Last week, my DEEP Centre colleague Dan Herman and I attended the Institute for New Economic Thinking (INET) conference on the economics of innovation in Toronto. The conference brought together a number of key thinkers, such as Mariana Mazzucato, Richard Nelson, Simon Head, Stian Westlake, and Jim Balsillie, for three days of discussion about innovation and the economy.
Though the topics and issues discussed at the topic were diverse, from my perspective two broad themes stand out.
First, the conference demonstrated of how our ideas about the role government can play in fostering innovation have changed, particularly in the aftermath of the 2008 financial crisis. The days in which innovation was viewed solely as the province of the heroic entrepreneur – where government’s sole function was to ‘get out of the way’ – appear to be thoroughly behind us.
Nor is it sufficient, as Mazzucato’s influential work reminds us, to see the role of government as limited to provision of public goods or the creation of incentives. While funding for basic research and favourable tax treatment of business R&D have a role to play, we cannot rely on these policies alone. Now more than ever, government needs to act strategically to foster domestic innovation.
As many of the presenters at INET noted, governments around the world have been playing such a role, to a greater or lesser extent, for many years. Government intervention through types of industrial policy – long seen as a set of dirty words – is increasingly recognized as a viable option. As Nobel Prize winning economist Joseph Stiglitz noted during the proceedings, “every country, whether or not they know it, has industrial policy.” Dan Herman’s own research has emphasized a similar point. To some degree, it is a matter of our discussions and debates catching up to empirical reality. And indeed, it is certainly time to move beyond stale ideological debates, and to begin to ask specific questions about the specific types of innovative policies we need.
In light of this, the second theme which stood out throughout the three days at INET was the need to build better bridges between the world of academic inquiry and the world of policy. Here at the DEEP Centre, we aim to bring the best scholarship on innovation and entrepreneurship to bear on the pressing and immediate problems that policymakers in Canada and elsewhere face every day. The INET conference demonstrated that there is a deep and growing well of work available for policymakers to draw on. While there are still significant gaps, our understanding of innovation ecosystems and the role that various actors can play continue to improve. Going forward, building greater collaboration between scholars and policymakers is an important step in building both better scholarship and better policy.