12 February 2016

The distinction between innovation and growth

I've been on this topic before, but an op-ed piece in The Globe and Mail today makes the case quite clearly:

"In the 21st century, prosperity comes from ideas commercialization throughout the private sector – high tech to low tech, agriculture to services. Countries that innovate prosper; countries that do not decline. We know that without public intervention to create an ecosystem enabling our innovators to make money here, we will have less innovation than we need for prosperity. By confusing general growth policies with strategic innovation policy, Canada risks falling further behind globally.

"The aim of growth policies is to entice people or companies pursuing specific, well-developed activities to move or create businesses in your jurisdiction. By handing out public money, a government can entice foreign companies to open new campuses and create jobs in "innovation industries." Singapore and Ireland achieved rapid economic development this way, and Canadian governments have tried to. Yet this approach does not help foster domestic innovation.

"The aim of innovation policy is to foster the development of industries, products and services that do not yet exist and whose business models and markets have yet to be created. Organizations and individuals capable of inventing these technologies must be attracted or developed, and the results of their labours must be channelled into economic growth.

"That means we cannot use a process of long-term planning. Instead, we need continuous experimentation. Policy makers must rapidly come up with new initiatives, kill those that don’t work, scale up those that do and then keep changing incentives to keep pace with growing, dynamic industries."
There's nothing here that states anything more than plain common sense. However, too many policy makers tend to conflate these two aims into something that is less than clear, and too many Canadian enterprises confuse innovation and growth with surfing on the next wave that is coming through, as opposed to really determining what will beneficially work for them. That probably also explains why our rate of capital investment is so laughably low.

Let's see if this never-ending debate will finally come to a real conclusion...

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