Pushing Innovation in Canada
The primary issue with most experiments is quite simple in the eyes of University of Toronto professor Dan Breznitz: They fail more often than not. For those in Canada wishing to cultivate an environment of innovation, this presents quite a dilemma.

When we have limited resources at our disposal, which should be responsible for setting the odds for potential winners and losers? And, perhaps most importantly, when winners win big, who decides the beneficiary of the spoils?

A Justification for State Spending to Drive Innovation

A report released earlier this year by the Broadbent Institute and Atkinson Foundation (BIAF) suggests that, in juxtaposition to conventional business wisdom, it may be that the state government, rather than the private sector, is in the best position to encourage future innovative trailblazers.

The report states that the government must begin to move past its traditional tendency to employ indirect means of encouraging innovation. These indirect measures have included such things as tax credits in the past, but the report ultimately suggests that the Canadian government could be doing a much better job at fostering innovative successes and ensuring that the rewards from these successes are shared more fairly.

According to Jonathan Sas, the BIAF’s director of research, “By seeing [the state] as an impediment to a dynamic private sector, as something that needs to get out of the way... [business] isn’t empowered to do big, bold things.”

Many experts throughout Canada currently agree that something “big and bold” must be done very soon. This stems from a 2011 report that bashed the federal government for not doing more to help small and medium-sized businesses grow into global competitors.

Canada’s Innovative Push

Despite the fact that, amongst wealthy nations, Canada has one of the highest levels of indirect funding to support innovation, the country’s direct spending on research and development pails in comparison to large global competitors like Germany and the United States.

As it’s explained by Professor Breznitz, “[Tax credits] are very low-risk politically. You give money only to things that are already successful. They look good at the same time, and they help the very strong interests of companies that employ a lot of people and have a lot more money.”

Unfortunately, this strategy hasn’t proven to be the most effective when it comes to encouraging highly innovative R&D. Many experts believe that direct government spending should be a necessary and critical aspect of innovation policy, and that it should be worthy of much more money.

“Governments are the only the body in our society that can make the big bets on unproven research and unproven technologies,” says David Wolfe, a political science professor at the University of Toronto in Mississauga.

By taking a more active role in sponsoring R&D efforts, the Canadian government must also work to more evenly spreads the benefits of the inevitable successes that stem from increased R&D funding. According to Jonathan Sas, “Government is always, in a sense, picking winners. It’s picking races. And so the conversation we need to have is around making sure the public sees return on those bets.”

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Posted by: DSR
Wednesday, April 1, 2015
Tag: Business Start Ups
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