The IPL newsletter: Volume 24, Issue 501

March 1, 2024

News from the IPL

NEWS

As the federal government dithers, Canada’s technology sector languishes

Adam Froman & David A. Wolfe
This recent op-ed is co-authored by IPL Co-director David Wolfe and founder and CEO of Delvinia Adam Froman. The authors discuss the impact on Canada's technology sector of the recent announcement by the Departments of Finance and Innovation, Science and Economic Development postponing the implementation of the Canada Innovation Corporation until “no later than 2026-27.″

RESEARCHERS

Distribution Sensitive Innovation Policies: Turning inclusive innovation from rhetoric to action

March 6, 2024, 14:30 - 16:00 , Virtual event
IPL Co-director Dan Breznitz will be speaking at the I2Hub's Inclusive Innovation Speakers' Series. Abstract: It is clear that innovation and inequality are salient questions to both business and political leaders. Indeed, many have latched to urging for “inclusive innovation” when they wish to support innovation that benefits a broad swathe of society, often individuals who are economically marginalized. But how? While statements such as “Innovation is the path to inclusive growth” makes CEOs and politicians sounds good, details about how this goal is to be achieved are ‘somehow’ lacking. A quick global survey of inclusive innovation highlights an inflation of rhetoric coupled with almost complete dearth of action and details.

In this talk, based on several papers co-authored with Amos Zehavi, Dan Breznitz contends that there are already a set of policies that achieve these goals – termed Distribution-Sensitive Innovation Policies. These are policy actions devised with the aim of increasing growth while taking into account economic distribution. Looking at diverse countries from the United State, to Canada, Sweden, Poland, Israel and Germany, DSIPs policies work by benefiting disadvantages group, specifically they look at Low skilled manufacturing workers, The economic periphery, ascriptive minorities and People With Disabilities (PWD).

DSIPs or by no mean a panacea for all social and economic ills. However, given that economies are no better than the societies in which they are embedded; it is of critical importance that business and political leaders seriously turn their attention to them. We desperately need to maximize both growth and equality in our society, the consequences of not doing so are just too dire. DSIPs offers a venue of constructive private-public experimentation.

Editor's Pick

Electrons, Rocks, and Brains: Canada’s Power in the New Geopolitical Order

Bentley Allan, Derek Eaton, Jonas Goldman, Centre for Net-Zero Industrial Policy, Transition Accelerator
This brief presents the results from an original analysis quantifying various countries' potential to contribute to the new energy order along seven critical indicators: solar, wind, hydrogen, critical minerals, biocapacity, gas, and oil. Canada is found to have a strong position in all seven. However, the authors note that Canada takes its position in the global geopolitical order for granted at a time when the energy transition is transforming geopolitics and the foundations of national power. The old geopolitical order was based on oil. Canada prospered under this order, but there is a risk that it will lose its position in the new energy world. The authors put forward several recommendations comprising a net-zero industrial policy to cultivate advanced production and innovation capabilities ("the brains") in the processing of materials for net-zero supply chains.

Cities & Regions

Harnessing global value chains for regional development: How to upgrade through regional policy, FDI, and trade

Ricardo Hausmann, Regional Studies
This review of Riccardo Crescenzi and Oliver Harman's recent book Harnessing Global Value Chains for Regional Development: How to Upgrade through Regional Policy, FDI, and Trade. The book articulates an argument for both developing and developed economies to pivot towards export-led growth through integration into global value chains (GVCs). Foreign direct investment (FDI) and the importance of multinational enterprises (MNEs) are a recurring theme throughout for subnational development. The book draws a clear distinction between horizontal leaps (existing tasks in new but complementary GVCs) and vertical leaps (new tasks along existing GVCs). The discussion on vertical leaps demonstrates how a country’s role in a GVC can and should go beyond assembly and into higher value-add sections of the value chain. As the authors note: ‘vertical policies that promote upgrading and innovation, such as through investment in R&D, technology transfer, and skills development, are crucial for enhancing the competitiveness and sustainability of firms and regions’. Participation in an existent GVC can be widened to capture a larger tranche of global production.

Statistics

What contributed to the slowdown of investment in Canada after the mid-2000s?

Statistics Canada
Investment in capital, which is the main driver of growth in labour productivity, has been weak in Canada since the mid-2000s. A new study, "Investment Slowdown in Canada After the Mid-2000s: The Role of Competition and Intangibles," examines the sources of this weakness in capital investment among Canadian firms. It found that investment per worker among Canadian firms declined by 20% from 2006 to 2021. The decline in investment per worker was more significant in large- and medium-sized firms compared with small firms. Large- and medium-sized firms accounted for 90% of the overall decline in investment per worker from 2006 to 2021, much larger than their share of investment (65% in 2021). The decline in investment per worker was also larger in foreign-controlled firms compared with domestically-controlled ones. Foreign-controlled firms contributed 30% of the decline in investment per worker from 2006 to 2021 but accounted for 20% of investment in that period.

