capital formation), Canada still ranks in the middle among countries of the Organisation for Economic Co-operation and Development (OECD). Of particular concern, Canada’s ICT investment gap with the United States (U.S.) is increasing—ICT investment intensity in the business sector in Canada averaged only 42 percent of U.S. levels over the period from 2000 to 2010. Canada also performs poorly on venture capital investment as a share of GDP, ranking 15th out of 27 comparator countries. As the Government of Canada considers recommendations to modernize its framework policies in support of increased competitiveness, Canadian firms have to become more innovative in order to maximize their success in the global economy.
Knowledge Development and Transfer
The development of knowledge is the root of a country’s STI ecosystem. Higher education expenditures on R&D (HERD) in Canada have increased significantly since the late 1990s, to reach $11.5 billion in 2012. Canada’s substantial investment in the higher education sector has reaped significant rewards, as the production and refinement of scientific knowledge in Canada continues to be characterized by vitality and high quality. With a share of only 0.5 percent of global population, Canada accounted for 4.4 percent of the world’s natural sciences and engineering publications in 2010. This positions Canada eighth after countries with significantly larger populations: the U.S., China, Germany, the United Kingdom, Japan, France and Italy.
But Canada continues to face chronic challenges in knowledge transfer—in effectively moving knowledge developed in higher education institutions to companies that have the ability to absorb it and translate it into commercially viable products and/or solutions to health, environmental and social problems. The most important form of knowledge transfer is “on two feet,” via the movement and interplay of people through, for example, students’ internships in companies, graduates’ employment in the workforce or industry-academia R&D collaboration. We know that there is a great deal of activity in Canada in these areas that is not reflected in available data, especially internationally comparable data. However, on the traditional indicators of knowledge transfer related to licensing activities and spinoff companies, where some limited international comparisons are possible, Canada continues to show disappointing results.
The most recent data available show stagnation in Canadian licensing activities and suggest that U.S. institutions are generally more successful than Canadian ones at creating licences, keeping them active and earning income from them. Similarly, while there was an increase in spinoff companies from higher education institutions in 2011—a promising sign—there was a general downward trend in spinoff creation between 2000 and 2010. Improvement in Canada’s knowledge transfer performance will be vital to ensuring that discoveries are translated into practical economic and societal benefits for Canadians.
It is important to note, too, that while HERD in Canada has been growing in dollar terms, the HERD-to-GDP ratio has fluctuated, declining to 0.66 percent in 2011 from its peak of 0.71 percent in 2009. In 2011 (the latest year for which international comparisons are available), while Canada continued to rank first in the G7 in HERD-to-GDP, its relative position deteriorated against the broader comparator group of economies. That year Canada ranked ninth out of 41 economies in HERD intensity (i.e.,HERD-to-GDP), down from fourth in 2008 and third in 2006. With their significant investments in research and higher education, other countries are catching up and overtaking Canada.
Talent Development and Deployment
Science, technology and innovation are fundamentally human activities, making talent the key competitive differentiator in the global knowledge-based economy. On the talent front, Canada’s highly-educated population continues to be an asset, with 51 percent of the adult population having attained a university or college education, one of the highest levels in the world.
A country’s ability to produce doctoral graduates is an indicator of its potential to engage in cutting-edge research and to train the next generation of talent. Canada continues to produce fewer doctoral graduates (per 100,000 population) than many comparator countries, ranking 21st in the OECD on this indicator in 2010. However, Canada’s performance that same year was better with respect to science and engineering doctoral graduates (per 100,000 population), on which it ranked 15thamong OECD countries. Between 2006 and 2010, Canada experienced 48.7 percent growth in the number of science doctoral graduates and 38.6 percent growth in the number of engineering doctoral graduates, growth rates notably surpassing those of many comparator countries.
But Canada cannot afford to be complacent. With other countries making significant investments in their research and education systems, Canada risks erosion of its competitive talent advantage. Canada could also do more to ensure that its talent is prepared to contribute fully to an innovative, productive and competitive economy, by nurturing talent that better understands the links between STI and business. Expanding the number of programs providing post-secondary students with work-integrated learning opportunities in companies and applied research projects, through internships for example, would contribute to this objective.
Canada also needs to do much better at deploying its STI talent—that is, effectively absorbing this talent into the labour force and utilizing its knowledge and skills to full advantage. On this front, Canada’s performance— reflected in the measure of employing human resources in science and technology (HRST) in the labour force—continues to disappoint. Canada’s HRST share of the services labour force is 39 percent, positioning Canada in the middle ranks among OECD countries on this measure. On manufacturing, the picture is dismal—the HRST share of the manufacturing labour force in Canada, at 11.5 percent, is among the lowest in the OECD.
Conclusion
To a significant extent, Canada’s success in the 21st century will be determined by our ability to harness science, technology and innovation to drive economic prosperity and societal well-being. STIC believes that Canada must strive not only for excellence inSTI but also for global leadership. Realizing our full STI potential in this way will help us build strong institutions, companies, industries and communities, and position us among the world’s most prosperous, healthy and secure countries.
