Innovation Policy and Canada's Competitiveness

Vincent di Norcia is an associate professor of philosophy and business
ethics at Laurentian University.

Rather than impartially examining government policies toward innovation,
this book seeks to prove that markets foster innovation and
competitiveness, while governments don’t. Palda’s extensive research
does show that many subsidies are wasteful, as evidenced by Canada’s
SRTC program. However, R&D tax incentives are low in both Canada and
Japan; Palda fails to explain what makes Japan more innovative and
growth-oriented than Canada. Nor is it clear that free trade and
laissez-faire enhance growth as Palda contends, given the massive
evidence to the contrary in the recent recession. Further, in contrast
to Palda’s faith in markets, activist industrial policies in the Asian
tigers have been shown to lead to high economic growth. Increased
Canadian R&D by large U.S. pharmaceutical firms reflects extended patent
protection by the Canadian government. France, Palda admits, has created
the “most advanced telecom system in the world,” just as the
government’s industrial strategy intended. Although Palda’s case for
free markets is unproven, his study of the complex links between market
conditions and innovation does show up government waste.