News from the IPL
NEWS
Julie Crljen, Medicine by Design
Medicine by Design, a strategic hub for regenerative medicine research at the University of Toronto (U of T) and its affiliated hospitals, has invested nearly $1 million into six projects aimed at exploring new ideas and possibilities in the field of regernerative medicine. The project 'establishing an international innovation community' led by Shiri Breznitz, IPL affiliated faculty, director of research and professor at the Munk School of Global Affairs & Public Policy, U of T will address the need for policy frameworks supporting the commercialization of regenerative medicine (e.g. cell and gene) therapies. The project will analyze relationships and assess the significance of social networks in the creation of innovation ecosystems, specifically focusing on Medicine by Design-funded projects and researchers. The ultimate objective is establishing an intentional innovation framework for regenerative medicine. The resulting economic and social network will be mapped and presented to government, university, hospitals and commercialization agencies to provide insights that can enhance collaboration, strengthen network connections among funded partners and promote continued research, discovery and commercialization in the field.
Dan Breznitz in Globes Israel: "What About Israel's Other 85%?"
Hila Weissberg & Assaf Gilead, Globes
This interview with IPL co-director Dan Breznitz touches on the role of the state in spreading Israel's tech-based prosperity more widely. The interview also touches on Israel's latest budget, talent retention issues and the benefits and limits of venture capital finance in promoting the growth of innovative companies.
RESEARCH
OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE)
This paper analyses Memorial University’s contribution to the economic development of the province of Newfoundland and Labrador in Canada, specifically focusing on the university’s contributions to the provincial ocean economy. It analyses the university’s public engagement, entrepreneurship, and collaboration strategies, programs, and relationships to understand Memorial’s regional impact. IPL Affiliated Faculty Shiri Breznitz provided substantive input as a member of the expert panel and IPL Postdoctoral Fellow Scott Mcknight prepared the background report and provided inputs and comments.
New Path Development in a Semi-peripheral Auto Region: The Case of Ontario
Elena Goracinova & David A. Wolfe, Economic Geography
The automotive industry is facing disruptive trends and great uncertainty. The path forward for automotive jurisdictions is uncertain in terms of how automakers will allocate the production of new connected and autonomous vehicles (C/AVs). The introduction of C/AV technologies creates high levels of uncertainty both for individual firms and regional innovation systems (RISs). The intersection of established production competencies with emerging digital technologies raises questions about how regional pathways and RISs develop and how local and RISs adapt to changes in global innovation networks. Building on recent contributions to evolutionary economic geography (EEG), the article examines the impact of the current technology transition on Ontario’s automotive sector. Drawing on rich empirical data and recent conceptual advances in theorizing about new path development from EEG and the literature on global innovation networks, the article casts light on how the intersection between global innovation networks and regional actors is altering Ontario’s developmental path. It examines the potential for Ontario to diversify away from its historic status as a semi-peripheral automotive region with limited investment in research and development to one with a greater role in the emerging paradigm of connected and autonomous vehicles. The article explores the potential for path diversification based on interpath dynamics between the region's auto and information and computer technology sectors as well as the importance of both system-level and firm-level agency for altering the region's developmental trajectory.
