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IN MY OPINION

When it comes to the lagging economy, universities are part of the solution

A new form of collaboration is evident in applied research institutes in Ontario.

By DAVID CRANE | OCT 15 2014

The role of universities in helping build a more competitive knowledge-based economy has been evolving over time, with universities adding contract research with industry and tech transfer offices, developing incubators for start-up companies and building innovation parks in recent years. Much of this focus has been directed to licensing of university research and helping to launch start-up companies.

But with the growing complexity of innovation, a new form of collaboration is evolving with industry. Universities are forming partnership institutions to help industry meet its need for new products and processes.

This direction has taken on added urgency in Ontario, where the industrial base was hard-hit by the triple whammy of a sharp increase in the Canada-U.S. exchange rate, the prolonged U.S. recovery and growing competition from other countries.

Ontario has to build a new economic base linked to new knowledge and new or restructured industries.

Fortunately, that process is under way, though the full pay-off will be some years in the future. Universities are expected to play an important role in helping this transformation by collaborating with industry to create new products and processes through specialized applied research centres.

This acceleration of university-industry partnerships is being funded in part by a little-known federal agency, the Federal Economic Development Agency of Southern Ontario or FedDev, which was established by the Harper government in 2009 to address the economic crisis in southern Ontario. It has its own cabinet minister, Gary Goodyear.

Here are a few examples of the applied research institutes, initiated by industry and universities and boosted with FedDev funds:

  • $11.5 million for the McMaster University’s $26.4 million Automotive Resource Centre, a collaboration with private industry to conduct research and develop new technologies for hybrid and electric powertrains, vehicle batteries and lightweight materials.
  • $11 million, in collaboration with the Ontario Brain Institute, to establish NeuroTech Ontario, with another $11 million coming from the private sector. It is building partnerships to accelerate the commercialization of neurotechnologies, such as enhanced imaging technologies.
  • $20 million to support the $210 million Southern Ontario Smart Computing Innovation Platform, a project of seven Ontario universities led by IBM Canada (with a $175-million contribution. It includes an IBM Blue Gene/Q computer at University of Toronto, the most powerful computer in Canada. Academic researchers and small and medium-sized companies, or SMEs, are working on applications and new businesses for energy, health, water, cities and agile computing.
  • $19.5 million to support the Southern Ontario Water Consortium, a collaboration of eight universities, FedDev, the Ontario government, IBM Canada and other private sector partners. With six research nodes (drinking water, wastewater treatment, watershed management, sensors and data integration), its goal is to help build a water technology industry in Ontario.
  • $20 million to help establish the Juvenile Diabetes Research Foundation Clinical Trials Network, based at the University of Waterloo in alliance with McMaster University. Its goal is to accelerate the testing of new technologies and treatments for people living with Type-1 diabetes.
  • $13.7 million to support Western University’s $30 million-plus Fraunhofer Project Centre for Composites Research to develop products and processes using lightweight materials for a variety of industries (such as automotive, aviation, construction and renewable energy) and to establish a centre that will commercialize new technologies by SMEs.

Centres like these should help develop highly skilled workers and researchers to bring new skills to the economy. This in itself is important. Some of the graduates of these institutes will go on to form their own companies or take their knowledge to help existing companies develop new or better products and processes. More broadly, they will provide an opportunity for universities and researchers to better understand the needs of industry.

The centres are also important because they depend on industry-university collaboration. Their output is applied research, which moves theoretical knowledge into the world of applications in job-creating industry. By ensuring that all of these centres have private-sector collaboration, there will be a stronger connection to industry’s innovation needs. That is important too because, while universities are critical sources of new talent and knowledge, most actual innovation takes place in industry.

We will need to track these partnerships, study their performance and identify the factors that make them successful, or lead them to fail. In fact, a valuable social science project would be a study of the many factors affecting their performance, including governance structure, the ways that that research priorities are set and how universities and industry ensure they are working to the same deadline.

However, I don’t believe there is any reason to fear that applied research will come at a cost to basic research. In fact, there are often feedback links between basic and applied research that could benefit university researchers while at the same time contributing to the innovative capacity of industry and the future success of the Canadian economy.

To be sure, these centres by themselves will not build a new economy. Industry has to be ready to receive the new knowledge and to hire highly qualified workers and researchers. Small and mid-sized companies will need access to financing to scale up in size to remain successful.

But the centres nonetheless are an important piece of the solution. We need more public-private collaboration and risk-sharing to create an economy with good jobs, and universities have an important role to play in this process. Simply cutting taxes won’t do it.

David Crane, a former economics columnist for the Toronto Star, writes about business and innovation policy and can be reached at crane@interlog.com.

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