Canada needs to rethink its approach to economic development
When the Liberals announced their “Innovation Superclusters Initiative”—a federal program that will see $950 million invested in five separate regions across the country over the next decade—critics immediately questioned if such a program was in fact designed to foster innovation, or if it was simply another chapter in Ottawa’s sorry history of economic development policy. Such critics—myself included—raised a number of questions related not so much to the intentions of the program, but rather its planning and implementation: were the initiative’s targets around GDP and job growth realistic? How were the five geographical clusters selected? Why was there no transparency regarding the process by which individual funding recipients will be chosen? And, perhaps most importantly, what is fuelling the implied and underlying assumption that one dollar of government spending will somehow generate greater growth than if that one dollar were left in the hands of private companies or individuals?
Ironically, though, there’s nothing new about the thinking behind an innovation initiative that dumps cash to spur growth. And in fairness to the Liberals, there’s nothing even particularly Liberal about Ottawa trying to jumpstart complex economic forces by pumping hundreds of millions of dollars into regions or industries in a quixotic effort to drive growth. After all, the federal government has been doing it for years in the form of its various regional development agencies, all of them in fact set up by Conservative governments. Producing results that are either impossible to assess, or simply disappointing, has become a truly bipartisan effort, and for decades, critics on both the left and the right have been calling for changes.
There is no easy or obvious solution to the issues raised above, although one potential avenue for exploration might be found in the process by which monetary policy is made. We take it for granted that the making of monetary policy by a central bank is a completely depoliticized process, but this is only because this practice has been shown to have results, and because the separation of monetary policy from executive and legislative power has now become an integral and accepted component of a democratic state. In the case of economic development policy, removing such decisions from any kind of political influence might be exactly what is needed to ensure a more accountable, transparent, and sensible approach to fuelling economic growth.
Granted, this would be a massive undertaking, and it is a move that would be highly unlikely to be embraced by government. Furthermore, it would be hyperbole to suggest that economic development policy is anywhere close to monetary policy in terms of its significance to the national economy. But taking a “monetary approach” to economic development would be an intriguing concept to explore, and one that could perhaps serve to alleviate skepticism about not just the superclusters initiative, but about Ottawa’s entire approach to economic development.
Canada needs to rethink its approach to economic development - Macleans.ca
When the Liberals announced their “Innovation Superclusters Initiative”—a federal program that will see $950 million invested in five separate regions across the country over the next decade—critics immediately questioned if such a program was in fact designed to foster innovation, or if it was simply another chapter in Ottawa’s sorry history of economic development policy. Such critics—myself included—raised a number of questions related not so much to the intentions of the program, but rather its planning and implementation: were the initiative’s targets around GDP and job growth realistic? How were the five geographical clusters selected? Why was there no transparency regarding the process by which individual funding recipients will be chosen? And, perhaps most importantly, what is fuelling the implied and underlying assumption that one dollar of government spending will somehow generate greater growth than if that one dollar were left in the hands of private companies or individuals?
Ironically, though, there’s nothing new about the thinking behind an innovation initiative that dumps cash to spur growth. And in fairness to the Liberals, there’s nothing even particularly Liberal about Ottawa trying to jumpstart complex economic forces by pumping hundreds of millions of dollars into regions or industries in a quixotic effort to drive growth. After all, the federal government has been doing it for years in the form of its various regional development agencies, all of them in fact set up by Conservative governments. Producing results that are either impossible to assess, or simply disappointing, has become a truly bipartisan effort, and for decades, critics on both the left and the right have been calling for changes.
There is no easy or obvious solution to the issues raised above, although one potential avenue for exploration might be found in the process by which monetary policy is made. We take it for granted that the making of monetary policy by a central bank is a completely depoliticized process, but this is only because this practice has been shown to have results, and because the separation of monetary policy from executive and legislative power has now become an integral and accepted component of a democratic state. In the case of economic development policy, removing such decisions from any kind of political influence might be exactly what is needed to ensure a more accountable, transparent, and sensible approach to fuelling economic growth.
Granted, this would be a massive undertaking, and it is a move that would be highly unlikely to be embraced by government. Furthermore, it would be hyperbole to suggest that economic development policy is anywhere close to monetary policy in terms of its significance to the national economy. But taking a “monetary approach” to economic development would be an intriguing concept to explore, and one that could perhaps serve to alleviate skepticism about not just the superclusters initiative, but about Ottawa’s entire approach to economic development.
Canada needs to rethink its approach to economic development - Macleans.ca
