News from the IPL
RESEARCHERS
Who gets left behind by left behind places?
Dylan S Connor , Aleksander K Berg , Tom Kemeny , Peter J Kedron, Cambridge Journal of Regions, Economy & Society
IPL Affiliated Faculty Member Tom Kemeny recently won a best paper prize for this paper at Cambridge Journal of Regions, Economy & Society. The article documents that children growing up in places left behind by today’s economy experience lower levels of social mobility as adults. Using a longitudinal database that tracks over 20,000 places in the USA from 1980 to 2018, the authors identify two kinds of left behind places: the ‘long-term left behind’ that have struggled over long periods of history; and ‘recently left-behind’ places where conditions have deteriorated. Compared to children of similar baseline household income levels, they find that exposure to left behind places is associated with a 4-percentile reduction in adult income rank. Children fare considerably better when exposed to places where conditions are improving. These outcomes vary across prominent social and spatial categories and are compounded when nearby places are also experiencing hardship. Based on these findings, they argue that left behind places are having ‘scarring effects’ on children that could manifest long into the future, exacerbating the intergenerational challenges faced by low-income households and communities. Improvements in local economic conditions and outmigration to more prosperous places are, therefore, unlikely to be full remedies for the problems created by left behind places.
Business trying to scale up in Canada face multiple challenges with no “silver bullet” solutions
Mark Lowey, Research Money
This article summarizes a recent panel featuring IPL Co-Director David Wolfe. Scaling up Canadian businesses is key to addressing the productivity crisis and growing the economy but startups face several challenges in becoming large and globally competitive, experts said at Research Money’s annual conference in Ottawa. These challenges include access to capital, lack of Canadian investment in scaling companies, insufficient domestic procurement of products, and inconsistent government policies, they said during a panel discussion titled “Addressing Canada’s Scale-Up Problem.”
Scott McKnight, IPL Working paper
Newfoundland and Labrador (NL), located on Canada’s northeast Atlantic coast, plays an outsized role in the national and global energy landscape. Despite a population of just over half a million, the province is a significant producer and exporter of both carbon-intensive petroleum and low-carbon hydroelectricity. It also exhibits some of the highest per capita energy consumption rates in the country. As the global shift toward low-carbon energy accelerates, NL faces a complex array of opportunities, risks, and strategic decisions that will shape its economic and environmental future. This paper explores the province’s pivotal position in the energy transition, highlighting unresolved questions around the expansion of offshore oil production, the financial and investment implications of curbing fossil fuel development, and the challenge of balancing legacy industries with emerging sectors such as wind energy, hydrogen, and critical mineral mining. It also considers how NL’s companies, workforce, and public institutions might secure competitive advantages in a global economy undergoing rapid decarbonization and geopolitical realignment. The analysis draws on insights from a two-day seminar held in December 2024 in St. John’s, titled “Innovation and the State of the Energy Transition.” Led by Scott McKnight, the seminar convened stakeholders from industry, government, and academia, including Memorial University and the College of the North Atlantic.
Editor's Pick
Dan Breznitz & Jane Gingrich, Annual Review of Political Science
In the past decade, there has been a global resurgence in attention to industrial policy (IP), a resurgence that cuts across political ideologies and geographic regions. IPs are inherently political, intimately connected to the roles of the state in the economy and of states within an international economic system. This review demonstrates that while overt IPs have waxed and waned in their political acceptability in the aftermath of World War II, IPs have always remained part of the policy tool kit. In using IP, policymakers have had to navigate three common governance domains: building coalitions to support productive investments, building the state’s capacity to collaborate with and discipline the private sector, and creating political incentives for credible commitments to firms. Nonetheless, the political dynamics in each of these domains have shifted over time. Historically, IPs focused on export-based catch-up strategies, requiring the mobilization of coalitions around manufacturing investment and export discipline. Today’s IPs often target frontier technologies and aim to address perceived vulnerabilities in global supply chains and new geopolitical competition, demanding greater experimentation with more uncertain economic outcomes and higher risks of failure. We trace the evolution of the literature on IP through four phases: state-led developmental policies, the changing coalitions and institutions in a globally fragmented production system, neoliberalism, and the more recent renewed focus on transformative IP.
