The IPL newsletter: Volume 26, Issue 528

June 2, 2025

News from the IPL

 RESEARCH

Regional Entrepreneurial Mentoring Networks as Transformative Innovation Policy: Insights from a Semi-peripheral High Tech Hub

Darius Ornston and Isabelle Watkinson, IPL Working Paper 2025-01
This chapter discusses how regional entrepreneurial mentoring networks (REMNs) can play a transformative role in fostering and shaping entrepreneurial ecosystems. Focusing on Waterloo, Canada, a low-density outlier in high-technology markets, it explains how the region developed a widely distributed REMN. Second, it illustrates how this mentoring network enabled Waterloo-based actors to circumvent both geographical constraints and suboptimal national institutions by legitimizing high-technology entrepreneurship and diffusing advice about how to cope with these disadvantages. More specifically, mentoring encouraged aspiring entrepreneurs to target diverse business-to-business niches, enabling the region to compete in a surprisingly diverse array of high-technology markets. At the same time, this distinctive pattern of civic capital was poorly positioned to disrupt national barriers to high-technology entrepreneurship. Indeed, the emphasis on niching risks reifying those constraints. In addition to reducing the demand for reform, niching makes it harder to build coalitions and concentrate resources. In the long run, these relatively weak ties are also unlikely to generate the soft or hard infrastructure necessary to achieve social and environmental sustainability.

 

 

Editor's Pick

Science, Technology, and Innovation in Canada: Tracking Our Evolution

Council of Canadian Academies
National prosperity, competitiveness, and well-being are inextricably linked to a country’s capacity for research and development (R&D) as well as innovation. Canada is competing intensely alongside other countries to foster the next wave of research advances. CCA has been examining Canada’s science and technology and R&D strengths and weaknesses since 2006. By bringing together data and expert analysis to inform critical conversations about Canada’s future, the CCA reports tell a story of a country that excels in research but faces hurdles to greater innovation and productivity. With their next assessment of Canada's science, technology, and innovation ecosystem underway, the CCA is revisiting its flagship assessments and their impacts. Also, learn more about their latest assessment here.

 

Cities & Regions

Regions and just transitions: worker perspectives on electrification in two automotive regions

David Hearne, David Bailey & Alex de Ruyter, Regional Studies
The UK’s automotive industry is spatially highly concentrated and hence a rapid move towards a net-zero economy has profound spatial implications. The paper combines a novel survey of union workers in two regions with a series of interviews to understand the policy implications of the shift towards ‘net zero’ from an industrial strategy perspective. The findings suggest that skill acquisition needs to be complemented by a wider place-based industrial policy, requiring collaborative working among those in the industry and regional clusters, including assemblers, supply chain firms, unions, and universities and colleges as well as private training providers.

The role of intra- and inter-regional relatedness and unrelatedness for the geography of breakthrough technological innovation: evidence from the US

Yijia Chen & Huiwen Gong, Regional Studies
Not all innovations are alike. Breakthrough technological innovations have a greater impact on regional development and are a key topic in economic geography. However, most studies focus on intra-regional factors, with little attention given to inter-regional perspectives. To address this, the authors extend the concepts of relatedness and unrelatedness density from the intra- to the inter-regional scale. Using US patent data from the period 1976–2015, we find that both intra-regional (un)relatedness density and inter-regional (un)relatedness density contribute to the emergence of breakthrough technological innovations in regions. Moreover, intra-regional relatedness density can reinforce the role of other types of (un)relatedness density in breakthrough technological innovations.

Statistics

Canada's Venture Capital Landscape 2025

BDC
Canada’s venture capital market had mixed results in 2024. Total VC investment activity increased, driven by growth-equity stage transactions and an increased interest in AI companies. The number of up rounds was also up versus 2023. Exit activity, however, remained weak, with a continued IPO drought and a limited number of M&A deals. This had an effect on VC returns, with the net 10-year internal rate of return (IRR) dropping to 10%, widening the gap with the U.S. Foreign capital, particularly from the U.S., continues to play a crucial role in the Canadian VC ecosystem; current trade tensions is raising questions about the direction these investments will take in the future. In this context, domestic investments to support Canadian innovation is more important than ever. With $11.5 billion in dry powder being held by Canadian investors, BDC "continues to believe in the ecosystem’s resilience and it’s ability to spur the growth of Canadian champions." The report includes the following: Canadian VC market evolution compared with global trends; deal volume, average deal value and capital deployment within the ecosystem; and an analysis of active venture capital funds in Canada by sector, investment and fundraising activity.

Underinvestment in Capital Equipment Is Harming Canadian Productivity, Competitiveness, and Economic Growth, New Report Finds

ITIF
The report examines the critical role of capital equipment in driving labour productivity and finds that Canada’s chronic underinvestment in productivity-enhancing tools, such as software, industrial machinery, computers and electronics, and other advanced technologies, is undermining its ability to defend its national interests. While overall capital spending appears stable, this is misleading. From 2013 to 2023, capital investments as a share of GDP declined 20 percent, and productive capital grew by just 1 percent in relative terms over the same period. The report warns that headline investment figures are skewed by the inclusion of low-impact assets like furniture, uniforms, and fleet vehicles, which lead to misdiagnosis of business modernization needs across the Canadian economy. Compounding the issue, overall decreases in capital stock, or how much capital businesses own, is eroding productivity potential. Canada’s productive capital stock has fallen 8 percent as a share of GDP since 2013. Declines are particularly steep in the most important and productivity-boosting types of capital: industrial machinery fell 19 percent, and computers and electronics declined 10 percent. Productive capital stock also declined in core industries such as manufacturing, information and cultural industries, and wholesale trade. Software capital stock investment has risen but remains insufficient to offset overall declines.

