The IPL newsletter: Volume 25, Issue 519

January 15, 2025

News from the IPL

EVENTS

Jan 15 banner Title text Prosperity's Path: A Blueprint for Canada's Future

REGISTER HERE | Online | January 15, 2025 | 5:00PM - 6:30PM

In the fall of 2024 IPL Co-Director Dan Breznitzauthored a special five-part series Prosperity’s Path, published in The Globe and Mail. The series explores the critical factors shaping Canada's prosperity and future economic growth, including pressing issues of innovation ecosystems, global competitiveness, sustainable development, and the role of policy in driving long-term economic success.

To dig deeper and to celebrate his work, Professor Breznitz will join Janice Stein, founding director of the Munk School of Global Affairs & Public Policy in conversation on January 15, 2025. Whether you're an industry leader, policymaker, or someone interested in the future of Canada's economy, you won’t want to miss this exclusive conversation.

Prosperity’s Path, special to the Globe and Mail:

How Canada’s middle class got shafted (Sept. 19, 2024)
How not to run a country: Government ineptitude and Canada’s economic malaise (Sept. 28, 2024)
We don’t need no education: How Canada’s broken university system holds us back (Oct. 4, 2024)
To fix Canada’s economic problems, we need a real strategy (Oct. 12, 2024)
As we build a vision of Canada, let’s make sure it has more Canada in it (Oct. 19, 2024)

Dan Breznitz has been elected as a University Professor of the University of Toronto, and is the Munk Chair of Innovation Studies at the Munk School of Global Affairs and Public Policy with a cross-appointment in the Department of Political Science of the University of Toronto, where he is also the Co-Director of the Innovation Policy Lab and a Senior Fellow of Massey College. In addition, he is a Fellow of the Canadian Institute for Advanced Research (CIFAR) where he co-founded and co-directs the program on Innovation, Equity and the Future of Prosperity.

RESEARCH

The Uneven Heartland: A Look at Household Wealth in the Midwest and Southeast

Ana Hernández Kent, Tom Kemeny, Federal Reserve Bank of St. Louis
This paper is co-authored by IPL Affiliated Faculty member Tom Kemeny. Understanding household wealth trends is important for getting a pulse on the economic health and stability of a community. Wealth can be used to invest in oneself and one’s family, meet future needs, provide access to opportunities, and cushion the impact of unexpected financial shocks. Wealth provides a more complete picture of financial well-being than income alone, but until recently, household wealth estimates have been available at only a national level. Having estimates of local wealth enables communities and organizations to place resources to build financial stability where they are most needed.The authors used the publicly available files from the Geographic Wealth Inequality Database, or GEOWEALTH-US, to look at local wealth estimates. Using those estimates, they found that there are pockets of both prosperity and financial insecurity within communities. High- and low-wealth areas can exist within a few miles. Further, significant and rising wealth inequality exists. This blog post focuses on seven states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. All of Arkansas and portions of the other states make up the Eighth Federal Reserve District.

Leading From Below: Turning Greater Sudbury into an Export Hub of Mining Innovation and Sustained Prosperity

Dan Breznitz, Scott McKnight, and Marte Vroom
This white paper is co-authored by IPL Co-Director Dan Breznitz, IPL Research Associate Scott McKnight, and IPL Research Trainee & PhD student Marte Vroom. The paper attempts to address several pressing matters. What can be done in, and by, SMEs, government, and supporting institutions in Sudbury to amplify the growth of established mining supply and service companies as well as to spur the creation of new ones, while also keeping their ownership in Sudburian hands? What measures can be taken to ensure Sudburians gain well-paid and safe employment? Finally, how can local institutions—governmental, education and non-profit—stay relevant in fostering this continued growth and sharing this prosperity? In answering those questions, this white paper puts forth the ambitious goal of Greater Sudbury becoming a leading export hub for hard-rock mining solutions, equipment, and knowhow.

