News from the IPL
ANNOUNCEMENTS
Montreal-based Sonder Raises $210 Million USD, Surpassing 1 Billion Valuation
Betakit
This financing marks the largest funding round for a Canadian tech company so far this year, and one of the largest rounds in Canadian tech history. The more than $1 billion valuation also adds Sonder to a small group of Canadian companies that have reached unicorn status, including Kik, Wealthsimple, Ritual, and most recently Lightspeed.
Editor's Pick
Defying Gravity: Building A Scaleup Ecosystem
Toronto Region Board of Trade
This report highlights the exponential value that high growth firms (HGFs) make to both net employment and economic growth, emphasizing their presence across all industries and geographic regions. Canada trails other mature economies in its ability to help small and medium-sized enterprises (SMEs) grow into larger firms, with existing programs favouring the start-up phase. The report highlights six areas that both policy makers and businesses should consider to encourage firms’ growth: executive leadership, recruiting and retaining talent, growing sales, securing capital, improving internal processes, and protecting intellectual property. The long-term goal of creating a coordinated and supportive scaleup ecosystem in Canada starts with the publishing of annual HGF data to help inform policy interventions and targeted programs. This report looks at four international case studies that have done this well and what Canada can learn from their experience: Silicon Valley, Boston, Tel Aviv, and UK.
Cities, Clusters & Regions
The Future of Work in America: People and Places, Today and Tomorrow
McKinsey Global Institute
This report examines the divergent impacts that automation may have on the future of work at the local level in the United States. Analysis of 315 cities and 3,000 counties shows that the United States is a mosaic of local economies with widening gaps between them. Twenty five megacities and high-growth hubs, where 96 million people live, have generated most of the nation’s job growth since the Great Recession. By contrast, 54 trailing cities and roughly 2,000 rural counties that are home to one-quarter of the US population have older and shrinking workforces, higher unemployment, and lower educational attainment. Automation technologies may widen these disparities at a time when workforce mobility is at historic lows.
Urban Agenda for the EU: Multi-level Governance in Action
European Commission
This report explores how multi-level governance and partnership are at the heart of the Urban Agenda for the EU, launched in May 2016 to improve the urban dimension of policies. Stemming from a joint effort of the European Commission, other EU institutions, Member States, regions and cities, the Urban Agenda for the EU strives to strengthen cities’ ownership of EU and national policy-making and implementation, and their capacity to ensure a more sustainable development of urban areas. This report highlights examples of how EU Cohesion Policy is being implemented via the Urban Agenda for the EU. To wit, 115 billion euros is being spent in cities; out of which 17 billion are implemented locally through integrated urban development strategies managed directly by urban authorities.
John Bunting, Governing
This article examines the private/public governance tensions at play with the prominent role played by Alphabet’s Sidewalk Labs in developing 12 acres of Toronto’s waterfront. In addition to privacy concerns over data use, the report notes that an even more consequential debate has emerged — a debate over government’s role, and government’s ability, to shape the future of the smart city. Companies such as Google already shape our digital worlds. The debate unfolding in Toronto may determine whether they shape our physical worlds as well.
Innovation Policy
Rebooting Regulation: Exploring the Future of AI Policy in Canada
Sarah Villeneuve, Gaga Boskovic, Brent Barron, CIFAR & Brookfield Institute
In 2018, CIFAR and the Brookfield Institute for Innovation + Entrepreneurship (BII+E) launched a series of five workshops to engage policy innovators in conversations about the public policy implications of artificial intelligence (AI). This series brought together over 125 policymakers from across Canada to learn about existing and potential AI capabilities and applications, explore the policy implications of AI, and develop policy responses. This report summarizes the results of these sessions, with policy recommendations in seven areas: addressing the future of work; AI anti-trust mechanisms; consumer protection; data governance; public education and consultation; encouraging responsible innovation; and AI regulation and legislation.
