By Jeff G. Gilmour, 3 November 2024
The issue of declining productivity growth and research and development in this country has been a significant issue for decades; the lowest among OECD member countries. Recently governments, banks, universities and economists have all initiated studies recommending ways in which we can fix these problems.
One significant factor in the United States which has led to its strong productivity growth is its strong relationship between the government and the defence industry.1 The Defence Advanced Research Project Agency (DARPA) recently created $840 million in its willingness to back risky ideas with public capital to create technological breakthroughs such as in its role in inventing the internet and GPS.
Israel also has a strong linkage and close ties between the country’s armed forces and the private sector leading to a significant high-tech industry.2 The result is Israel spends more on R&D, relative to GDP, than any other country in the world, and more than double the average among members of the OECD. Tech industries have benefited from a boom in defence spending at home and abroad. The Israeli government has always sought to increase R&D development through grants, fund-matching arrangements and schemes such as the “Magnet Program,” which brings together companies and universities to develop new technologies. This policy has continued to draw private capital into the country’s high-tech industry.
Some things for Canada to think about.
1-The Economist, “Getting More from More,” 19 October 2024 at p. 5 of the Special Report on the American Economy.
2-The Economist, ”Under Fire,” 12 October 2024, p. 51.
