HESA

Higher Education Strategy Associates

Tag Archives: Innovation Cluster

August 28

Welcome Back

Morning all.  Hope you had a good summer.  To welcome you back, let’s take a quick look at state of play in the sector as we start the academic year.

In Canadian PSE, I don’t think there’s a whole lot of doubt about where things are headed this year.  Post-Naylor, we’re going to be talking research, research, research.  If you doubt this, take a look at Universities Canada’s recent budget submission.   As always, there are three “asks”; for the first time I can remember all three asks are about research.  It’s clear that scientists – particularly those in health-related fields who have been jerked around the most in recent years – have been making their voices heard and that University Presidents at least are responding to that pressure by making this issue central to higher education lobbying for the next twelve months.

(I think this is poor form, actually.  Less than two years on from the Truth and Reconciliation Commission and not an enormous amount of progress immediately evident, I’m not sure how appropriate it is to not have something on indigenous education this year.  But I’m not in charge.)

“Superclusters” will probably get a lot of mileage as they get announced in the run-up to the budget next winter.  Apparently the competition – which is supposed to have five winners – received 50 applications, each of which was supposed to have at least one post-secondary education partner.  However, we’ve also been told that only 20 PSE institutions’ names were attached to these proposals.  From this we can deduce that i) it’s likely that a handful of institutions’ – no prizes for guessing which ones – are on three or more proposals (rumour has it one is on no less than 18), and either ii) almost none of these proposals have more than one participating PSE institution or iii) there are a lot of the same institutions over and over again.  If it’s the latter then the program has basically abandoned the idea of clusters being geographic in nature and this program basically is back to Network Centre of Excellence but with some private enterprise attached.  Which defeats the purpose of this stuff, in my view.  No self-sustaining cluster gets by on research alone. It gets by more than anything on having lots of trained workers of various kinds.  And that means colleges and polytechnics *have* to be part of the mix.  If they’re not then this whole thing is a conceptual failure from the get-go.

(But hey, this is Ottawa.  No one’s ever going to measure the results.  And even if by some miracle the policy’s was found officially wanting, presumably they can always claim that it’s because they didn’t spend enough money.)

While much of the attention will be focussed on Ottawa, remember we live in a federal country.  For most institutions, the real game this year will be in provincial capitals.  2018 is going to see elections in Ontario (June) and Quebec (October).  Combined with a minority legislature in British Columbia, what we have is a situation where the country’s three largest provinces – all of whom have budgets which are more or less in balance – are going to be in spending mode for the next twelve months.  Not everyone is going to share in this bounty, of course. My guess would be that Manitoba, Newfoundland and Saskatchewan are going to see continued or intensified restraint and from what I hear Alberta is about to find out exactly how miserable a tuition freeze combined with zero funding growth can be.  But still, for the sector as a whole, what we have right now is possibly the best alignment of the constellations we’ve seen in about a decade.

Outside Canada, I think the big stories are going to be in Brazil, Russia, where the lingering effects of the commodity price collapse have left state budgets in very weak shape to fund higher education; in England the chaotic combination of Brexit and a historically incompetent/cowardly government will surely provide some entertainment, while in the US the twin topics of free speech on campus and the dismantling of many Obama-era improvements in student policy – particularly in the area of oversight of private colleges – will get top billing even if President Trump’s own ideas about student aid are surprisingly generous.

Here on this blog, I’m hoping to shift topic areas slightly this year.  Often last year I felt I wasn’t adding much to discussions beyond what I had already contributed in the previous five years, and I do worry sometimes about the blog feeling stale.  I hope this year to be able to focus a little bit more on areas I’ve dealt with less fulsomely in the past: particularly, colleges & polytechnics and on international PSE (the latter with a bit of a data focus).  Also, at some point this fall we will be moving to accept advertisements. We’ll see how all that goes.

And with that: have a good year, everyone.  Let’s get to work.

