In what was perhaps humankind’s greatest clash of ideas on how societies should be organized, the Soviet Union measured itself against western economies during what came to be known as the Cold War in the middle of the last century. Beyond the many ideas crystallized in popular culture from that period, one of the most telling differentiators between the West and the planned economies of the Soviet bloc was the gap in technology and innovation that grew between both.
Despite efforts by the Soviet Union to showcase itself as a beacon of technological advancement, the reality was much more sobering. Relying heavily on the exploitation of primary resources, with low productivity and marginal increases in GDP, the planned economies of the Soviet Union repeatedly failed to bring to its citizens the benefits of modern life that those in the West enjoyed.
Apart from a tale of good vs. evil (as is often portrayed), we should consider the role that innovation played in this clash of ideas.
The Soviet Union was a planned economy and, as such, even its innovation system was characterized by heavy, top-down hierarchical structures. Government priorities were translated into science and technology policy that would direct a complex hierarchy of research institutes which in turn was meant to support key industries. This approach is called the statist model and though it was able to produce outstanding research and researchers in the Soviet Union, one of its major drawbacks was that its top-down, siloed nature consistently failed to capture retroaction from the bottom back to the top and across the three main actors of this innovation ecosystem: government, institutions, and industry. In fact, it is very likely that these actors never fully recognized each other as members of the same ecosystem, interdependent, and at the core of each other’s success.
The polar opposite of the statist model is an economy like that of the United States, particularly in a place like Silicon Valley in California, a state with the fifth largest economy in the world. Silicon Valley doesn’t begin with Facebook or Apple. It is a tale that begins out of regional necessity and where the American government intervened in the face of the 20th century’s greatest cataclysm.
In the 1930s, Frederick Therman was a professor of electrical engineering at Stanford University. At the time, the area was mostly known for French plum farming, which offered few prospects for his graduating students. He grew frustrated at seeing highly talented individuals leave the area, what we would call a “brain drain.” So, Therman encouraged his students to start their own businesses, mentoring them and going as far as investing his own funds in them. The original garage start-up was thus born and, perhaps most importantly, a lasting university-industry connector was created. But these were the Great Depression years and although there was much good will, economic opportunities were few. This remained so until the outbreak of the Second World War when the American government found itself in urgent need of new electronic technologies and found a ready-made ecosystem waiting amid plum orchards. This momentary input would strengthen an ecosystem that would, in turn, become a magnet for other direct investments, private and public, notably that of NASA.
The dynamic interaction of government, institutions, and industry to fuel innovation is referred to today as the triple helix model. The use of the word helix is significant as it describes a dynamic and endless retroaction between three major pillars of innovation versus the top-down structure where information only flows in one direction — down.
It is hard to underestimate the importance of this model; it has been reproduced in such places as Israel, China, and India. In Israel, what started as defence research in collaboration with the Israel Institute of Technology (Ha Technion) sparked a government-academia-industry innovation ecosystem that set conditions for what would become “the start-up nation” and ended up attracting large companies such as Intel, IBM, Google, Cisco, Motorola, Philips, Apple, and Microsoft. The foreign direct investments (FDI) spurred by this ecosystem became so important that in 2019, FDI to Israel had outpaced the FDI destined to all of the Arab world combined.
Triple helix ecosystems are not always born from investments in defence technology. In a major effort to shed its statist model, China sought to liberalize its approach by creating a special economic zone in Shenzhen that would allow for a freer interaction between government, institutions, and industry. Today, Shenzhen is widely recognized as a global hub for technology and in a few decades generated a GDP that surpassed that of Singapore.
So, where does Canada stand in its relationship with innovation? The answer is that, well, it’s complicated. In the last few years, Canada, through outstanding research in its universities, managed to develop a leadership position in areas such as artificial intelligence (AI) and quantum technologies. Cities like Montréal and Toronto became internationally recognized for their research and for the start-up activity fostered by technological advancement. Organisations like MILA in Montréal, Vector Institute in Toronto, and AMII in Edmonton have placed Canada in a leading role. To capitalize on this momentum, our federal and provincial governments have supported large-scale initiatives to encourage these new sectors.
There is a recurrent theme in Canada’s relationship to innovation: industry highlights need for support to our governments; our governments provide broad directions; an administrative structure is created to manage these directions; then bureaucracy ends up yielding decisional power over when and to whom it grants financial support. As striking as these initiatives come across, they remain fundamentally a variation of the statist model and are often very hard to steer once they are launched. Granted, a far cry from Soviet-style statism, but nonetheless statist.
The answer lies in relying more on the triple helix, in supporting ecosystems besides the creation of top-down structures, in fostering multilateral communication channels between every permutation of the government, academia, and industry triple helix, and in reducing the communication barriers among them. At Mitacs, for over 20 years we have played that role. Our model has been disarmingly simple: connect industry to academia, let industry guide areas for research in an agnostic way, co-fund these collaborations from our government support and allow for academic researchers to work directly at the company site so that new products and services can come about faster.
This is the triple helix in action, and it will continue to pay dividends as the global economic impact of AI is estimated to reach $13.1 trillion by 2025.
As Canada strives to retain its leadership across an increasingly dynamic global landscape, we should think about the mechanisms we use to foster innovation, setting the stage for our companies to grow and for generating FDI in cutting-edge sectors.