Innovation Policy

Designing and implementing mission-oriented policies: Tools and resources from the field

Anna Goulden & Rainer Kattel, UCL Institute for Innovation and Public Purpose
This policy report investigates the tools and resources used globally by practitioners to support them in design, implementation or evaluation of mission-oriented policies. In recent years, ‘policy toolkits’ (often called ‘playbooks’, ‘guides’, ‘resource libraries’ or similar) have become increasingly widespread in policy communities. In the context of policy approaches such as mission-oriented innovation, toolkits and many tools can be a means of bridging the gap between theory and practice by providing practitioners with tangible resources to support them in their work. As part of this work, IIPP engaged with practitioners in its Mission-Oriented Innovation Network (MOIN) to discuss cases of mission-oriented policy tools and toolkits developed in the field – and current and future needs for tool development.

Consultation Paper: Scientific Research and Experimental Development

Department of Finance Canada
The federal government recently announced its intention to review the SR&ED program, first to ensure that it is effective in encouraging R&D that benefits Canada, and second to explore opportunities to modernize and simplify it. This consultation paper calls for submissions relating to cost-neutral improvements to the SR&ED program that more effectively support innovative businesses and create economic opportunities for Canadians. Responses are expected to include proposals on how any costs stemming from an increase in the program's generosity should be financed or offset from within the SR&ED program. Cost savings could include, among other potential changes, introducing additional eligibility conditions, better targeting the scope of eligible expenditures or activities, or re‑examining the program's tax credit rate structure.

Green Industrial Policy: A Holistic Approach

Ilaria Mazzocco, Center for Strategic and International Studies
This policy brief discusses the importance of taking a holistic approach to green industrial policy. In the United States, the rise of the economic-climate agenda and green industrial policy has coincided with growing attention to supply chain resilience, economic security, and a deteriorating U.S.-China relationship. As a consequence, the interaction between trade, geopolitics, domestic economic policy, and climate policy demands a new holistic approach from policymakers and civil society to find more politically sustainable and effective policy solutions. The author notes that more consideration should be given to the specifics of U.S. climate strategy when it comes to trade and international relations and how to integrate climate strategy with the Inflation Reduction Act and green industrial policy efforts.

The White House announces over $5B from CHIPS and Science Act for R&D and workforce programs, other updates on semiconductor programs, including Mfg USA Institute

Michele Hujber, SSTI
This SSTI post summarizes a recent announcement by the Biden-Harris Administration of $5B in investments from the CHIPS and Science Act. Investments are targeted to semiconductor-related research, development, and workforce needs. The $5B will flow through the National Semiconductor Technology Center (NSTC), a public-private entity created to handle the funds. The White House fact sheet describes NSTC as the “centerpiece” of the CHIPS R&D program, which will operate as a public-private consortium of the Secretaries of Commerce, Defense, and Energy, the Director of the National Science Foundation, and Natcast. Natcast will operate the NSTC consortium.

Investing in Leading-Edge Technology: An Update on CHIPS Act Implementation

Center for Strategic and International Studies
This video from the CSIS Renewing American Innovation series features a major policy address by U.S. Secretary of Commerce Gina Raimondo on "Investing in Leading-Edge Technology: An Update on CHIPS Act Implementation".

Policy Digest

Innovation, Science and Economic Development Canada's 2024–2025 Departmental Plan

Innovation, Science and Economic Development Canada
This departmental plan describes Innovation, Science and Economic Development Canada's priorities, plans and associated costs for the upcoming three fiscal years. The report also contains the Departmental Results Framework, which outlines the organization's core responsibilities, the results it plans to achieve, and the performance indicators that measure progress toward these results. The report has gained coverage in the Logic for its plan to significantly decrease funding for the innovation procurement program Innovative Solutions Canada.

ISED summarized the 2024-2025 Departmental Plan as follows:

Key Priorities

Develop a sustainable battery innovation and industrial ecosystem, establishing Canada as a leader in battery manufacturing, recycling and reuse.
Advance the Biomanufacturing and Life Sciences Strategy through strategic investments to strengthen Canada's domestic biomanufacturing capacity.
Advance broadband delivery by connecting more households, including those in rural and remote regions across Canada, to achieve Canada's target of connecting 98% of Canadians to high-speed internet by 2026 and 100% of Canadians by 2030.
Help Canadians improve digital literacy skills, and support Canadian businesses in adopting digital technologies, to ensure all Canadians can thrive in the digital economy.
Advance recovery measures to support tourism businesses and help them position themselves for future growth and
Make Canada's entrepreneurial ecosystem more accessible by providing opportunities and support for individuals from under-represented groups to start, scale, grow, and maintain their businesses.

