Last week saw another stark juncture in North American economic affairs.
First, on Monday, February 12, the White House released a budget agenda for FY 2019 that proposed to eliminate four important programs focused on supporting regional strategies for boosting advanced-sector innovation and start-up growth. Slated for closure if the White House gets its way—which it won’t—are such meaningful efforts as the Hollings Manufacturing Extension Partnership.
Then, on Wednesday, February 14, Canada’s Innovation Minister Navdeep Bains made exactly the opposite sort of announcement.
At a splashy press conference in Ottawa, Bains named five regional industry consortia as winners of its $950 million “superclusters” competition—a major increase of effort to call forth and invest in regional and industrial collaborations to drive Canadian innovation and growth. Bains spoke of lifting his nation’s “ambition” and “getting people talking” about advanced sector growth.
In short, the contrast of direction between the two national governments on industry development has now become glaring—something we have been noticing as we work on a new benchmarking (due in April) of advanced-sector competitiveness in Canada’s diverse regions. (Funding for the work has come from the Province of Ontario and Innovation, Science, and Economic Development Canada, the nation’s innovation and growth ministry).
The contrast of direction between the two national governments on industry development has now become glaring
Part of the contrast is on execution: Canada’s federal government is launching new initiatives that at least resemble global best practices in innovation, commercialization, and regional technology ecosystem development (even if they may be imperfect) while the American government struggles to just maintain its limited existing efforts (even as the White House proposes to shut them down). Adding irony is the fact that the big “superclusters” initiative in Canada resembles a plus-size version of the kind of challenge grants to regional networks and manufacturing consortia that were introduced by the Obama Administration but that are now adrift or disintegrating.
Yet what is more striking is the contrast of the two nations’ broader perspectives and directions. As indicated by last week’s budget proposal, U.S. innovation policy and execution appear, for the most part, to be: dwindling, consumed by ideological red herrings about “picking winners,” and unaware of the investments in innovation and technology being made by global competitors.
For its part, Canadian policy—supported by a superior fiscal position—appears at once research-based, urgent, and increasingly expansive. Last year the Trudeau government named a blue-chip Advisory Council on Economic Growth chaired by McKinsey & Co. global managing partner Dominic Barton to probe Canada’s economic problems and identify bold ideas for significantly improving the nation’s growth trajectory. (Barton is a Brookings board member). Out of that work came the outlines of the new Canada Infrastructure Bank. And now, with last week’s “supercluster” announcement, Canada is launching one of the more robust and targeted sets of investments in modern industrial policy among developed nations this year.
Now, of course, the Canadian effort is hardly perfect, and much remains to be worked out. The selection criteria for the clusters has not always been crystal clear, and recent U.S. experience suggests the difficulty (still ahead in Canada) of establishing the optimal governance arrangements to maximize market relevance while avoiding big-firm capture in multi-party consortia. Then there is the question of whether Canada has enough locally owned, ambitious firms to make clusters of them impactful.
Yet with that said, it’s good to see a national government acting with ambition and information, albeit with the goal of making Canada, not America, great again. Which makes this an unusual moment: big gambles to drive innovation and growth are alive and well… in Canada.