The IPL newsletter: Volume 25, Issue 511

September 3, 2024

News from the IPL

RESEARCH

Semi-Peripheral Pathways to High-Technology Markets: How Organizational Origins Shape Entrepreneurial Ecosystems

Alessandra Cicci & Darius Ornston, Studies in Comparative International Development
This article is co-authored by IPL Affiliated Faculty Darius Ornstonand Master of Global Affairs alumni Alessandra Cicci. Recent technological changes have created new opportunities for small- and medium-sized firms in the semi-periphery to enter digital markets. At the same time, the need to connect startups with the diverse range of actors and resources which sustain an entrepreneurial ecosystem poses a formidable challenge to regions which have historically suffered from disarticulation. The literature suggests that regions aspiring to support technology startups could benefit from bridging organizations or “entrepreneurial ecosystem incubators” (EEIs) to build civic capital. Comparing two successful EEIs in Toronto and Waterloo, Canada, we find that their organizational structure, specifically the composition of their board, shaped connectivity in important ways. Whereas Communitech, an entrepreneur-led EEI in Waterloo, relied heavily on horizontal, peer-to-peer mentoring among entrepreneurs, MaRS, led by established firms and civic leaders, linked startups to external capital, customers, and other resources within a limited number of industry verticals. Both EEIs supported local startup activity, but they fostered different patterns of collaboration and high-technology competition. This analysis suggests that regional leaders in laggard regions may face a tradeoff in how they support technology startups and nurture entrepreneurial ecosystems.

Editor's Pick

Tallying the Two-Year Impact of the Inflation Reduction Act

Clean Investment Monitor
As the United States marks the two-year anniversary of the Inflation Reduction Act, this report provides a comprehensive analysis of actual investments in clean technologies and infrastructure since its enactment. From the second half of 2022 through the first half of this year, actual business and consumer investment totaled $493 billion, a 71% increase from the two-year period preceding the legislation. Clean energy and transportation technology is proving to be one of the largest industries in the US economy. The investments in greenhouse gas (GHG) emissions-reducing technologies tracked over the past two years accounted for 4.5% of total US private investment in structures, equipment, and durable consumer goods in the United States, compared to 2.6% from H2 2020 through H1 2022. Investment in manufacturing clean energy and transportation technology posted the fastest growth, totaling $89 billion in the post-IRA period—more than quadruple the $22 billion invested in the two years prior to the IRA’s enactment.  Over $1 in every $4 of clean investment went to manufacturing in Q2 2024, an increase from $1 in every $10 in Q3 2022. This reflects rapid and sustained quarter-on-quarter growth, with the lion’s share going into the electric vehicle supply chain. Also see the Statement from President Joe Biden on Inflation Reduction Act Anniversary and this article summarizing how the Republican fight over green subsidies heads toward a boiling point.

Cities & Regions

A typology of urban knowledge sharing: from a systematic literature review to an integrated model

Jet Bakker, Peter Scholten, Jan Fransen, Ellen Minkman, Science and Public Policy
This paper provides insight into how the conceptualization of urban knowledge sharing has developed. Based on a structured review and categorization of the literature, the authors identify three forms of knowledge sharing in and between cities that are distinctly different: knowledge transfer, knowledge exchange, and knowledge co-creation. The authors find that the three forms have different boosts and barriers, whereby the complexities of knowledge sharing and hence the capacities required of the actors are lowest for knowledge transfer and highest for knowledge co-creation. The authors would therefore like to qualify the recent emphasis given in literature to co-creation; with its complexities and required capacities, it is not to be considered a panacea for solving all urban problems. The paper proposes a model within which knowledge transfer and exchange are more suitable for less wicked problems and may sometimes fruitfully reduce complexities.

EDA funds all Tech Hubs designees

Jason Rittenberg, SSTI
Following its announcement of implementation awards to 12 Tech Hubs regions, the U.S. Economic Development Administration made Consortium Accelerator Awards of $500,000 to each of the additional 19 Tech Hubs designated regions. This funding should enable regions to continue dedicated efforts to strengthen their strategies and partnerships and to pursue alternative sources of implementation project funding. The National Science Foundation made similar awards to the Regional Innovation Engines finalists earlier this year, and SSTI witnessed the potential value of such support while working with RTI International and the Build Back Better Regional Challenge finalists, which did not receive such continuation assistance

Statistics

Importance of reasons for bringing engineering and research and development (R&D) services activities to Canada, by industry and enterprise size

Statistics Canada
This recent release focuses on sector-level and firm-size differences in reasons cited for locating R&D services in Canada. The data comes from the Survey of Innovation and Business Strategy.