The Political Economy of Energy Transitions in Canada: Implications for the Auto Industry
David A. Wolfe and Nathan Lemphers, IPL Working Paper 2023-02
This chapter explores the broader implications of the current energy transition from a carbon-based energy paradigm to one based on decarbonized energy sources for the automotive and broader transportation sector. This transition carries grave implications for two of Canada’s leading economic sectors — automotive and oil and gas — two of the sectors that will be most directly affected by the prospective transition. The chapter focuses on the two provinces most directly affected by this transition — Ontario and Alberta — but also explores the implications for Québec. Ontario’s automotive sector is on the cusp of a major restructuring that will determine whether it continues to enjoy the status of a semi-peripheral automotive region it has held since the mid-1960s under the Auto Pact and the successor North American trade agreements, or whether it follows the steady path of decline that it has experienced since the early 2000s (Mordue and Sweeney 2020; 2017; Anastakis 2013). While this restructuring most directly implicates Ontario’s manufacturing sector, the energy shift creates broader implications for the political economy of the Canadian federation through its impact on the provincial economies of Alberta and Québec, given that energy products and motor vehicles combined accounted for 37 per cent of Canada’s total exports in 2020. The Ontario and Alberta economies, based as they are on manufacturing and resources, have long been viewed as representing antithetical interests, particularly since the OPEC price revolution of the 1970s (Simeon and Robinson 1990, 236–249). In contrast, we argue that, since the late 1940s, the two provinces have been equally locked into the “carbon trap” in terms of the mutual dependence of their primary economic sectors on the production and consumption of carbon-based energy (Haley 2011). Consequently, they face similar challenges in restructuring their economic base in the coming transition to decarbonized energy sources and electrified transportation.
Dan Breznitz, Guilio Buciuni & Michael Murphree, Regional Studies
The rise of globally fragmented production since the 1980s encouraged economic regions to specialise in narrow slices of the value chain, making the benefits from local agglomeration no longer certain. Nonetheless, locally integrated production districts continue to thrive. Locally integrated industrial districts have proven sustainable in times of both increasing and decreasing fragmentation of production. Drawing upon insights from three schools – the Markusian logic of multiple district models, strategic coupling and the production of semi-public goods – this article uses a two-staged case-study design to explore the conditions under which locally integrated production districts continue to thrive in the global economy.
Regulating the Platform Giants: Building and Governing China’s Online Economy
Scott McKnight, Martin Kenney & Dan Breznitz, Policy & Internet
The online platform economy in China has grown to become one of the largest in the world. Its growth has contributed to China's economic development and played an important role in its innovation path. We present a three-stage structured explanation of China's governance approaches toward its homegrown platform firms. Using Chinese government documents and secondary sources to conduct a historical process tracing analysis, we argue that the growth of China's main platform firms and the government's governance of them was co-evolutionary, guided by the party-state's goals of maintaining social-political stability, economic growth and strengthening technological self-sufficiency. By so doing this paper addresses the fundamental question of how a “strong” and “capable” state such as China's has responded as platform firms went from providing various online services to becoming core infrastructure in the economy and society to the point of threatening core government objectives.
Editor's Pick
Elvira Uyarra, Kieron Flanagan, Iris Wanzenböck, Manchester Institute of Innovation Research
In recent years, debates about innovation policy have highlighted a broader scope for action and a widening of the range of policy goals such policies are expected to (or might be expected to) address (Borrás, 2009; Flanagan et al., 2011). Scholars and analysts have both detected but also advocated a shift from generic and primarily R&D-based innovation support measures towards a new (or third) 'generation‘ of innovation policy - variously referred to as challenge-led, mission-orientated (Foray, 2018; Mazzucato, 2018b) or transformative innovation policies (Schot & Steinmueller, 2018). This new generation of innovation policy thinking is a response to major societal challenges such as climate change, migration, or food and energy security - the implication being that traditional innovation policies were either inadequate in response to or else uninterested in such challenges. A more targeted and challenge-oriented innovation policy should, it is argued, help to deliver desired, and not just more, innovations (Boon & Edler, 2018; Kuhlmann & Rip, 2018). This implies a more active role of the state in funding risk-taking activities and in creating - not just correcting - markets. This 'normative turn‘ in innovation policy has also been observed in the design and implementation of regional policies, with a greater emphasis on the socio-ecological dimension of innovation (Bugge et al., 2021a; Coenen & Morgan, 2020a; Uyarra et al., 2019), particularly in the context of the European Green Deal and the Innovation Strategies for Sustainability (S4) (Hassink et al., 2021; Morgan & Marques, 2019). Whilst there is much agreement that bolder, more customised and directional policies are needed to tackle the societal challenges of our time, there is less consensus about how such policies should be implemented in practice.