The US government helped create 24% of unicorns, a study finds

Michael Bodley, Pitchbook
Tesla famously benefited from quite a bit of government assistance, but it’s far from the only venture-backed success to do so. Nearly 1 in 4 venture-backed US unicorns eclipsed the $1 billion valuation mark with the help of government funding or support, Commonweal Ventures found in a new study exclusively shared with PitchBook. The study accounted for municipal, state and federal government help. From 2003 to 2023, the federal government invested an average of $100 billion annually into startups. Unicorns in the study were founded, on average, in 2012 and had a median valuation of $1.7 billion, with an average valuation of $8.3 billion, as of 2023. The report cautions of a 4% margin of error.

 

Innovation Policy

Digital Regulation and Innovation in Sweden, Korea and Canada

Shirley Anne Scharf, CIGI
Regulating digital technologies is a delicate balancing act of protecting personal data and privacy rights without stifling innovation. This CIGI Digital Policy Hub Working Paper looks at how Sweden and Korea are managing these digital governance challenges and what Canada can learn from these innovation leaders. Shirley Anne Scharf is a former Digital Policy Hub post-doctoral fellow at CIGI.

AI-Driven Productivity Scenarios

Paul Samson, S. Yash Kalash, Nikolina Zivkovic, CIGI
Technological development and diffusion are rapidly transforming economic, financial and societal systems. Policy and legal frameworks may be unable to keep pace with approaches that maximize opportunities and manage risk, and advancing artificial intelligence (AI) technologies, combined with weak economic growth projections, create an urgent need to better understand AI-driven scenarios and the implications for productivity. This special report identifies three key conduits (drawing on established AI-related indices) that link actions and improved productivity outcomes: technological capabilities; applications and markets; and policy and regulation. It then provides a country-level assessment of G7 countries (plus China and India) to outline a current snapshot of AI-driven productivity in each and inform plausible futures for AI’s impact on productivity. Overall, G7 countries are generally well positioned on data infrastructure and research and development, as well as on some sector-specific applications and standards, but are typically less well positioned on ensuring the required labour and talent pool is in place. The report also examines four scenarios for the potential impact of AI on global productivity: flat AI; US-led AI; multipolar AI; and artificial general intelligence. These scenarios broaden the scope for G7 members to consider key areas and actions that could boost productivity under different circumstances.

Policy Digest

Place-Based Policies for the Future

OECD
Across the OECD and EU, persistent spatial disparities in economic, social and environmental outcomes are being amplified by megatrends, risks and shocks—climate change, technological change, globalisation and demographic change. This has resulted in some communities feeling “left behind” and being faced by new threats.

Against this backdrop, place-based policies have seen renewed interest. Place-based policies are intentionally spatially-targeted policies that provide support to a place to improve long-term economic development and well-being outcomes. These policies can respond to the needs and potentials of diverse places, while also contributing to national competitiveness and social cohesion. Increased adoption of place-based policies calls for a greater understanding of their purpose and of how to effectively design, implement and evaluate them. It highlights the need for effective place-based policies that support structural transformations to build the long term economic, social and environmental sustainability of regions—and consequently of countries.

In recognition of the renewed interest, the OECD and European Commission commissioned twelve expert papers and organised a series of workshops in 2023 on “Place-Based Policies for the Future”. To help address future challenges, this report synthesises the latest knowledge and evidence on place-based policies to provide policymakers across all levels of government with insights on the design and implementation of better (place-based) policies for better lives.

The case for place-based policies

  • Many places are underperforming in the OECD, with high economic and social costs.

  • ‘Spatially-blind’ policies can be insufficient, ineffective or even problematic in the context of large place-specific challenges. 

  • Place-based policies also have an important role to support social cohesion and help limit regional inequality. Spatial inequalities are persistent in many OECD countries. Today, 70% of the OECD population live in a country experiencing regional divergence in economic performance (when comparing small TL3 regions).

  • Place-based policies can play a role in supporting national competitiveness. 

  • Empirical evidence indicates that place-based policies have the potential to be efficient and effective. 

Effective design of place-based policies requires a place-specific lens

Place-based policies have important benefits, but also face limitations when they are not properly designed. To ensure that place-based policies are effective therefore four priority conditions are needed:

1. Targeting regional and local development potential – Defining clear objectives for place-based policies based on a deep and forward-looking understanding of market failures and institutional barriers to making full use of (underutilised) local assets.

2. Ensuring policy coherence – Managing interactions among institutions, sectors and policymaking frameworks to maximise potential synergies and address trade-offs, including with macro-structural and sectorial policies.

3. Seeking efficient implementation – Creating policies that act at the relevant scale with targeted instruments, transparent funding allocation and feedback loops to support continual improvement.

4. Reinforcing multi-level governance – Enhancing planning and coordination mechanisms, subnational institutional and fiscal capacity, place-based leadership, experimental governance and inclusive engagement to ensure effective policy design and implementation.

Effective place-based policies leverage multi-level governance and build capacity

  • Place-based policies often require coordinated actions by multiple levels of government and private stakeholders, making multi-level governance essential. 

  • Today’s increasingly complex policy challenges and trade-offs require enhanced planning, coordination, capacity, local leadership and engagement.

Forward-looking place-based policies to address tomorrow’s challenges

  • The “systemic” nature of today’s rising challenges, such as climate change and demographic change, often requires cross-sectorial and local solutions making place-based policies a relevant approach.

  • Support to industries, businesses and workers can support the transformations to reach climate neutrality more successfully if it is place-based, integrating innovation and digitalisation in local contexts

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

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.

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

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.'

 6th 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

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