Amid Cum COVID: Saving the Champions or Feeding the Growth Drivers?

The federal government will announce its recovery strategy on September 23rd and the Quebec government is preparing to do the same very soon. In many countries, the pandemic and the rise of protectionism have put back on the agenda the industrial development policies that had been abandoned with the rise of globalization in recent decades. Buying local, manufacturing locally, reducing external dependency, repatriating companies, and supporting local and national champions are topics found in the speech of almost all political leaders worldwide. The return to such approaches is entirely understandable given the extremely unequal effects generated by the recent wave of globalization and exacerbated daily by the digital revolution coupled with the pandemic. These same political leaders are under pressure to quickly reopen their economies as they receive daily requests for support from several sectors. Their challenges are huge and complex because governments are extremely more indebted, the world economy is under strong deflationary pressures, and the entire planet is facing an ecological emergency; in this context, the industrial development policy toolbox is making a strong comeback. Yet industrial development and the resulting economic growth take time and do not follow easily predictable trajectories. Actual progress made can only be measured after the fact. For example, Quebec City transformation over the past 30 years is phenomenal. The first optical projects were initiated in the 1980s. Today, the national capital and its region boast a large pool of high-level graduates who are working, with their research centres and growing companies, in promising sectors, including optics and photonics, but also biomedical and information technology. Over the same period, the Greater Montreal area universities have also hosted seasoned researchers in mathematics, operations research and computer engineering. As a result, the area was quickly recognized as a world leader in the field of artificial intelligence. We could list several other sectors and regions of the world that took decades to build the conditions for their “instant success”. Through this observation over time, in addition to studies on government industrial development policies, we can also establish that this long road travelled is being made “in and by” sectoral and regional ecosystems that have relied on public infrastructures of all kinds; in these ecosystems, companies are born and grow, but some disappear; some become larger and even very large, while others are acquired by larger ones or disappear due to economic, financial or technological disruptions that seal their fate.[1] [1] Burgundy Reports by Henri-Paul Rousseau on this subject: Rousseau, Henri-Paul, 2020, “The Blue Basket: A Tool to FastTrack Quebec’s Digital and Ecological Transition”, Burgundy Report 2020RB-07, CIRANO Rousseau, Henri-Paul, 2020, “COVID-19 – Economic Policy Options for Managing and Recovering from the Crisis in Quebec and Canada”, Burgundy Report 2020RB-02, CIRANO