Cities & Regions
Frank W Geels, Cambridge Journal of Regions, Economy and Society
While escaping the lock-ins of existing systems is essential for accelerated low-carbon transitions, the paper argues that acceleration also requires creating new lock-ins of emerging niche innovations which need to be stabilised before widespread diffusion. The paper makes three conceptual contributions to the lock-in literature: it distinguishes and assesses three specific debates (on locked-in entities, determinism and agency and unlocking), it mobilises insights from multiple social sciences regarding these debates and it identifies interactions between the debates and integrates relevant insights in the multi-level perspective. The paper confronts and illustrates these contributions with empirical analysis of accelerating low-carbon transitions in electricity and auto-mobility systems in Europe, the USA and China. It finds that low-carbon niche innovations became locked-in to dominant designs before widespread diffusion, that accelerated diffusion involved techno-economic and agentic drivers, and that existing systems were unlocked more by niche innovations and regime destabilisation than by external landscape pressures.
The effect of R&D co-location on innovation activities in Great Britain
Richard Harris & John Moffat, Regional Studies
This paper analyses the effect of research and development (R&D) co-location on the extensive and intensive margins of innovative activities. To mitigate modifiable areal unit problems, measures of co-location are constructed using distances between plants. The results show that intra-industry R&D co-location has little effect on innovative activities, whereas inter-industry R&D co-location has positive effects, although these tend to diminish as co-location increases. In low-tech industries, the effects of inter-industry co-location are driven by co-location with businesses in related industries, but in high-tech industries, they are the result of R&D co-location with unrelated industries.
Statistics
Intellectual property in the context of firms’ exit strategies: The role of patents
Chahreddine Abbes, Amélie Lafrance-Cooke,& Nicholas Johnston, Statistics Canada
By focusing on exits, their characteristics, patenting behaviour and the possible reasons behind exits, the paper provides a first attempt to answer the following question: What is the role of patents in firms’ exit strategies? While most exits can be the direct result of small and medium-sized enterprises’ failure to compete in a private market for various reasons, when exits involve intellectual property (IP), the situation may require thorough analysis because IP may play a double role. It can be a valuable asset to attract investors, and secure financing, therefore improving firms’ odds of survival and delaying exit (patent survival effect). On the other hand, IP can also be a very attractive asset for incumbents to acquire, accelerating exit from the market through mergers and acquisitions (patent trigger effect). Using data from Statistics Canada’s Canadian Patent Research Database and National Accounts Longitudinal Microdata File, this paper provides a detailed analysis of the role played by patents in the context of exits. The paper finds that firms that patent are more likely to be larger, to perform research and development, export their products, and be alive seven years after entry relative to businesses that do not patent. Furthermore, while the patent survival effect is estimated at a statistically significant 4.5%, the trigger effect was positive but not significant when regressing a fully specified model.
Innovation Policy
White House Unveils America’s AI Action Plan
The White House
The White House recently released “Winning the AI Race: America’s AI Action Plan”, in accordance with President Trump’s January executive order on Removing Barriers to American Leadership in AI. Winning the AI race "will usher in a new golden age of human flourishing, economic competitiveness, and national security for the American people." The Plan identifies over 90 Federal policy actions across three pillars – Accelerating Innovation, Building American AI Infrastructure, and Leading in International Diplomacy and Security – that the Trump Administration will take in the coming weeks and months.
Jane Bjørn Vedel, Jacob Hasselbalch, Susana Borrás, Alan Irwin, Vera Simoneit, Research Policy
In a world increasingly shaped by geopolitical divides, technological disruption, and the climate crisis, Transformative Innovation Policy (TIP) is more essential than ever. However, the TIP research field holds considerable potential to move beyond its current state of the art by incorporating a more sophisticated organizational perspective. This paper responds to a recent call for new analytical tools in TIP by proposing that valuable insights can be drawn from Organization Theory (OT) scholarship. By reviewing and categorizing recent OT research on transformative innovation, the authors show how engagement with this literature can yield novel insights within key TIP gap areas and beyond. In particular, recent OT work on emotions, social movements, and temporality offers promising opportunities to deepen TIP's understanding of capabilities, experimentation, and the systemic impact of policy interventions. More broadly, this paper contributes to TIP debates by advocating for stronger cross-pollination with OT to enhance the field's theoretical foundation and practical relevance. The authors conclude that closer interaction between OT and TIP can enable more effective approaches to transformative innovation.
China puts new restrictions on EV battery technology in latest move to consolidate dominance
John Liu, CNN
China has put export restrictions on technologies critical for producing electric vehicle batteries, in a move to consolidate its dominance in the sector that has contributed to the country’s lead in the global EV race. Several technologies used to manufacture EV batteries and process lithium, a critical mineral for batteries, were added to the government’s export control list. Inclusion on the list means transferring the technologies overseas – such as through trade, investment, or technological cooperation – will require a government-issued license, according to a statement by the country’s Commerce Ministry. The restrictions apply to the battery cathode production technology for the making of lithium iron phosphate (LFP) batteries.