Cities & Regions
Place-based industrial and regional strategy – levelling the playing field
David Bailey, Christos N. Pitelis & Philip R. Tomlinson, Regional Studies
Over the past decade there has been renewed interest in the role of industrial strategy in enhancing innovation, productivity, and competitiveness within and across firms, sectors and regions with an eye to fostering more balanced regional economic growth. This special issue explores how policymakers could adopt place-based industrial policy measures to foster regional catch up and a more balanced and cohesive regional growth. In doing so, the papers are a mix of contributions that develop theory, provide evidence and highlight ‘state of the art’ or good practice that can inform a level playing field fostering regional industrial strategy.
Texas aims to lead the future of semiconductor manufacturing
SSTI
This post summarizes recent efforts to position the state of Texas as a leader in semiconductor manufacturing. The Texas CHIPS Act bill creates the $1.3 million Texas Semiconductor Innovation Consortium in a bid to protect the state’s competitive standing for future federal funding and authorizes the Texas Semiconductor Innovation Fund. There are 19 institutions of higher education institutions, along with industry, and nonprofit stakeholders will develop a comprehensive strategic plan to ensure ongoing semiconductor innovation. The Texas CHIPS Act also authorized the Texas Semiconductor Innovation Fund from the state's General Revenue to provide matching funding to state entities, including institutions of higher education, for semiconductor manufacturing and design projects; award grants to business entities with an established presence in this state to encourage economic development related to semiconductor manufacturing and design; and funding for staff to support or provide services.
Statistics
Statistics Canada
Early estimates of S&T spending by the Canadian federal government are expected to grow $566 million from 2021/2022 levels to $15.6 billion in 2022/2023. Looking further ahead, S&T spending intentions are expected to decrease $501 million to $15.1 billion in 2023/2024. Spending intentions expected to decline for the first time in nine years. Despite this decrease, spending will remain above pre-COVID-19 pandemic levels.
Federal Patents, Licences and Royalties Survey, 2021/2022
Statistics Canada
The data from the Federal Patents, Licences and Royalties survey are available for the reference period 2021/2022. The Federal Patents, Licences and Royalties (FPLR) survey is a biannual product. The last reference period for this survey was 2019/2020. The survey provides information on the activities of federal government science-based departments and agencies related to new instances of intellectual property (IP) reported or disclosed, to the number of patents, and new and active licences, and to income received from IP commercialization.
Innovation Policy
Commission puts forward €13.6B research budget for 2024, with €12.8B for Horizon Europe
Goda Naujokaitytė, Science|Business
This post summarizes the funding available for Horizon Europe in the EU Commission's proposed 2024 budget. The European Commission wants the EU to spend a total €13.6 billion on research and innovation next year, with €12.8 billion going to Horizon Europe. That is €400M more for the research programme than 2023, but in the face of rampant inflation the European Parliament doesn’t see this as a major increase.
A tale of two speeches: the state of British industrial strategy
Will Lord, Bennett Institute for Public Policy Cambridge
The Conservatives and Labour are each developing a distinct strategy to grow the British economy. This post discusses their strengths and weaknesses and recommends where they should focus their attentions. The author draws on Rishi Sunak’s Mais Lecture as Chancellor in 2022 and Shadow Chancellor Rachel Reeves in her speech in Washington DC and accompanying paperby either side to illustrate their respective approaches to industrial strategy.
Innovation landscapes: The changing role of corporate research
Casey Nemecek, SSTI
This SSTI post summarizes a recent research summary from the National Bureau of Economic Research, “The changing structure of American innovation,” which describes this rise and fall of industrial innovation in the United States and a growing division of innovative labor between university-based research institutions and development-focused corporations. Though it still flourishes in fields such as artificial intelligence, the corporate lab’s heyday was from the 1930s until the 1980s. Many leading US firms have withdrawn from scientific research, closing their labs or reorienting them toward applications rather than basic science.
