Getting the Institutions Right: Designing the Public Sector to Promote Clean Innovation

Canada’s current economic state of affairs has been described as a “low-innovation equilibrium”. While Canada has an educated workforce and strong scientific capabilities, we fall short in creating new knowledge-based firms and industries. There is a growing policy consensus on the need for more strategic and targeted approaches, capable of grappling with innovation problems and opportunities in particular sectors, regions, and technological areas. While Canada confronts its general innovation problem it must also face other challenges, amongst them climate change and environmental degradation.

In this century, countries that are able to improve resource efficiency and reduce environmental impacts are likely to be rewarded in global markets. A transition towards sustainable development could create a mix of external pressures, windows of opportunity, and societal mobilizations that trigger an escape from Canada’s state of low-innovation equilibrium. However, unless we develop new policy approaches clean technology sectors could fall into Canada’s general pattern of innovation underperformance.

This report grapples with the question of how to get the institutions right to implement effective clean innovation policy by drawing on lessons from the academic literature and four case studies.

Share this post

About the Project

The goal of this project is to shed light on the relationship between economic activity and the environment by exploring the linkages between changes in our natural capital and our measures of productivity generally, and through the construction of an environmentally adjusted measure of productivity specifically.

While it is now commonly accepted that economic activity and the state of our environment are linked, many economic measures still fail to incorporate the environment – both the things we draw from it and the pollution we release into it. By developing and calculating measures of productivity that include natural capital, Canada may be able to better understand these linkages. This, in turn, may lead to the identification of strategies that can help Canada become more efficient and innovative in the use and protection of natural capital, and thus more productive and more prosperous.

Using the forestry sector as a case study, this project aims to construct an environmentally adjusted measure of multifactor productivity. In doing so, we aim to add another layer of understanding to the environmental and economic performance of this sector. The proposed measure will have relevance to the Canadian economy as a whole.