To reflect this ambition this report has gone beyond examining OECD and other comparator countries (as in previous reports) to identify, on key internationally comparable STI indicators, the threshold that Canada would have to attain in order to break into the ranks of the world’s top five performing countries. We have gone still further to highlight five particularly important STI indicators on which Canada should aspire to join the ranks of the world’s top five performing countries:
- BERD as a share of GDP;
- business investment in ICT;
- HERD as a share of GDP;
- science and engineering doctoral degrees granted per 100,000 population; and
- share of human resources in science and technology.
Attaining the highest standards of international excellence in these five “aspirational” indicators will help secure Canada’s future as a global STI leader, allowing us to reap greater economic and societal benefits for Canadians and contribute meaningfully to addressing key challenges faced by the global community. To realize this goal, all participants in our STI ecosystem must assume responsibility. We must work together not only to invest more in STI, but to invest more strategically and coherently, learn from the experience of global STI leaders, and be more agile seizing opportunities. That is how Canada will truly be able to “run with the best.”
Events
16th Uddevalla Symposium 2013: Innovation, High-Growth Entrepreneurship and Regional Development
Kansas City, 13-15 June, 2013
The critical role of innovation and entrepreneurship in regional economic development in terms of productivity and employment growth has been well documented theoretically as well as empirically by researchers in recent decades. The specific mechanisms through which innovation stimulates regional economic development are less well established. It is often assumed that entrepreneurship in the form of new firm formation and the growth of newly established firms plays a critical role, but how, why, when and under what conditions is less clear. Empirical studies show that a limited share of new business ventures have the capacity to rapidly up-scale and to generate substantial new jobs in the regions where they are launched. From the perspective of regional policy makers, this implies that it is critical to understand what regional economic milieus are capable of generating innovations that can be the basis of high-growth entrepreneurship as well as provide the right environment for entrepreneurs to launch entrepreneurial initiatives.Against this background, we seek papers that, in particular, topics related to exploring these themes.
Experience the Creative Economy
Toronto, 18-21 June, 2013
The 6th Annual Experience the Creative Economy conference is a forum for emerging scholars who are engaged in research related to the creative economy. The conference brings together up to 25 individuals from around the world to share and discuss their research. In particular, the small and focused setting provides participants with the opportunity to: present their work; receive feedback; refine and develop research methods; and join an ongoing network of collaboration and exchange.
Knowledge-Based Entrepreneurship, the Triple Helix and Local Economic Development
London, UK, 10 July, 2013
The creation of innovative new firms and the development of SME innovation are strongly influenced by the extent to which localities offer environments that favour the transfer of knowledge to local business and provide the other resources required for innovative firm development, including skills, finance, advice, and supply chain partners. The concept of the ‘triple helix’ captures the interplay of government, research and industry in the promotion of business innovation and provides a framework for policymakers seeking to understand how to promote local knowledge-based entrepreneurship. The workshop will use this framework to examine the policy actions that governments can take to promote innovative new firm creation and SME innovation in local economies by improving conditions for knowledge transfer and knowledge-based entrepreneurship.
Brighton, UK, 10-12 July, 2013
Europe’s relations with the wider world are continuously undergoing change. The urban and regional significance of these changing relations remains surprisingly poorly understood. The global financial and economic crisis, the dramatic events of late 2010 and 2011 in the Middle East and North Africa, the continuing crisis in Europe, and the global rise of ‘new powers’ are each impacting on how Europe, its citizens, and its cities and regions are connected to the wider world. The 9th European Urban and Regional Studies conference aims to consider a wide range of consequences of these changes as well as other themes relating to European urban and regional change.
2nd European Colloquium on Culture, Creativity and the Economy
Berlin, Germany, 10-11 October, 2013
During the past decades myriad links between culture, creativity and economic practice have become major topics of interdisciplinary debates. No longer restricted to a few sectors, there is a growing consensus that the intersections between these spheres and symbolic and culturally embedded values in particular, pervade the global economy. Indeed, the formerly distinct logics of the cultural and the economic have become increasingly indiscernible. Similarly, the notion of creativity, once used to express exceptional talent, activities and outcomes, is now considered a key component to success in all fields of economic activity. At the same time, the Internet has revolutionized the conditions under which cultural production and distribution as well as creative collaboration can be undertaken. Despite the high degree of uncertainty about future developments, policy makers as well as business managers are highly optimistic, if not enthusiastic, about the ability of symbolic values and creativity to drive sustained economic growth and regional development. This colloquium will take up and continue an international and interdisciplinary debate on these topics.
Atlanta Conference on Science and Innovation Policy
Atlanta, GA, 26-28 September, 2013
The Atlanta Conference on Science and Innovation Policy provides a showcase for the highest quality scholarship addressing the multidimensional challenges and interrelated characteristics of science and innovation policy and processes. This year’s sessions will explore the research front addressing the broad range of issues central to the structure, function, performance and outcomes of the science and innovation enterprises.
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This newsletter is prepared by Jen Nelles.
Project manager is David A. Wolfe.