Glass half-full or half empty?

I’m usually not much of an optimist but decided that, as it relates to trade issues, I should try it out.

A free trade agreement between the United States and the European Union is finally moving closer to reality. While significant challenges remain, strong support in both markets has dramatically improved the likelihood of the deal’s success, shaking the lull created by the demise of the Doha Development Round. The aggregate economic effects of a trans-Atlantic agreement and the risks for those left out may, in fact, work to create sufficient pressure on other trading partners to allow for a resumption of WTO talks. As a result, and almost ironically, the WTO will be given another chance to prove itself as the forum for global trade governance.

While the actions of the United States and the European Union since the onset of negotiations towards the Doha Development Round have done little to indicate a true commitment to a multilateral agenda, the negative impacts of the ongoing shift to bilateral/regional agreements create significant incentives for new efforts to be made through the WTO.

You can read the  full policy brief that accompanies this podcast here.

 

 


The global competition for innovation

(Cross-posted at www.deepcentre.com)

Whether measured through shares of global R&D spend, shares of peer-reviewed journal publications, or shares of high-value patent applications, the building blocks of innovation are increasingly dispersed across both developed and developing economies. The effects of this diversification of innovative capacity, notably from China, means the acceleration of competition for innovation rents, notably for North American jurisdictions who have long thought themselves in the lead.

Take, for example, China. As Chinese President Xi Jinping noted in March 4, 2013 speech, “boosting innovation-powered development (is essential) in order to make China an economic heavyweight.” Doing so has largely focused on the country’s indigenous innovation program, zizhu chuangxin, which aims to upgrade the country’s knowledge infrastructure in order to reduce the country’s reliance on foreign technology from 80% in 2006 to 30% by 2020.[1] Achieving this goal, and increasing the country’s competitiveness across a series of knowledge sectors, is predicated primarily on massive investments in science and technology. In the country’s 12th Five Year plan released in 2012, over $18 billion was allocated towards research and development in “strategic industries” defined as next-generation information technology, biotech, renewable energy, materials and advanced manufacturing.

Such investments are part and parcel of the country’s increasing prominence across a series of innovation-related metrics. For example, the number of engineering PhD’s in China has tripled since 2000 and the number of science-oriented researchers has grown by an average 12% per year.  Chinese research in peer-reviewed journals has similarly grown by 16% per year since 1995, with the Chinese share of published articles now reaching 9%. China’s share of high-value triadic patents[2] has experienced similar growth, increasing more than seven-fold between 2000 and 2007 (Fu et al 2010:4).[3]

These foundational aspects help explain the increasing competitiveness of the country’s tech sector. As Jim Balsillie (former RIM co-CEO) noted at a recent INET conference in Hong Kong, Read the rest of this entry »


Filling the evidence gap – do incubators work?

This post is hosted at www.deepcentre.com, a research thinktank that I’ve co-founded with Anthony Williams, co-author of Wikinomics and MacroWikinomics.

Our  goal is to investigate the critical interrelationships between technology, innovation and long-run economic performance; and subsequently advocate for the creative use of technology, education and economic policy to enable high-performing firms and economies.

If you managed to read through the four hundred plus pages in last Thursday’s Canadian Federal Budget you might have noticed that, amongst the initiatives aimed at improving Canada’s innovation performance, is a $60 million investment over five years to fund “outstanding and high-potential” incubator and accelerator organizations.

The ethos of this investment is certainly laudable, aimed as it is at helping entrepreneurs refine their businesses and business skills. Through competitive selection processes and a curriculum of mentorship, training and advice, as well as the provision of early-stage funding, such centres aim to accelerate and catalyze good ideas into good businesses. And while the tech sector is most often the target for such centres, we’re increasingly seeing similar setups for the service and manufacturing sectors.

Evidently, the Canadian government is far from alone in attempting to utilize these centres as key elements of an innovation and entrepreneurship strategy. Hundreds have sprung up around globe, funded by public and private sources, and organized at the national, regional and municipal level.

Yet despite this popularity, there’s actually very little known about their effectiveness in creating long-term value, be it in terms of sustained employment or long-run survival. What little quantitative analysis does exist depends on data pooled together from a variety of sources, and poses some rather significant methodological challenges.

The most complete is that produced by Seed-DB -an online database of seed accelerators and their companies.  This data set contains information on 156 accelerator programs world-wide. Their findings highlight that such centres have, on aggregate, created over 6600 jobs at a net per job cost of over $200,000 (USD).[1]To be sure, this likely underestimates the number of jobs created in long-run spinoffs and multipliers from successful exits, and fails to capture less quantitative metrics around skills development.

Nonetheless, it doesn’t create a story of resounding success and instead mimics the per job funding costs of many traditional industrial subsidy programs.

Read the rest of this entry »