Work by economists like Mariana Mazzucato has led to growing recognition that many of the key innovations that fueled economic growth were funded by governments. A new report by the Broadbent Institute, More Courageous Bets and Equitable Returns: Challenging Perceptions about Public Investment in Innovation looks at what Canadian governments should be doing differently.
As the report points out, while many politicians claim governments shouldn’t be directly funding innovation, the Canadian government is one of the only ones that actually believes it.
Even under supposedly free market governments, countries like the United States and Germany have been “picking winners” by directly funding the development of new technologies.
In contrast, as the report points out, Canada has abandoned programs that provided direct funding in favour of tax subsidies. And as the federal government's Review of Federal Support to Research and Development found, this approach has led to Canada having one of the lower rates of business R&D investment in the OECD.