The IPL newsletter: Volume 21, Issue 439

Agglomeration externalities of fast-growth firms

Jun Du & Enrico Vanino, Regional Studies

Small groups of fast-growth firms contribute disproportionately to job creation, yet little is known about their broader impact on the economy. This paper provides the first evidence of the agglomeration externalities of fast-growth firms, examining their economic impact on non-fast-growth firms operating within the same region (NUTS-2) and industry (SIC2), and through backward and forward linkages. Using comprehensive firm-level data on UK firms between 1997 and 2013, the analysis shows robust evidence of positive spillovers of fast-growth firms on the labour productivity of non-fast-growth firms in the same industry and region. However, the externalities in relation to the employment growth of non-fast-growth firms are negative, suggesting labour poaching and local competition effects.

Intellectual Property Awareness and Use Survey, 2019

Statistics Canada
This post summarizes findings from the recently released survey on intellectual property awareness, which finds that nearly a fifth of all businesses in Canada owned intellectual property. From 2017 to 2019, approximately one-fifth of businesses (18.2%) in Canada reported that they owned at least one type of intellectual property (IP), including IP owned outside Canada. Intellectual property is a distinct form of creative endeavour such as an invention, literary and artistic work, image or design that may be protected by formal legislation or common law or that has provided commercial value. Protected IP owned by businesses includes trademarks, copyrights, patents, and industrial designs. During this period, trademarks were the most commonly owned form of IP, with 12.9% of businesses holding trademarks in Canada and 3.7% outside Canada. Larger firms were more likely to own IP than smaller firms. Specifically, 72.6% of businesses with 500 employees or more owned at least one type of IP, compared with 13.5% of businesses with fewer than 5 employees

Canadian Start-ups: Growth and Scale-up Transitions

May Song & Charles Bérubé, Innovation, Science and Economic Development Canada
This study presents a statistical description of Canadian firm size transitions, in terms of numbers of employees, by examining five cohorts of firm entrants during the period 2002 to 2006. The study found that the vast majority of Canadian firms, around 87 percent, remained within their size category during the observation period without scaling up or scaling down to other size categories. Indubitably, this number might vary according to the chosen size category definition. Regardless of the size category definition, however, 80 percent of firms experienced either no change in their employment figures or variation of plus/minus one to two employees over the observation period. Furthermore, the study found that almost 75 percent of firms that scaled up did so within the first 5 years of being established, suggesting that firms are more likely to expand when they are younger. The study also found that the federal government’s Small Business Deduction (SBD) and Scientific Research and Experimental Development (SR&ED) Program were both positively correlated with the likelihood that a firm would scale up and with sustainable firm-level employment growth. In addition, both the SBD and SR&ED Program seem to be negatively correlated with the likelihood that a firm would scale down. The probabilities of firms scaling up and scaling down were both positively related to profitability and both negatively related to the financial leverage ratio. These results suggest that a firm’s financial position has a significant influence on its capacity to scale up.

Accelerating Decarbonization in the United States: Technology, Policy, and Societal Dimensions

National Academies of Sciences, Engineering, and Medicine
This report by the U.S. National Academies of Sciences, Engineering, and Medicine summarizes recent findings from a committee convened to investigate how the United States could best decarbonize its energy system. This report outlines the goals and policy recommendations needed to reach net-zero emissions by 2050.

This interim report of the committee provides a “technical blueprint and policy manual for the first critical 10 years of a 30-year effort to transform the U.S. energy system to net-zero GHG emissions.” It “focuses on “no-regrets” actions—”essential near-term policies that are valuable under any feasible pathway to a net-zero emissions energy system.” This “implies the need for robust research, development, and demonstration (RD&D) across the range of possible candidates, and infrastructure that is specifically planned to be robust to uncertainty in the final mix deployed.” Finally, the report notes that “it should also be noted that the committee was specifically not tasked to determine whether the nation should pursue deep decarbonization, but rather to evaluate options for decarbonization and the highest-priority actions to pursue, given that goal.”

The committee summarized the following five technological goals and four socioeconomic goals for net-zero policy during the 2020s:

Technological Goals

• Invest in energy efficiency and productivity
• Electrify energy services in transportation, buildings, and industry
• Produce carbon-free electricity
• Plan, permit, and build critical infrastructure
• Expand the innovation toolkit.

Socioeconomic Goals

• Strengthen the U.S. economy
• Promote equity and inclusion.
• Support communities, businesses, and workers.
• Maximize cost-effectiveness.

Policy recommendations for “a comprehensive clean-energy industrial policy”

• Output-based allocations and carbon border adjustments that would accompany the carbon price in order to maintain industrial competitiveness;
• A Green Bank to help finance an expansion of clean industry and clean technology manufacturing;
• Corporate climate risk disclosure rules;
• Wholesale power market reforms;
• Education and training policies for the new energy economy;
• Expanded RD&D;
• Electrification of tribal lands;
• A package of loan guarantees and sunsetting subsidies to support installation of non-emitting industrial equipment (e.g., electric boilers) and expand clean-tech manufacturing;
• A process for planning and initiating a national network to transport and safely store CO2captured by industrial sources and perhaps by fossil electricity plants with carbon capture; and
• Procurement and other standards for companies that receive federal funds, including labor standards and Buy America/American policies.

Regional Innovation Policies Conference

Aalborg, Denmark, 25-26 March 2021 CANCELLED
Due to the COVID-19 outbreak the conference scheduled for March 25 and 26, 2021 in Aalborg, Denmark has been cancelled. The next RIP Conference is scheduled for Prague in August, 2021.  The conference will focus on regions in transformation – as well as transformations in regional innovation policy and new developments in methods for defining and analyzing regions. Submission deadline: 30th November 2020.

Policies, Processes and Practices for Performance of Innovation Ecosystems (P4-IE) International Conference

May 10-13, 2021 | May 10 – Pre-conference Summer School
Virtual conference
The Partnership for the Organization of Innovation (4POINT0) is organizing the first ‘‘Policies, Processes and Practices for Performance of Innovation Ecosystems” (P4IE) international conference on 10-13 May 2020. Organized around eight highly relevant tracks, the conference offers participants the opportunity to discuss the impact of various technologies, practices, processes and policies, on innovation ecosystems, and the best means by which to design collaborative environments. The goal of the conference is to explore ways to strengthen Canada’s innovation through innovation ecosystems.

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This newsletter is prepared by Travis Southin.
Project manager is David A. Wolfe