menu
News Release

Industrial Policy: A Path to Economic Transformation for Canada?

October 8, 2024 Print

Montreal — In the face of major challenges like the COVID-19 pandemic, climate change and geopolitical tensions, policymakers around the world have taken a renewed interest in industrial policy to address pressing challenges that aren’t being solved by markets alone.

Industrial policy, which involves using government resources to influence private-sector activity, has gained renewed attention in recent years. Many countries, including the U.S. with its Inflation Reduction Act and CHIPS and Science Act, have launched major industrial initiatives. Should Canada follow suit?

The Institute for Research on Public Policy (IRPP) is addressing this crucial issue through its new multi-year project titled Canada’s Next Economic Transformation: What Role Should Industrial Policy Play? led by IRPP research director Steve Lafleur and guided by an expert steering group.

“We are engaging with stakeholders — including academics, government officials, and Indigenous and industry leaders — to learn from experience and identify potential industrial policy tools. We will provide evidence-based recommendations to governments exploring industrial policy,” says Lafleur.

To kick off the project, the IRPP has released Should Governments Steer Private Investment Decisions? Framing Canada’s Industrial Policy Choices, outlining potential applications for industrial policy:

  • Improving Productivity: Targeted policies can help scale up small, productive firms and incentivize investments in technologies that enhance productivity.
  • Managing Trade and Geopolitical Risk: Strengthening domestic capacity in strategic sectors can act as a buffer against vulnerabilities from external supply shocks.
  • Building a Net-Zero Economy: Clean energy projects often require long-term investments that can be too risky for the private sector alone. Industrial policy can reduce uncertainty.
  • Indigenous Economic Reconciliation: Improving access to capital for Indigenous businesses can foster growth and enhance procurement opportunities.
  • Solving the Housing Crisis: Innovation and increased productivity are critical to addressing Canada’s housing shortage, which will require millions of new homes.
  • Promoting Inclusive Growth: Government intervention may be necessary to support marginalized groups, including Black entrepreneurs and communities in the North.
  • Rebuilding the Defence Industry: Revitalizing Canada’s defense production capacity is crucial for meeting NATO obligations and addressing the shortfall in our defence spending targets.
  • Fostering a Climate-Resilient Economy: Collaborating with universities and industries can drive innovations to address climate adaptation, including flood and fire mitigation.

“For industrial policy to succeed, it needs a clear strategy, strong governance and rigorous evaluation. It should benefit society at large, rather than just boosting corporate profits,” says Lafleur.

The IRPP will host a series of expert workshops and consultations throughout 2024, culminating in a major report and conference in 2025. For more information on the Canada’s Next Economic Transformation project, visit irpp.org.

Should Governments Steer Private Investment Decisions? Framing Canada’s Industrial Policy Choices

Should Governments Steer Private Investment Decisions? Framing Canada’s Industrial Policy Choices

Read

Media Contact

Cléa Desjardins
Communications Director
514-245-2139 • cdesjardins@irpp.org