The Narwhal Project: Research into Canada’s Challenges in Scaling Technology Companies
The Impact Centre, University of Toronto
In 2016, the Impact Centre initiated the Narwhal Project to conduct research to discover the root causes of Canada’s challenges in creating a world-leading innovation economy. This report summarizes the projects findings, which centre on Canada’s inability to produce world-leading, scaleup technology companies. The report highlights the following as barriers to scaling up firms: few Canadian companies are founded in large consumer markets capable of generating the desired scale; we invest less per company relative to the US; Canadian firms spend less on marketing and sales (M&S), activities that are critical to building the customer base; we have fewer qualified people in marketing functions.
Statistics & Indicators
Where Jobs Are Concentrating and Why It Matters To Cities and Regions
Chad Shearer, Jennifer S. Vey, Joanne Kim, Brookings
To better understand the changing role of density during the first wave of the digital revolution, this report tracks trends in the spatial concentration of jobs in large U.S. metropolitan areas from 2004 to 2015. It builds on the works of other scholars who have examined the proximity of jobs to the urban core and uses similar data and concepts. But this report also departs from these earlier works in its focus on job density rather than proximity. Using sensitive measures of density and counterfactual analysis, this report describes recent trends in the density of most private-sector wage-and-salary jobs among and within 94 of the nation’s 100 largest metro areas and the local and sectoral dynamics behind the trends. Together, these 94 metro areas contained 66% of the nation’s private-sector jobs in 2015. The U.S. Census Bureau’s Longitudinal EmployerHousehold Dynamics (LEHD) Origin-Destination Employment Statistics program (or LODES) is the primary source of local-area employment data in this analysis.
Regional Innovation Scoreboard
European Commission
The RIS 2019 is a comparative assessment of regional innovation based on the European innovation scoreboard methodology, using 18 of the latter’s 27 indicators. The RIS 2019 covers 238 regions across 23 EU countries, Norway, Serbia, and Switzerland. In addition, Cyprus, Estonia, Latvia, Luxembourg, and Malta are included at country level. The dataset compares structural economic, business and socio-demographic structure differences between regions. The scoreboard confirms that Europe’s most innovative regions are located in the most innovative countries. The most innovative region in the EU is Helsinki-Uusimaa, Finland, followed Stockholm, Sweden and Hovedstaden, Denmark. The overall most innovative region in Europe is Zϋrich in Switzerland.
Policy Digest
The Data-driven Economy: Implications for Canada’s Economic Strategy
Dan Ciuriak, CIGI
FEATURES OF THE DATA-DRIVEN ECONOMY
The digital transformation is enabling the emergence of a ‘data-driven economy’ which is premised on different logics than the previous knowledge-based and industrial eras. The report highlights several features of the data-driven economy that have a significant impact on existing economic policy frameworks:
Machine Knowledge Capital
AI introduces a new factor of production into the economy — machine knowledge capital, which in the first instance will be narrowly intelligent but hyper-competent AI programs. This enables a significant expansion of income-generating knowledge-based assets, often performing functions that currently are the province of “white collar” work. The competition to capture the rents these assets will generate could redefine the global map of prosperity.
Market Failures and Incentives for Strategic Trade and Investment Behaviour
The data-driven economy features three powerful sources of potential market failure: economies of scale, economies of scope and information asymmetry. The same factors also give rise to powerful incentives for strategic trade and investment policy as countries compete to capture international rents. Government interventions will thus assuredly play an important role in determining which companies dominate.
Rising Income Share of Knowledge Capital Rents
In the knowledge-based economy, the basis for market share capture shifts to ownership of rent-generating IP. Knowledge capital rents are gained through: being the source of information asymmetry; enabling industrialization of learning and creation of IP; underpinning the creation of machine knowledge capital; powering business and industrial process optimization (the Internet of Things [IoT]); and enabling extraction of consumer surplus through price discrimination.
Trade Agreements
In the knowledge-based economy, trade agreements shifted emphasis from opening markets to protection of IP assets — they became more aptly called “asset value protection agreements.”
