Canada looks to Israel for R&D reform ideas

Thu Feb 2, 2012 2:17pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada may copy some of Israel's policies on funding high-tech startups and turning research ideas into businesses as it seeks to revive the country's weak performance in business innovation and productivity, the finance minister said on Thursday.

Finance Minister Jim Flaherty has been in Israel this week meeting with officials overseeing that country's widely admired research and development policies as well as its venture capital initiatives.

"They've certainly had remarkable success and there are aspects of what has been done in Israel that we need to look at closely and perhaps emulate," Flaherty told reporters on a conference call.

It was not clear whether the government would increase its budget for research and development (R&D) or draft new policies in time for the federal budget expected in March.

Pressure has grown on the Conservative government after a report by the World Economic Forum last year showed Canada was no longer among the top 10 most competitive countries in the world. The report cited low private-sector R&D as the reason for the downgrade.

Other studies have shown that government support for research has failed to produce the expected impact on the economy and that labor productivity, measured as output per hour worked, is sorely lagging that in the United States and other countries.

A government-commissioned report on how to reverse this trend recommended, among other things, setting up new funds to help startups access risk capital and relying less on tax credits for small and medium-sized businesses in favor of direct support.

Flaherty said he would draw from those recommendations and also from the high-tech success of Israel, which has the most startups per capita in the world.   Continued...