Editor's Pick

Technological Disruption in the US Labor Market

David Deming, Christopher Ong, and Lawrence H. Summers, Aspen Institute
This paper explores past episodes of technological disruption in the US labor market, with the goal of learning lessons about the likely future impact of artificial intelligence (AI). The authors measure changes in the structure of the US labor market going back over a century. We find, perhaps surprisingly, that the pace of change has slowed over time. The years spanning 1990 to 2017 were less disruptive than any prior period we measure, going back to 1880. This comparative decline is not because the job market is stable today but rather because past changes were so profound. General-purpose technologies (GPTs) like steam power and electricity dramatically disrupted the twentieth-century labor market, but the changes took place over decades. The authors argue that AI could be a GPT on the scale of prior disruptive innovations, which means it is likely too early to assess its full impacts. Nonetheless, they present four indications that the pace of labor market change has accelerated recently, possibly due to technological change. First, the labor market is no longer polarizing— employment in low- and middle-paid occupations has declined, while highly paid employment has grown. Second, employment growth has stalled in low-paid service jobs. Third, the share of employment in STEM jobs has increased by more than 50 percent since 2010, fueled by growth in software and computer-related occupations. Fourth, retail sales employment has declined by 25 percent in the last decade, likely because of technological improvements in online retail. The post-pandemic labor market is changing very rapidly, and a key question is whether this faster pace of change will persist into the future.

Cities & Regions

Tech Hubs or Tech Dispersion?

Robert D. Atkinson and Trelysa Long, ITIF
In 2019, ITIF and Brookings proposed that Congress provide funding for the U.S. Department of Commerce to establish a system of regional technology hubs with a program to identify promising metro areas and help them transform into self-sustaining innovation centers. This post argues that "to date, that vision has not been achieved, but the next Congress can fix it." Congress initially authorized $10 billion for Commerce to establish the Tech Hubs program under the auspices of the Economic Development Administration (EDA). While significantly lower than the $60 billion over 10 years that ITIF proposed, it still would have constituted a sizeable investment. But Congress appropriated just 5 percent of the authorized amount, $200 million. The authors lament that "four federal tech hub programs doled out awards to 48 states" and that "as a result, these are not concentrated tech “hub” programs at all; they are instead tech “dispersion” programs—many places receiving relatively modest amounts."

Statistics

Chasing the Dream: Industry-Level Productivity Developments in Europe

Serhan Cevik, Sadhna Naik, Keyra Primus, IMF
European countries are lagging behind in productivity growth, with significant productivity gaps across industries. This study uses comparable industry-level data to explore the patterns and sources of total factor productivity (TFP) growth across 28 countries in Europe over the period 1995–2020. The empirical results highlight four main points: (i) TFP growth is driven largely by the extent to which countries are involved in scientific and technological innovation as the leader country or benefiting from stronger knowledge spillovers; (ii) the technological gap is associated with TFP growth as countries move towards the technological frontier by adopting new innovations and technologies; (iii) increased investment in information and communications technology (ICT) capital and research and development (R&D) contributes significantly to higher TFP growth; and (iv)the impact of human capital tends to be stronger when a country is closer to the technological frontier. The core findings of this study call for policy measures and structural reforms to promote innovation and facilitate the diffusion of new and existing technologies across Europe.

Innovation Policy

Industrial Policy in Europe: A Single Market Perspective

Andrew Hodge, Roberto Piazza, Fuad Hasanov, Xun Li, Maryam Vaziri, Atticus Weller, Yu Ching Wong, IMF
European countries are increasingly turning to industrial policy to address the challenge of geopolitical fragmentation, enhance productivity, and accelerate the green transition. Well-targeted industrial policy has the potential to correct market failures and support production efficiency by exploiting scale effects and internalizing knowledge externalities. But even the most carefully designed unilateral industrial policies risk generating negative production externalities in other countries, and, under certain conditions, may not even be welfare-enhancing for the implementing country. The reason is that negative externalities of unilateral industrial policy can drive European and international production patterns away from underlying comparative advantages, create regional or global over-supply, and result in changes in terms of trade that reduce domestic welfare. This suggests significant benefits from coordination. Structural modeling and case studies show that a coordinated approach within the European Union and with international trading partners on a narrowly defined and carefully designed set of industrial policies could unlock untapped benefits. Closer European integration would facilitate the adjustment of firms and workers to coordinated and well-targeted industrial policies and amplify their benefits. Also see this blog post by the authors.

