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.
A Globe and Mail Business journalist points out that one of the biggest reasons for Apple's success is technology whose development was funded by the United States government. Apple products like the iPhone or iPad are dependent on publicly funded technology like the lithium battery or liquid crystal display.
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.
At the Ontario Securities Commission conference, U.S. corporate lawyer Martin Lipton argued the focus on short-term profits by activist investors is harming businesses. He argued the focus on paying out cash to investors resulted in things like reducing spending on research and development and laying off employees who may be needed over the long-term.
Canadian scientist and environmentalist, David Suzuki, points out that, as scientific research often produces unexpected results, it can be hard to predict what projects will end up having the greatest commercial application. He cites two examples of research that had considerable impact, but would never have received funding under new rules.
In a recent opinion piece, Dr. Feridun Hamdullahpur, president and vice-chancellor of the University of Waterloo, suggested three measures to improve innovation in Canada. All require involvement of government or public institutions.
Federal government restrictions on Canadian government scientists speaking publicly about their work have been criticized for the impact on accountability and democratic decision making, but the restrictions also have the potential to harm Canadian research and development.
In its report card, “How Canada Performs”, the Conference Board of Canada gave Canada a “D” for innovation. It found Canada ranked 14th out of the 17 countries surveyed and lack of innovation was harming the economy.
What makes the report card surprising is that the Canadian government spends more on research and development, as a percent of GDP, than any of the other countries surveyed. The problem is how the money is spent.