Innovation Policy and Venture Capital: Korea, Sweden and Canada
Shirley Anne Scharf, CIGI
This paper brings a comparative lens to the study of innovation policy and venture capital (VC) in the case of two innovation leaders — the Republic of Korea and Sweden — and Canada, a country with a more challenging history on the innovation front. In all three cases, government policy has focused on measures that address the respective gaps in access to VC, with significant results in VC performance. Korea has taken a highly targeted strategy, centred on start-up and high-technology firms in need of investment and strategic guidance. Sweden as well has pivoted to providing capital at the early stage of firms’ development. While Canada has focused on providing VC at dedicated points along the innovation spectrum, from early to late stage, more recently that targeting has become much more diffuse. Moreover, there has not been sufficient attention to growing small and medium-sized enterprises (SMEs), with the capacity to globally scale. Policy recommendations include the need for a consolidated Venture Capital High-Technology Fund for SMEs that is equipped with clear targets for access to VC, including revenue and employment, asset valuation and research and development expenditures.
Policy Digest
EU Startup and Scaleup Strategy
The European Commission
The European Commission has launched the EU Startup and Scaleup Strategy, ‘Choose Europe to Start and Scale', to make Europe a great place to start and grow global technology-driven companies. The Strategy aligns with the broader ‘Choose Europe' initiative, launched by President von der Leyen. This initiative focused first on the science component promoting a unified European approach to attract and retain talent, thereby strengthening Europe's competitiveness.
Startups and scaleups are “essential to Europe's future, driving innovation and sustainable growth, creating high-quality jobs, attracting investment and reducing strategic dependencies.” Yet, despite strong foundations, too many still struggle to take ideas from lab to market or grow at scale within the EU.
The Strategy addresses these challenges by supporting them throughout their lifecycle, from starting up to scaling up to maturing and succeeding in the EU.
It identifies the key needs of startups and scaleups and is putting forward a set of actions in five main areas:
-
Fostering innovation-friendly environment: As outlined in the Single Market Strategy, startups and scaleups need less fragmentation, fewer administrative burdens, as well as rules that are simpler and more supportive across the Single Market. The Commission will propose a European 28th regime to simplify rules and reduce the cost of failure by addressing critical aspects in areas like insolvency, labour and tax law. The European Business Wallet will enable seamless digital interactions with public administrations across the Union through a unified digital identity for all economic operators. The forthcoming European Innovation Act will further support innovation by promoting regulatory sandboxes.
-
Driving better financing: Startups and scaleups need better funding, a larger and more integrated EU venture capital (VC) market and greater involvement of European institutional investors. The Savings and Investments Union initiative will be key to unlocking more financing and investment opportunities in the EU. To complement this initiative, the Strategy aims to expand and simplify the European Innovation Council, deploy a Scaleup Europe Fund to help bridge the financing gap of deep tech scale-up companies, and develop a voluntary European Innovation Investment Pact to mobilise large institutional investors to invest in EU funds, venture capital funds and unlisted scaleups.
-
Supporting market uptake and expansion: Startups and scaleups need a quicker journey from lab to market. The Strategy introduces a Lab to Unicorn initiative, which includes the European Startup and Scaleup Hubs to help connect university ecosystems across the EU. This includes a blueprint for licensing, royalty and revenue-sharing and equity participation for academic institutions and their inventors when commercialising intellectual property (IP) and creating spinoffs, along with guidance on State aid IP-related rules.
-
Attracting and retaining top talent: To keep and attract top talent, startups and scaleups need better access to highly skilled individuals. The Strategy introduces the Blue Carpet initiative, notably focusing on entrepreneurial education, tax-related aspects of employee stock options and cross-border employment. The Commission will also promote the Blue Card Directive and encourage Member States to put in place a fast-track schemes for non-EU founders.
-
Facilitating access to infrastructure, networks and service: Startups and scaleups need a shorter time-to-market and quicker commercialisation. The Strategy proposes to simplify and harmonise diverging access and contractual conditions for startups and scaleups to technology and research infrastructures through a Charter of Access for industrial users.
Next Steps
The progress will be monitored using global key performance indicators. The Commission will report on the Strategy's implementation by the end of 2027.
Events
EVENTS
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.
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