The IPL newsletter: Volume 25, Issue 521

February 17, 2025

News from the IPL

Video: Prosperity's Path: A Blueprint for Canada's Future

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 joined Janice Stein, founding director of the Munk School of Global Affairs & Public Policy in conversation on January 15, 2025.

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.

Editor's Pick

Artificial Intelligence and Innovation Policy: A Comparative Perspective

Shirley Anne Scharf, CIGI
This CIGI Digital Policy Hub Working Paper argues that in the intensifying global race for advantage in artificial intelligence (AI), three considerations around innovation policy are critical. First, there needs to be consistent and clear priority setting, set out over time. Second, AI policy needs to be embedded in a larger ensemble of industrial priorities that include a focus on digitalization and information and communication technology. And third, AI priorities need to also exist within a larger governmental focus on innovation that is targeted and focused on demonstrable results. The Republic of Korea has forged successful policies in these domains. Sweden, while having a somewhat later start in AI, has also moved forward quickly. Canada, with a long and illustrious history in AI, is beginning to lose its competitive edge. AI policy priorities need to be tightened and focused, if Canada is to have more enduring comparative advantage.

Cities & Regions

Regionalism, Productivity, and Innovation

Rolando Avendano, Massimiliano Tani, Lovely C. Tolin
In this paper, the authors examine whether, and if so how, an economy's deliberate policy choices of regional cooperation and integration influence underlying determinants of economic growth. Building on models of growth and innovation, the authors analyze the role of regional integration on labor productivity and firms' probability to innovate using data from a panel of 170 economies and 60,000 firms over a period of two decades. The results suggest that regionalism, as captured by metrics of regional cooperation and integration, can positively contribute to labor productivity and innovation, in addition to known factors of production.

Statistics

Research and development personnel, 2022

Statistics Canada
In 2022, the number of full-time equivalent personnel engaged in R&D reached 315,030 (FTEs), reflecting an increase of 11,310 FTEs (+3.7%) from the previous year. This growth marks the sixth consecutive annual increase and aligns with the rise in Canada's gross domestic R&D expenditures, which grew by 9.0% to $51.7 billion in 2022. The number of R&D personnel rose across all provinces and territories in 2022, with Quebec (+4,240 FTEs to 88,090 FTEs; +5.1%) and Ontario (+3,110 FTEs to 140,890 FTEs; +2.3%) accounting for almost two-thirds of the total gain. British Columbia also saw a strong increase (+1,550 FTEs to 40,710 FTEs; +4.0%).

Innovation Policy

Quantum Technologies as a New Paradigm for Digital Economies and Societies

OECD
Quantum technologies have the potential to transform the digital economy and society, driving innovation towards groundbreaking applications. For instance, advances in quantum sensing, computing and communication are significantly expanding technological capabilities to gather, process and transmit information. This policy brief summarises the findings of a recent OECD paper that explores what quantum technologies are, their readiness for commercial use, the benefits they bring to economies and society, the risks they pose, and how governments can play a role in responsibly shaping their development.

Canada must hit the U.S. where it hurts most: its lucrative patents

Richard Gold, The Globe and Mail
This op-ed articulates a strategy for Canada to respond to tariffs from the United States. The article notes that Canada "has the right, under both Canadian and international law, to effectively suspend patent rights held by U.S.-controlled companies in key sectors, such as pharmaceuticals and artificial intelligence." The article is authored by Richard Gold, the director of McGill University’s Centre for Intellectual Property Policy, chief policy and partnerships officer at Conscience – an independent organization building open science drug discovery to address unmet health needs – and senior fellow at the Centre for International Governance Innovation.

Here’s What a Trade War Will Mean for Canada’s Knowledge Economy

Jeremy de Beer, CIGI
America’s recurring demand is for more, longer and stronger IP rules. US President Donald Trump’s tariffs on goods imported from Canada will be severely destabilizing. But this trade war will also have profound long-term effects on Canada’s knowledge economy. Data governance, digital trade, intellectual property (IP) and other innovation policy measures will surely be emphasized by the cadre of big tech leaders now clinging around Trump.

EU launches InvestAI initiative to mobilise €200 billion of investment in artificial intelligence

European Commission
At the Artificial Intelligence (AI) Action Summit in Paris, EU Commission President Ursula von der Leyen launched InvestAI, an initiative to mobilise €200 billion for investment in AI, including a new European fund of €20 billion for AI gigafactories. The EU's InvestAI fund will finance four future AI gigafactories across the EU. The new AI gigafactories will be specialised in training the most complex, very large, AI models. Such next-generation models require extensive computing infrastructure for breakthroughs in specific domains such as medicine or science. Also see the Logic's coverage of the Paris AI Action Summit: U.S. claims AI for its own as Canada makes push for global co-operation.

Accelerate Recommendations regarding U.S. Tariff Threats to Canada

Matthew Fortier, Accelerate
This post summarizes four policy recommendations to respond to threatened US tariffs on Canadian goods: 1) Prioritize Canadian Procurement; 2) Accelerate Critical Mineral Development; 3) Strengthen Innovation and Productivity: ; 4) Protect and Preserve Canadian Production Capacity. Accelerate is Canada’s zero emissions vehicle industrial alliance.

Policy Digest

Ambition and Action: An urgent plan for Canada

Business Council of Canada
Amid ongoing threats of tariffs on Canadian exports, the Business Council of Canada is "urging federal leaders to make ambitious structural changes to improve Canada’s economy." The report lays out a policy road map aimed at strengthening Canadian industries, expanding high-growth sectors and embracing Canada’s energy advantage.

“For far too long, we have lacked ambition and a long-term vision for our prosperity,” the report says. “We can no longer afford that level of comfort and complacency.”