Final hydrogen tax credits get greenlight

CTVC
This post summarizes the recent announcement by the US Treasury and IRS of the final rules for the 45V Clean Hydrogen Production Tax Credit. Introduced in the 2022 Inflation Reduction Act (IRA), after two years of volatile debate, these new rules bring a more stable element to the industry, and much-needed certainty for investors and project developers. The program offers of up to $3 in tax credits for every kilogram of hydrogen, so long as production methods substantially lower the total greenhouse gas emissions throughout the process. Now, ahead of the presidential transition, the Biden administration finalized these 45V rules, addressing concerns from industry stakeholders. Post also discusses recently released guidance on the Clean Fuels Production Credit (Section 45Z), which incentivizes producing low-GHG transportation fuels, including sustainable aviation fuel (SAF) and other transportation fuels, starting in 2025.

Policy Digest

Public procurement for public sector innovation: Facilitating innovators' access to innovation procurement

OECD
This paper explores ways to promote public sector innovation through public procurement. The paper provides an overview of different approaches to innovation procurement and underscores the challenges faced by public sector managers while using procurement to insource innovative approaches, solutions, and processes.The report is produced in the context of the Horizon Europe research programme on public sector innovation and has been drafted to reflect the point of view of public sector innovators. The report puts their needs and expectations at the centre.

Innovation procurement emphasises using procurement as a strategic tool to drive economic growth and innovation, improve performance and
effectiveness, and spur technological advancements, ensuring that what is procured creates value and addresses emerging needs. Innovation procurement also opens new market opportunities, promotes investment in research and development, and empowers public sector managers to adopt new solutions to societal challenges.

As part of this project, an analytical framework was developed to emphasise a challenge-based, constructive approach across its four pillars. The cases presented under each pillar illustrate possible approaches to the challenges outlined in the analytical framework

1) improving the design and development of innovative solutions

2) creating inclusive and targeted solutions

3) reducing barriers and friction in innovation adoption

4) promoting effective policy tools in terms of encouraging additional R&D and innovation.

Policy lessons from this project emphasise the need for governments to strategically manage resources while
ensuring that procurement initiatives attract industry participation:

Building capacity and raising awareness in innovation procurement by promoting training and stakeholder collaboration can also enhance public procurers' and innovators' understanding of legal frameworks, risk management, and best practices.
Establishing mechanisms for measuring innovation in public procurement, including ex ante and ex post assessments, can help to track the novelty and impact of procured solutions.
As whole-of-government approaches to innovation policy gain traction, effective co-ordination mechanisms are essential for monitoring procurement-based innovation support. Finally, using public procurement to aggregate demand and scale up innovative solutions is crucial.
By co-ordinating procurement across sectors and regions, governments can create a critical mass of purchasing power, encouraging industries to scale up production and enabling large-scale deployment of innovative solutions that meet public needs.

Events

OPPORTUNITIES

Call for application for a fellowship for the project “Science technology relationships in the development of AI in the health sector”

The application for this University of Torino position must be submitted exclusively online, using the form available here: https://forms.gle/NHKw4Nnhta7Mew4BA .Applicants are advised that once they receive the application registration form via email, they must complete the transmission by printing the said email, signing it and transmitting the scan to the following address: incarichi.cle@unito.it.

Duration: 18 months. The total amount of the grant is € 34,200.00 and is paid in monthly installments (€ 1,900.00 per month after tax). The research activity consists of:
- Research on the diffusion of AI and robotics technologies within hospitals.
- Creation and analysis of comparative data at regional and national levels.
- Production of two articles to be submitted to international scientific journals.