CONSIDERATIONS FOR CANADA’S ECONOMIC STRATEGY
The second half of the report outlines policy recommendations to position Canada for success in capturing rents from data assets and IP in the data-driven economy:
Public Sector Co-investment
Canada’s low net-debt-to-GDP ratio presents an opportunity to capitalize on innovation assets by substantially expanding public sector investment. Borrowing at scale to invest in technology assets or acquire outputs generated by Canada’s innovation ecosystem (for example, in the rollout of fifth-generation [5G] networks to power the IoT or as launch customer for new technologies) would mean deploying serious money to address the country’s inability to scale up innovative opportunities.
Data Retention, Scaling and Mobilization
Prosperity in the knowledge-based and data-driven economy will be based on ownership of rent generating assets. Canada should create of intermediary data trusts with fiduciary responsibilities to their data “depositors” in order to facilitate responsible data use. Data collected through public sector activities should be harnessed for better industrial policy and to build IP portfolios surrounding data that resides in Canada. Data and data-driven intellectual property (IP) retention policies are needed, such as state patent funds.
Foreign Direct Investment
Inward technology-seeking foreign direct investment (FDI) should be viewed through a different policy lens than traditional inward investment in the industrial sectors. In the knowledge-based and data-driven economy, inward investment is more typically associated with knowledge extraction and the shift of the IP assets generated by R&D abroad. Policy intervention would be warranted where the appropriable private returns to an individual start-up firm from selling to a foreign firm do not reflect the (positive) externalities that the start-up firm’s presence in a given innovation location generates for the location. In cases where there is a net, uncompensated outflow of wealth from a country, there is public interest in the transaction that goes beyond the private interest.
FTA Strategies for a Post-Free Trade Agreement World
A data governance regime is required to create competitive market conditions under technological conditions that drive the emergence of superstar firms and “winner-take-most” economics. Canada will need to develop its regime in the context of free trade agreement commitments to the free flow of data and data localization prohibitions.
Events
Montreal, 25-27 September, 2019
This conference will provide the opportunity for urban and regional scholars to grapple with the complexities of innovation and change, qualifying the idea of innovation, questioning the institutions that organize and channel it, and exploring the actors, private, public and civil society, who instigate change and cope with its consequences. To what extent are innovative processes regionally embedded? Can radical innovation occur within the current institutional context? Who innovates? Who benefits? Is it possible, or useful, to think through the consequences of innovation? Is it always necessary or advisable to innovate? Can innovation lead to more inclusive forms of growth? How does innovation impact cities and regions – in terms of their governance, their economies, their infrastructure and their social cohesion? And, conversely, how do cities and regions, as politics, innovate, influence innovation, adapt to change, and channel its consequences? These are some of the questions that will be addressed in Montreal.
The 2019 Technology Transfer Society Annual Conference
Toronto, 26-28 September, 2019
The Munk School of Global Affairs and Public Policy and the Technology Transfer Society would like to invite you to submit a paper* to the 2019 Technology Transfer Conference. The main themes of the Conference will revolve around technology transfer and innovation policy, technology commercialization and entrepreneurship (with a focus on universities), and inclusive innovation. Submissions featuring longitudinal and historical studies, ideally using mixed-methods research are particularly encouraged. Submissions based on other methods are also welcome.
Atlanta Conference on Science and Innovation Policy
Atlanta, GA, 14-17 October, 2019
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. Opportunities to watch parts of the proceedings streaming online. Full details on the sessions are available at the Atlanta Conference site.
Florence, Italy, 7-8 November, 2019
The Conference will focus on the paths of regional transformation that emerge as a response to technological and social change. Sustainability issues require regions to face change by trying to balance economic growth with social innovation. We will discuss the role that regional policies can play within such scenarios, by supporting the creation of new assets and resources, as well as favouring multi-level alignments of visions and interests.
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This newsletter is prepared by Travis Southin.
Project manager is David A. Wolfe.