Pursuing a Canadian Moonshot Program
Standing Committee on Science and Research
To consider factors facilitating the successful implementation of a moonshot program in Canada, the House of Commons Standing Committee on Science and Research (the Committee) embarked on a study of international moonshot programs that “aim to resolve difficult environmental and social problems, set ambitious research and development programs, and attract researchers from around the world.Based on the testimony it heard, the Committee made 15 recommendations to government.
Policy Digest
U.S. National Clean Hydrogen Strategy and Roadmap
The U.S. Department of Energy
National Clean Hydrogen Strategy and Roadmap explores opportunities for clean hydrogen to contribute to national decarbonization goals across multiple sectors of the economy. It provides a snapshot of hydrogen production, transport, storage, and use in the United States today and presents a strategic framework for achieving large-scale production and use of clean hydrogen, examining scenarios forstrategic opportunities for 10 million metric tonnes (MMT) of clean hydrogen annually by 2030, 20 MMT annually by 2040, and 50 MMT annually by 2050. Using clean hydrogen can create 100,000 net new direct and indirect jobs by 2030 and reduce U.S. emissions approximately 10 percent by 2050 relative to 2005.
The Strategy and Roadmap (to be updated every three years) was mandated by section 40314 of the 2021 Bipartisan Infrastructure Law (BIL), which also authorized and appropriated $62 billion for the U.S. Department of Energy (DOE), including $9.5 billion for clean hydrogen. This was followed in August 2022 by the Inflation Reduction Act (IRA), which provides additional incentives for hydrogen including a very generous production tax credit of up to $3.00 per kg of hydrogen, depending on its carbon intensity.
This document was posted for in draft form for public comment in September 2022, and the final version of the report was informed by stakeholder feedback, further analysis on commercial liftoff, as well as engagement across several federal agencies and the White House Climate Policy Office. The 'living document' report was informed by extensive industry and stakeholder feedback including workshops and listening sessions, written comments from more than 50 organizations, and ongoing engagement.
This roadmap is based on prioritizing three key strategies:
1) Target strategic, high-impact uses for clean hydrogen
The report identifies the highest value hydrogen applications where limited deep decarbonization alternatives exist. Specific markets include the industrial sector (e.g., chemicals, steel and refining), heavy-duty transportation, and long-duration energy storage to enable a clean grid. Additional longer-term opportunities include the potential for exporting clean hydrogen or hydrogen carriers. The report identifies scenario and tipping point analyses for competitiveness with the cost of incumbent fuels in various sectors based on analysis and industry feedback through prior workshops and critical reviews of lab and DOE publications. Moving from the current cost of green hydrogen electrolysis (5-7 US$/kg) to $4 will unlock buses and commercial vehicles, $3 will unlock biofuels, and $1-2 will unlock chemicals, steel seasonal storage and grid, synthetic fuels, industrial heat and export markets. Importantly, the Inflation Reduction Act's $3/kg production tax credit is already bringing the cost down to near competitiveness levels for many of these applications.
2) Reduce the cost of clean hydrogen
The Hydrogen Energy Earthshot (Hydrogen Shot) launched in 2021 will catalyze both innovation
and scale, stimulating private sector investments, spurring development across the hydrogen
supply chain, and dramatically reducing the cost of clean hydrogen towards achieving its goal of $1/kg. Efforts will also address critical material and supply chain vulnerabilities and design for efficiency, durability, and recyclability. Together with investment in midstream infrastructure (storage, distribution), these initiatives can reduce not only the production cost, but also the delivered cost, of clean hydrogen. The cost of clean electricity accounts for over half of the cost of hydrogen production from electrolysis. Therefore, US RDD&D efforts target lowering the cost of clean electricity (renewables, nuclear power), boosting the efficiency of electrolysis, reducing electrolyzer and balance-of-plant capital costs and enabling dynamic integration of electrolyzers with the grid and with renewable and nuclear generators to access low-cost variable power. The BIL's $1b through FY26 to the DoE's electrolysis RD&D programs is particularly relevant to reducing the cost of clean hydrogen.