The two-part plan outlines practical steps leaders should take to mitigate immediate economic risks while positioning the country for sustained long-term prosperity:

1) Strategic industrial growth plan

Objective: Strengthen domestic industries, accelerate investment, and enhance economic productivity and resilience

Fast-track strategic infrastructure: Infrastructure investment is critical to economic resilience and long-term competitiveness. Canada must take immediate steps to prioritize and fast-track key projects in energy, transportation and digital infrastructure to ensure continued economic stability:

Immediate funding through internal reallocation for essential infrastructure projects that support economic resilience, including energy, trade and Research and Development (R&D) infrastructure such as industrial labs.
Expedite project approvals, harmonize regulations across levels of government and eliminate bureaucratic bottlenecks that delay strategic investments.

Industrial R&D in high-growth industries: To build a more competitive and innovative economy, Canada must prioritize R&D and commercialization in high-growth industries where Canada has a competitive advantage. A new targeted industrial R&D public-private effort should be deployed in strategic sectors:

Advanced Manufacturing – Invest in precision manufacturing, automation, and AI-driven production to enhance global competitiveness.
Ag-Tech – Promote modernized food production and precision agriculture to increase efficiency and sustainability in farming.
Clean Tech – Focus on next-generation energy solutions, including advancements in nuclear and carbon capture technologies.
Biotechnology – Accelerate growth in synthetic biology and agricultural biotech to strengthen Canada’s position in global innovation.
Semiconductors and Advanced Materials – Develop capabilities in microchip production and new material sciences to enhance industrial sovereignty.

Strengthen the defence industrial base: Canada’s defence industrial sector is crucial for national security and economic growth. Bolstering the defence industry not only enhances sovereignty but also supports domestic technological innovation. The federal government must take steps to:

Develop a national defence industrial base strategy that enhances domestic production capabilities and strengthens international commitments.
Streamline defence procurement to improve efficiency, support domestic suppliers, and drive technological innovation in defence-related industries.
Strengthen defence-related R&D to support aerospace, cybersecurity, and advanced weaponry sectors, ensuring that Canada remains competitive globally.

Canada-first procurement policy: To reduce reliance on U.S. supply chains and boost local economic activity, Canada must implement a Canada-first procurement policy which should:

Prioritize domestic manufacturing and suppliers in public contracts to strengthen local industries.
Expand federal and provincial/territorial procurement programs to ensure Canadian companies receive preference in government projects.

Accelerate business investment: To stimulate immediate business investment, Canada should:

Implement a five-year 100 per cent capital cost allowance for businesses making strategic investments in domestic production.
Partner with the private sector to ensure talent development in AI, advanced manufacturing and other high-growth fields, thereby strengthening Canada’s industrial competitiveness

Eliminate interprovincial barriers to trade and labour mobility: The Canadian economy has been constrained by internal barriers to trade and labour mobility, which essentially act as domestic tariffs. The negative impact that these barriers have on our economic competitiveness, productivity and growth are as great if not greater than the impact of the threatened tariffs on Canadian exports to the U.S. They must be eliminated, completely and immediately.

2) Energy and critical minerals strategy

Objective: Expand energy production, secure new markets, and enhance national energy independence.

Accelerate development and secure the full value of Canadian energy and natural resources: Canada’s energy sector must expand rapidly to secure long-term energy independence and new markets. The federal government should:

Expedite approvals for energy and critical mineral projects.
Expand domestic refining and processing of critical minerals essential for advanced materials, batteries, military and clean energy technologies.
Streamline project approval and permitting processes for major projects by advancing the principle of “one project, one assessment, one decision.”
Ensure efficient and predictable operations of Canada’s port and railroad systems.

Expand energy export corridors: To expand the capacity to export energy and critical mineral resources, Canada should:

Develop new export opportunities to support the long-term energy security goals of our allies and trading partners.
Prioritize new pipeline development, LNG terminals, and port capacity to facilitate competitive energy exports.
Partner with provincial/ territorial governments and Indigenous communities to ensure jurisdictional harmony, public support and shared benefits through additional export opportunities.

Invest in nuclear technology

Expand partnerships with private sector firms to drive innovation and create high-value jobs in the nuclear sector.
Accelerate commercial-scale deployment of proven and innovative nuclear technologies including both large and small modular reactors to establish Canada as a global leader in next-generation nuclear energy.
Ensure a robust and responsive nuclear regulatory system that supports the development and application of new technologies while maintaining public confidence.
Develop export markets for Canadian uranium, nuclear fuel, equipment, technology and services

Events

OPPORTUNITIES

Derrick Rossi Innovation Fund

The University of Toronto (U of T) Innovations & Partnerships Office (IPO) is hosting a call for applications for the Derrick Rossi Innovation Fund, which supports proof-of-concept research projects focused on accelerating the implementation and/or commercialization of high potential, cutting-edge research, with the promise of significant socio-economic impacts. The fund provides up to $300,000 over two years. A Notice of Intent (NOI) is due on February 10, 2025 and the application deadline is March 17, 2025.

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

6^th International ZEW Conference on the Dynamics of Entrepreneurship (CoDE)

October 9-10, 2025, Mannheim
The aim of this conference is to discuss recent contributions to entrepreneurial research. It focusses on the formation, growth and exit of young firms linked to innovation, environmental sustainability, or entrepreneurial finance. The conference also addresses the challenges and opportunities of entrepreneurship policies. You are welcome to participate in the conference and contribute theoretical, empirical and/or policy-oriented papers on all areas of entrepreneurship research. Interested researchers are invited to submit a paper (or extended abstracts of at least 4,000 words are also welcome) to entrepreneurship2025@zew.de. Submission deadline: 31 May 2025

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