Refocusing Government Spending

In Budget 2023, the government committed to reducing spending by $14.1 billion over the next five years, starting in 2023–24, and by $4.1 billion annually after that. As part of meeting this commitment, Innovation, Science and Economic Development is planning to contribute the following amounts:

2024-25: $141,182,000
2025-26: $158,071,000
2026-27 and after: 313,701,000

To achieve this objective, Innovation, Science and Economic Development will be implementing three savings initiatives:

Operating Efficiency Savings: The department aims to generate savings of $24.3M in 2024-25, ramping up to $38.8M ongoing by 2026-27 through a series of measures that will reorganize work to generate operational and administrative efficiencies and by not backfilling certain positions as they vacate through attrition. Implementation of these savings measures are not anticipated to impact the delivery of programs and services to Canadians.
Temporary Savings from Transfer Payment Programs: The department will contribute an amount of $81.7M from two temporary transfer payment programs. First, the department will self-fund the 2024-25 CANARIE program estimated at $38M by leveraging available funding from the Digital Research Infrastructure Strategy envelope, rather than accessing new funding. In addition, the department will reduce the Canada Digital Adoption Program funding envelope by $43.7M in 2024-25.
Permanent Savings from Transfer Payment Programs: Starting in 2025-26, ISED will return an amount of $11.4M per year from the Canada Foundation for Innovation program and will reduce the overall funding envelope for the Strategic Innovation Fund by $38.2M in 2025-26, ramping up to $141.4M in 2026-27 and subsequent years.

In addition, the department is also committed to supporting government savings through the following efforts:

Increase to revenue: The department aims to contribute an additional $7M in 2024-25 and 2025-26 and $52.1M ongoing starting in 2026-27 to the fiscal framework through new or increased user fees for services providing benefits to specific enterprises, organizations or individuals.
Rescaling of the Innovative Solutions Canada (ISC) Program: The department supports a government decision to scale down spending on the ISC program by $28.2M in 2024-25 and $70M ongoing starting in 2025-26, with savings achieved through reduced contributions to the programs from participating departments across government. Allocation of the savings by department will be determined in spring 2024 and reflected through the government's supplementary estimates process.

Departmental Results Framework

Companies, Investment and Growth
Departmental results: Canada has a clean and sustainable economy; Canadian businesses and industries are innovative and growing; & Businesses, investors and consumers are confident in the Canadian marketplace, including the digital economy
Planned spending: $4,279,156,052
Planned human resources: 4,352
Science, Technology, Research and Commercialization
Departmental results: Canadian science, technology and innovation research contributes to knowledge transfer
Planned spending: $969,539,190
Planned human resources: 114
People, Skills and Communities
Departmental results: People and communities from all segments of Canadian society participate in the economy
Planned spending: $703,840,962
Planned human resources: 178

Events

EVENTS

The 23rd Annual Research Money Conference: Creating the future we want for Canada in 15 years
April 24-25, 2024, National Arts Centre, Ottawa
The primary objective of the 23rd annual R$ conference is to identify where Canada envisions itself in the next 15 years and craft how to reach that future. We’ll analyze the federal budget, assess past attempts to galvanize the country around innovation, hear from other countries how they did it and how they view Canada, learn from Canadian successes in specific sectors and regions, and address challenges that have been hindering us.

Participants will be able to record their ideas and commentary about the sessions in real time. The conference will include an interactive session during which participants identify priorities for future action.

ISS2024

June 9-11, 2024, Gothenburg, Sweden
ISS2024 is the 20th biennial conference of The International Joseph A. Schumpeter Society. The conference takes place in Gothenburg, Sweden, between Sunday 9th June and Tuesday 11th June, 2024. The ISS2024 conference theme is "Transformation: Creative Accumulation and Creative Destruction in the Economy". The Deadline for submitting abstracts is Jan. 15th 2024.

2024 RSA Annual Conference: Global Challenges, Regional Collaboration and the Role of Places

11-14 June 2024, Florence, Italy
The Regional Studies Association’s Annual Conference 2024 #RSA24 is being held in partnership with the Department of Economics and Business Sciences and Department of Architecture, University of Florence, Italy. This four-day conference brings together academics and policymakers to exchange news, views and research findings from the fields of regional studies and science, regional and economic development, policy and planning.

2024 Industry Studies Association Annual Conference

June 13-15, 2024, Sacramento, CA, USA
This year's ISA conference is titled Empowering Community Wellbeing: Clean Energy, Sustainability and Industrial Strategy and will be held at California State University, Sacramento. In the heart of the world’s largest subnational economy, California, the Industry Studies Association proudly presents its annual conference with a theme that resonates with the future of our planet and communities. The conference will explore the dynamic interplay between California's pioneering efforts in clean energy and sustainability and their profound impacts on industrial strategy and community wellbeing around the world. Call for Paper and Panel Submissions

Technology Transfer Society Annual Meeting 2024

September 11-13, 2024, Brussels, Belgium
The conference theme is 'Blurring Boundaries and Ambiguous Roles: Universities and the Entrepreneurial Ecosystem.' The deadline for abstract submissions is February 15, 2024.

ANNOUNCEMENTS

Ikerbasque Research Fellows 2024

The Basque Foundation for Science is launching a new international call for 20 positions for promising young postdoctoral researchers to strengthen scientific research in the Basque Country. 5-YEAR POSITION: During the last year the researcher can be assessed to obtain a permanent position. PHD DEGREE: Between Jan 2013-Dec 2021. APPLICATIONS FROM WOMEN Are especially welcome.

Subscriptions & Comments

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