EVENTS

Rise and Fall of the Inclusive Innovation Monitor and Lessons for Future Initiatives

January 15, 2025, 13:00-14:30 EST, Dr. Daniel Munro, Inclusive Innovation Speaker Series, Format: Hybrid (virtual and in-person)
In the depths of the COVID pandemic, researchers from the Innovation Policy Lab at the Munk School of Global Affairs & Public Policy and the Brookfield Institute for Innovation and Entrepreneurship built Canada’s first “Inclusive Innovation Monitor” (IIM). The IIM aimed to extend and improve efforts to measure Canada’s innovation performance by addressing some of the gaps in other innovation scorecard initiatives including, critically, who gets to participate in innovation, and how its risks and benefits are distributed across In the depths of the COVID pandemic, researchers from the Innovation Policy Lab at the Munk School of Global Affairs & Public Policy and the Brookfield Institute for Innovation and Entrepreneurship built Canada’s first “Inclusive Innovation Monitor” (IIM). The IIM aimed to extend and improve efforts to measure Canada’s innovation performance by addressing some of the gaps in other innovation scorecard initiatives including, critically, who gets to participate in innovation, and how its risks and benefits are distributed across individuals and communities. In this talk, IIM lead researcher, Dan Munro, will reflect candidly on what the IIM aspired to be, how it came about, why it (mostly) went away and why it still matters.

Speaker's bio: Dr. Daniel Munro is Director, Research and Innovation at Actua, Canada’s largest youth STEM outreach organization, and Co-Director of Shift Insights, a research and policy shop that examines the social, technological and economic challenges and opportunities facing Canada. Previously, Dan was Senior Fellow in Innovation Studies in the Innovation Policy Lab at the Munk School of Global Affairs & Public Policy at the University of Toronto (2017-2024), Research Fellow at the Brookfield Institute for Innovation + Entrepreneurship (2017-2020), Associate Director of Public Policy at the Conference Board of Canada (2008-2017) and Senior Analyst at the Council of Canadian Academies (2007-2008). Dan’s research and teaching focus on science, technology and innovation policy; skills and education; and applied ethics, including the ethics of innovation and space ethics. He holds degrees from the University of Toronto (BA), Western University (MA) and M.I.T. (PhD).

The 10th Atlanta Conference on Science and Innovation Policy

May 14-16, 2025, Georgia Institute of Technology
Hosted by Georgia Tech, the Atlanta Conference provides a forum to present and discuss high quality empirical research by about 300 scholars representing more than 30 countries that focus on the challenges and trends associated with science and innovation policy and processes. Abstracts Due: Nov. 17, 2024.

7th Global Conference on Economic Geography

June 4-8, 2025, Clark University, Worcester, Massachusetts
The GCEG is the largest international conference dedicated to Economic Geography. Cutting-edge research concerning the sources and drivers of socio-economic change, and an assessment of the economic geography of places in a multi-scalar and multi-dimensional context.

SASE 2025 Annual Conference

9-12 July 2025, Palais des Congrès, Montréal, Québec

The conference's theme is 'Inclusive Solidarities: Reimagining Boundaries in Divided Times.'

DRUID25

Toronto, June 25-27, Rotman School of Management, University of Toronto
Since 1996, DRUID has become one of the world's premier academic conferences on innovation and the dynamics of structural, institutional and geographic change. DRUID is proud to invite senior and junior scholars to participate and contribute with a paper to DRUID25, hosted by Rotman School of Management, University of Toronto. Presenting distinguished plenary speakers, a range of parallel paper sessions, and an attractive social program, the conference aims at mapping theoretical, empirical and methodological advances, contributing novel insights, and help identifying scholarly positions, divisions, and common grounds in current scientific controversies within the field. Submission deadline: March 1

Twin Transition, Ecosystems, and Disruptive Innovation

October 23rd-24th 2025, Venice School of Management - Ca’ Foscari University of Venice, San Giobbe - Economic Campus.
The 19th edition of Regional Innovation Policies Conference will take place in Venice, Italy.

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