December 08

Cluster Theory

Unless you’ve been under a rock for the last twelve months, you’ll have noted that the Government of Canada has become enamoured of “innovation clusters” as a means of raising national productivity levels.  What should we make of this?

For some annoying reason, the Liberals act as if cluster theory is something new rather than something which dates back to the mid-1980s (Michael Porter’s The Wealth of Nations gave the idea its first mass-market outing in 1990; six years later, Saskia Sassen gave us what is probably still the most engaging short book description of cluster formation in Regional Advantage.  In fact what is actually new – in Canada at least – is the idea that the federal government should encourage cluster formation/densification with great huge wads of cash.  $800 million over four years, in fact, according to Liberal manifesto and the 2016 Budget.

There are three reasons to be skeptical about this set of developments.  One is political, the second administrative, and the third is empirical.

The political problem is this: we live in Canada.  There is no way on God’s green earth that doling out money for what amount to economic development (or, say it softly, “industrial policy”) isn’t going to get 100% enmeshed in regional pork-barrelling.  Initially, the Government’s plan was for five clusters (I’ve heard it may now be for as many as eight).  Well, isn’t that convenient – five clusters, five regions.  I mean put away all your crystal balls about what’s going to get funded: It’ll be something Ocean-y in the Atlantic, something aerospace-y in Quebec, ICT-y in Ontario, Energy-y in the Prairies and (probably) life sciences-y in BC.  Whether each of these clusters is equally deserving of, or has the capacity to absorb, public dollars is irrelevant once regional politics comes into play.   Inevitable result is sub-optimal investments

The second issue is an administrative one.  Say you want to spend $150 million (or so) on “a cluster” in a variety of ways which increases research productivity, corporate partnerships, etc., etc.  It’s not just a question of deciding among hundreds of worthy micro-projects within a $150 million budget.  Who actually manages the project?  It’s not like giving money to a university or a hospital – a cluster has no corporate entity.  Occasionally, you get a trade organization that might conceivably act as a co-ordinator of a cluster, like say Communitech in Waterloo, and you could use them to distribute money in a way that made sense regionally.  But i) not every cluster has one of those and ii) even if they do, they’re going to tend to be biased towards established players rather than new ones.  The only alternative is to manage it all from Ottawa, but that’s a frightening prospect for a project that’s meant to improve industry flexibility.

Which brings us to the third, empirical, problem.  I’ve said this before but it bears repeating: a lot of the research on innovation is American, and assumes things like having DARPA around, and being at the technological frontier and having access to lots of venture capital and all that good stuff.  Most countries in the world don’t have that.  In fact, when most countries in the world (including us) think about “clusters” they are thinking about something fundamentally different than what Americans think of when they use that term, because our cluster thinking is designed as much around attracting established foreign companies as it is around developing native entrepreneurial talent.

And here’s a little secret: there are almost no good examples anywhere of clusters having been built on government money.  In fact, to the extent that anyone can work out what it is that makes a great cluster, it’s the presence of one or two industry-leading companies plus one heck of a lot of spin-offs related by disgruntled former employees who want to do their own thing (see especially Steven Klepper’s recent posthumously-published book Experimental Capitalism).  This is actually something most Canadian clusters are really bad at: the OECD Cluster rankings, although now a bit dated, show Canadian clusters generally in the bottom half of clusters across the OECD for new company formation.  Government can do something about this, but it’s not by spending money, it’s about using law and regulation to make sure non-competes are unenforceable.  Surprisingly, given that this is supposed to be a government devoted to evidence-based policy, that issue doesn’t appear to show up at all in our government’s thinking on clusters.

So what are we spending money on, exactly?  And why?  To what end?  Although the government’s had over a year to work on this, it’s really hard to get a sense of what the plan is.  I suspect that a lot of this money will end up in the hands of universities because they know the “apply for government money” game really well and can play to the Minister’s predilection to be photographed in front of a lot of shiny hi-tech gadgetry.

But will any of it have the slightest effect on national productivity?  I have my doubts.