News from the IPL
RESEARCHERS
Iain Stewart
This paper is written by IPL Affiliate Iain Stewart. Canada faces a productivity crisis that threatens our economic future. After decades of lagging behind international peers in business innovation and productivity growth, the need for improvement has intensified. The challenge is multifaceted. This commentary is focused on improving the effectiveness and impact of these federal business innovation subsidy programs. While these tools are not sufficient to on their own to change economy-wide business innovation outcomes, the programs represent a substantial annual federal expenditure, and this commentary argues that improvements can be made to increase their beneficial impact. After reviewing four “core” federal business innovation support programs (SR&ED, IRAP, ISC, and the SIF), this paper concludes that Canada would benefit from establishing a dedicated business innovation as the Canada Innovation Corporation announced in Budget 2022 (but not yet implemented). This new agency could improve the client experience by consolidating and coordinating programming, strengthen evaluation by compiling and analyzing program data, and, in so doing, become a centre of expertise and advocate for program experimentation.
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.
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.
Editor's Pick
Bruno Arcand, Policy & Society
While there is growing agreement that government-affiliated intermediaries can be an asset in advancing climate policy, perspectives diverge on the precise governance arrangements and conditions under which they excel. Some view government-affiliated intermediaries as instruments that states can exert control over to achieve their centrally determined objectives. Others contend that such bodies work best when they have the autonomy to experiment and shape policy formulation. This article seeks to clarify these debates by demonstrating that there is value in adopting governance arrangements that keep these two approaches (instrumental/experimental) in tension. The argument here is that a governance approach, which balances instrumental and experimental logics, can generate “productive tensions” to manage trade-offs between flexibility and control. Using a process-tracing analysis, the article explores this argument through a case study of a government-affiliated intermediary in Quebec—Propulsion Québec—deliberately created by the state to intermediate between the public and private sectors in the electric transportation sector. Findings reveal productive tensions between the state and a government-affiliated intermediary, as well as between different government-affiliated intermediaries, but show that these tensions can be difficult to sustain over time. Overall, attending to these tensions allows for a deeper understanding of the governance arrangements and conditions under which government-affiliated intermediaries can advance climate policy.
Cities & Regions
Strategic regional path development: industrial policy, place and the rhetoric of regionalisation
Simon Baumgartinger-Seiringer, Richard Shearmur, David Doloreux, & Amélie Gauthier, Regional Studies
Amid geopolitical uncertainties, countries adopt new industrial policies to reshore strategic industries. Simultaneously, rising political discontent underscores the importance of intra-national industrial location. Within this context, the authors introduce the concept of strategic regional path development, a mechanism for (supra-)national industrial capacity-building based on top-down government interventions. Using a semiconductor innovation zone (Technum Quebec, innovation zone) as a case study, they find that while the innovation zone is driven by national objectives, the region is mobilised instrumentally (regional dynamics are secondary) and rhetorically (regional development narrative aligns actors). Ultimately, success depends on reconciling perspectives on the innovation zone’s purpose across policymaking levels and actors.
Statistics
adMare Institute
Canada has developed a world-class life sciences sector, but without stronger domestic investment, much of the economic value and intellectual property it generates is flowing abroad. The second white paper from the adMare Institute, "Does Canada Own its Life Sciences Future?”, analyzes investment flows across various deal stages, investor types, and origins, providing a comprehensive view of Canada’s therapeutics funding landscape. The goal is to support informed discussions among investors, policymakers, and stakeholders across the life sciences ecosystem on how to better capture and retain the economic value created by Canada’s life sciences innovation. The analysis shows that more than 75% of the investors receiving returns from the top 20 exits are international, and as a result the economic returns and control over intellectual property increasingly leave the country.
Rim Chatti, Marie Albertine Djuikom Tamtchouong, Manassé Drabo & Amélie Lafrance-Cooke, Statistics Canada
This paper aims to identify the factors that may explain the effect of characteristics specific to Canadian business decision makers on technology adoption. The 2022 Survey of Advanced Technology and the National Accounts Longitudinal Microdata File are used to analyze the adoption rate of business decision makers who are women, racialized individuals and recent immigrants and compare them with the rate for decision makers who are men, non-racialized individuals and long-term residents of Canada. A Blinder–Oaxaca decomposition shows that the differences in observable characteristics between these groups of decision makers and their counterparts explain one-third of the difference in technology adoption. Certain characteristics—such as business size, industry and province—play a role in explaining the differences. Furthermore, reducing barriers to technology adoption could increase the adoption rate in the different groups of decision makers analyzed.
