The National Post’s David Akin had a useful article last week entitled Canada Has Failed at Innovation for 100 years: Can The Trudeau Government Change That? Read it, it’s good. It’s based around a new-ish Peter Nicholson article in Canadian Public Policy which is unfortunately not available without a subscription. But Nicholson’s argument appears to be: we’ve done pretty well our entire history as a country copying or importing technology from Americans: what exactly is it that Ottawa is going to do to “shock” us into becoming a massive innovator?
Good question. But I have a better question: does it make any sense that the federal government is leading on these kinds of policies? Wouldn’t provinces bet better suited to the job? Knee-jerk centralists (my guess: probably half my subscribers) probably find that suggestion pretty horrific. But hear me out. There are a number of really good reasons why Ottawa probably isn’t best placed to lead on this file.
First: innovation policy is to a large extent is about people and skills. And skills policy has been fully in the hands of provincial governments for over twenty years now. We accept that provincial governments are closer to local labour markets and local business for skills purposes. Surely the same is also true for innovation?
Second: Canada is huge. We’re not like Singapore or Israel or Taiwan, where industries are essentially homogenous across the entire country. We are more like China or the US, where a single industry might look completely different in one part of the country than another. If you haven’t already read Run of the Red Queen: Government, Innovation, Globalization and Economic Growth in China by Dan Breznitz and Michael Murphree, I recommend it. Besides showing how innovation can be profitable even when it is not of the “new product”/”blue sky” (a truth to which our current government seems utterly oblivious), it shows how the structure of a single industry (in this case, IT) can be utterly different in different parts of a single country. That’s also true in Canada. And it’s why it’s tough to draw up decent national policies on a sectoral level.
(A corollary to that second point, which I made back here: because the country is so big, any government attempt to play the “cluster” game in the name of improved innovation is bound to get wrapped up in regional politics pretty quickly. Anyone who’s watched Montreal and Toronto’s unseemly jockeying for a single big federal investment in Artificial Intelligence will know what I mean.)
Over the course of the past twenty years, of course, many provinces have set up their own innovation ministries or agencies. But apart from the partial exceptions of Ontario and Quebec, they tend to be poor cousins of the federal ministry: understaffed and not especially well-resourced. As a result, they’re not at present any more effective than Ottawa in driving innovation. But that could change with more effective investment. And of course, Ottawa would always have a role to play: if nothing else, its authority over competition policy means it will always have levers which it can and should use to promote innovation (even if at present it seems extremely reluctant to use this particular lever).
In short, it’s worth considering the hypothesis that it’s not “Canada” which has failed at innovation, but Ottawa.