Science and Technology Cluster Ranking 2024

World Intellectual Property Organization
The Science and Technology (S&T) Cluster ranking of the Global Innovation Index identifies local concentrations of world-leading science and technology activity. S&T clusters are established through the analysis of patent-filing activity and scientific article publication, documenting the geographical areas around the world with the highest density of inventors and scientific authors. WIPO locates and ranks science and technology clusters through a geocoding method, mapping addresses and names pulled from documents to 96% accuracy. Find out more about the S&T Cluster methodology.

Innovation Policy

Biden administration weighs price support for US critical minerals amid Chinese pressure

James Bikales, Politico
The Biden administration is considering using federal dollars to prop up U.S. critical minerals projects being hammered by an influx of cheaper Chinese materials, an Energy Department official familiar with the potential move told POLITICO.Under the policy, the department would set a price floor and agree to pay the difference when market prices fall below that threshold for critical minerals produced by certain U.S. projects. The effort comes in response to delays and cancellations of many U.S. minerals processing projects, including those that were set to receive a collective $1 billion in grants from the Biden administration.

U.S. Department of the Treasury Issues Proposed Rules to Expand Clean Energy Investments in Underserved Communities

U.S. Department of the Treasury
This announcement by the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) discusses a recently issued Notice of Proposed Rulemaking (NPRM) for 48E(h), the Clean Electricity Low-Income Communities Bonus Credit Program, created by the Inflation Reduction Act. The program promotes cost-saving clean energy investments located in low-income communities, on Indian lands, within affordable housing, or directly benefitting low-income households.  The 48E(h) Clean Electricity Low-Income Communities Bonus Credit Program builds on the first-of-its-kind Low-Income Communities Bonus Credit Program, also known as 48(e). The transition from 48(e) to 48E(h) opens the program to additional clean energy technologies beyond wind and solar such as hydropower and geothermal. This expansion also coincides with Treasury’s efforts to make the benefits of the Clean Electricity Production Credit and Clean Electricity Investment Credit available to clean energy facilities with a greenhouse gas emissions rate of zero or less.  

Policy Digest

How Innovative is China in AI?

Hodan Omaar, ITIF
The Smith Richardson Foundation provided support to the Information Technology and Innovation Foundation (ITIF) to assess how innovative Chinese industries are. The report relied on three methods to assess China's innovation performance in AI: an in-depth case study evaluation of two leading AI companies; interviews and held a focus group roundtable with global experts on the Chinese AI industry, allowing participants to speak anonymously unless they asked to be named in the report; and assessing global data on AI innovation, including scientific articles, patents, talent, and access to infrastructure.

The report summarizes the key takeaways as follows:

  • China is the global leader in AI research publications and is neck and neck with the United States on generative AI. However, China’s research publications have less impact than U.S. ones, with fewer citations and less private-sector involvement.

  • Tsinghua University in Beijing is the breeding ground for China's leading AI start-ups, including four of the country’s “AI tigers”—Zhipu AI, Baichuan AI, Moonshot AI, and MiniMax—which were all founded by faculty and alumni.

  • Chinese large language models are closing the performance gap with U.S. models, with some Chinese models outperforming their U.S. counterparts in bilingual benchmarks.

  • China has less private AI investment than the United States, but foreign investment in China's generative AI sector is growing, with Saudi Arabia’s Aramco leading the way.

  • State-directed capital funds and financial aid are proving effective at supporting high-potential firms in regions of China the private sector typically underinvests in.

  • China’s open-source LLM ecosystem is rapidly advancing, with models such as Alibaba’s Qwen 1.5 and Zhipu AI’s ChatGLM3 outperforming some U.S. counterparts and gaining recognition for their impressive capabilities.

  • U.S. policymakers should not prioritize containing China, but rather craft and fund a comprehensive national AI strategy that addresses the twin goals of increased AI development and increased AI adoption to stay ahead.

The report outlines the following recommendations for increasing AI development:

1. Stimulate private investment in AI R&D.

2. Revitalize the federal funding process for AI.

3. Avoid policies that undermine U.S. AI leadership and bolster Chinese competitors.

4. Develop a national data strategy to dramatically expand the availability of data for training AI models.

The report outlines the following recommendations for increasing AI adoption:

5. Create a national AI roadmap for adoption.

6. Prioritize the rapid adoption of AI in the federal government.

7. Support digital transformation.

8. Incentivize AI workforce training investment.

Events

EVENTS

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.

WICK#12 PhD Workshop in Economics of Innovation, Complexity and Knowledge

December 12-13 2024, Turin
Annual meeting for doctoral students and young researchers in Economics of Innovation, Complexity and Knowledge. The Workshop is organized by the students of the Vilfredo Pareto Doctoral Program in Economics, in collaboration with the University of Turin, BRICK, Collegio Carlo Alberto and Young Scholar Initiative

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