Divided we fall behind: Why a fragmented EU cannot compete in complex technologies
European Commission
This study presents a novel complexity-based framework to analyse fragmentation in the EU’s R&I system, highlighting hub connectivity as a critical factor. Drawing on extensive patent and publication data (2000–2023), it finds that European hubs are significantly less interconnected than their US counterparts, particularly in complex technologies such as AI, biotech, and quantum computing. The research underscores not only a performance gap but also structural inefficiencies, calling for more targeted, cross-regional policy interventions to enhance Europe’s innovation competitiveness.
Innovation Policy
Introducing the OECD.AI Policy Navigator
OECD
In an era where artificial intelligence (AI) is reshaping societies, economies, and governance, understanding and comparing national and international AI policies has become more critical than ever. That’s why OECD.AI has launched its AI policy navigator—a redesigned and expanded tool to track public AI policies and initiatives worldwide. The Policy Navigator replaces the previous OECD.AI policy database with a more intuitive and powerful platform. Designed in consultation with its primary audience, national contact points and policy users, GAIIN simplifies the process of tracking and submitting AI policy information, while dramatically increasing coverage and usability.
What Survived? An Update on Inflation Reduction Act Programs
BlueGreen Alliance
This summary focuses on key changes made to the Inflation Reduction Act by the “One Big Beautiful Bill Act” (OBBBA), with a focus on changes to tax credits, loans, and grants that were creating good jobs, addressing climate change, and building more resilient communities. The passage of OBBBA occurred alongside other Trump administration attacks on Inflation Reduction Act investments, primarily through frozen and terminated grants. Where possible, the report include an update on the status of these actions.
Andrés Rodríguez-Pose, Zhuoying You, Peter Teirlinck, Research Policy
This paper explores the relationship between support for extreme political parties and research and innovation across regions in the European Union (EU). Extreme parties often exhibit deep scepticism towards expertise and science, with extreme right-wing parties, in particular, challenging the legitimacy of climate change; an attitude that may weaken green research and innovation. The authors draw on data from 1137 EU regions —including scientific publication and patent records— and apply Tobit regression models to find that stronger support for extreme parties is associated with lower levels of scientific research and technological innovation, both overall and in their green forms. While this pattern is visible across the political spectrum, important differences emerge. Support for extreme right-wing parties is consistently tied to reduced research output and innovation performance, particularly in green technological sectors. By contrast, the relationship with extreme left-wing support is more variable, depending on the degree of radicalism, and shows no consistent negative connection with green innovation.
Policy Digest
A new approach to measuring invention commercialization: An application to the SBIR program
Carlo Bottai, Gaétan de Rassenfosse, Emilio Raiteri, Research Policy
Measuring the commercialization of patented inventions remains a key challenge in innovation studies. This paper introduces a novel, web-based method for tracking the commercialization of patented inventions. The method leverages targeted web searches to identify online traces of commercialization, offering a scalable alternative to surveys and case studies. The authors apply this method to patents arising from the U.S. Department of Defense’s Small Business Innovation Research program, linking 3070 patents to procurement contracts and assessing their commercialization outcomes. The results indicate that 21.5% of these patents show signs of commercialization, with variations across R&D stages and contract phases. The method provides a systematic way to identify market adoption of patented technologies and can be extended to other contexts where identifying commercialized patents is relevant.
Studies evaluating STI policies have focused predominantly on estimating the so-called input additionality effect—whether specific policy tools such as R&D subsidies, R&D tax credits, or innovation procurement contracts increase firms’ private investment in R&D. In contrast, studies examining output additionality — the extent to which subsidies lead to the introduction of new products, processes, or services — are less numerous, largely due to data restrictions.
Method
Building on a growing body of literature that exploits web-based data to measure innovation the authors' method involves performing targeted searches on the web to identify traces of invention commercialization. Specifically, they leverage recent changes in U.S. patent law and innovators’ publicizing their commercialization success online to identify patent-protected products and services.
They apply their method to the study of the DoD’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, two related public funding programs that seek to encourage U.S. small businesses to engage in federal R&D projects with commercialization potential. The DoD accounts for the majority of the SBIR funding, whose total budget for 2025 reaches about $4 billion. The focus on SBIR funding allows the authors to link with reasonable certainty the procurement contracts to the associated patents using government interest statements in patent documents. The final dataset consists of 3070 granted patents with filing years ranging from 1984 to 2019 and assigned to 1182 distinct companies. These patents acknowledge 2213 different procurement contracts.
Results
The authors identify traces of commercialization for 642 out of the 3070 patents in their sample. The commercialization rate is higher for Applied or Development R&D contracts compared to Basic R&D contracts, and for Phase II contracts compared to Phase I contracts. These findings, consistent with expectations, suggest that the "method effectively captures meaningful signals of commercialization."
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