Mediocre innovation record blamed on lack of government involvement

In a recent article in the Toronto Star, internationally recognized expert on innovation, Mariana Mazzucato, blamed lack of direct government involvement for Canada's mediocre record when it comes to innovation.

She argues the approach taken by Canadian governments — cut corporate taxes, reduce regulation and sign trade deals that protect corporations and investors — has failed. Instead of investing more, corporations are hoarding cash.

She also points out that the countries where the private sector does invest are those where the public sector is directly involved in research and development. In a talk last year, she used the example of the smart phone, for which the public sector was involved in the development of all key components.

Interestingly, information from the federal government's Review of Federal Support to Research and Development supports her conclusions. The review found that, while the Canadian government's funding for businesses to do research and development was the second highest in the Organisation for Economic Co-operation and Development (OECD), it was eighteenth when it came to private sector investment. The report also found that, as a proportion of GDP, Canadian governments performed far less research and development than the OECD average.

Our own history also shows what can be achieved when we do more to support research and development than just hand out tax breaks. In Canada, the public sector performing research brought us insulin and Canola, to name just two successes.