3) Focus on regional networks
DoE industry analysis and data from its National Labs have identified and mapped 'regional production potential' - the combination of natural resources, infrastructure assets, and hydrogen demand opportunities that vary from region to region. Investing the BIL's $8bn in 6-10 Regional Clean Hydrogen Hubs will enable large-scale clean hydrogen production close to high priority hydrogen users, allowing the sharing of a critical mass of infrastructure. Also, these investments will drive scale in production, distribution, and storage to facilitate market liftoff. Properly implemented, these regional networks will create place-based opportunities for equity, inclusion, and sustainability. Priorities will include reducing environmental impacts, creating jobs – including good-paying union jobs – securing long-term offtake contracts and jumpstarting domestic manufacturing and private sector investment.
All of government approach to clean hydrogen
The Roadmap draws on input across agencies and a DOE-funded report by Sandia National Laboratories to identify specific regulatory activities by various agencies that impact each step of the value chain across various end-use sectors. Activities will include collaboration across multiple federal agencies including the U.S. Departments of Agriculture, Commerce, Defense, Energy, Interior, Labor, State, Transportation, and Treasury, the Environmental Protection Agency, the National Aeronautics and Space Administration, the National Science Foundation, and the Office of Science and Technology Policy, in close coordination with the Executive Office of the President. Federal agencies will also collaborate with industry, academia, national laboratories, local and Tribal communities, the energy and environmental and justice communities, labor unions, and numerous stakeholder groups to accelerate progress and market liftoff.
Links to recent IPL webinars
Does Canada have an effective innovation policy?
March 16, 2023 |11:00AM - 12:00PM, Online via Zoom
Since 2000 Canada has witnessed a proliferation of Innovation Strategies, including the 2017 Innovation and Skills Plan. Yet our innovation performance continued to deteriorate throughout this period. The 2022 Federal Budget began with the admission, “Our third pillar for growth is a plan to tackle the Achilles’ heel of the Canadian economy: productivity and innovation.” What factors best explain Canada’s dismal innovation performance over the past two decades? Join us for an IPL webinar with two of the most insightful analysts of Canadian innovation policy.
Moderator: David A. Wolfe, Professor of Political Science and Co-Director, Innovation Policy Lab
Panelists:
Shirley Anne Scharf, Ph.D. Shirley Anne Scharf is Visiting Researcher with the CN-Paul M. Tellier Chair on Business and Public Policy, Graduate School of Public and International Affairs, University of Ottawa and has her Ph.D. in Public Administration, School of Political Studies at U of O. Her dissertation, “Canadian Innovation Policy: The Continuing Challenge” (2022) examines the key dimensions driving the gap between policy intent and impact, and the consequences for Canada’s innovation eco-system.
Travis Southin, Ph.D. Travis Southin is a postdoctoral fellow at Carleton University’s School of Public Policy and Administration working with the Transition Accelerator on net-zero industrial policy. He completed his PhD in Political Science from the University of Toronto in 2022. His dissertation, titled “Overcoming Barriers to Policy Change: The Politics of Canada’s Innovation Policy,” illuminates the political barriers constraining the Government of Canada’s ability to shift its innovation policy mix away from neutral/horizontal policy instruments towards more targeted innovation policy instruments.
Events
June 27 to 29, 2023, Toronto
The 6th International Conference on Public Policy (ICPP6) is coming to Toronto! Organized by IPPA, ICPP6 is hosted by the Toronto Metropolitan University's Faculty of Arts and Public Policy graduate studies programs and will take place at the University's premises in downtown Toronto from June 27 to 29, 2023, with a Pre-Conference on June 26. This conference includes a panel chaired by IPL Co-director Dan Breznitz called "Organizational Evolution in Innovation Policy."
Subscriptions & Comments
Please forward this newsletter to anyone you think will find it of value. We look forward to collaborating with you on this initiative. If you would like to comment on, or contribute to, the content, subscribe or unsubscribe, please contact us at ipl.munkschool@utoronto.ca .
This newsletter is prepared by Travis Southin.
Project manager is David A. Wolfe