Public policy and the Quebec aerospace sector

by Letovsky, Robert.

Public PoPcy and the Qucbec Aerospace Sector Robert Letovsky, Ph.D. Concordia University, 1 999 For over 150 years, governments around the world have adopted various types of policy measures to influence not only the level but also the nature of economic activity within their jurisdictions. These measures have cornmonly been referred to as "industrial policy " . Since the end of WW II. governments in most developed and some developing corntries have oriented their industrial policy programs to promote the growth of high technology industries within their borders. Such industries are seen to offer benefits which spread throughout the national economy. Using the Quebec aerospace sector as a case study, and drawing on both secondary research and interviews with fims and government officials active in the sector, the research addresses several questions. First, why do some areas develop successfil and ongoïng clusters of innovative, high technology industries? Second, what has been the role of public policy, if any, in the inception and ongoing success of these clusters? Third, how has public policy in this area evolved over tirne, and why? The research will describe and explain the evolution of industrial policy initiatives as they have been implemented in Quebec towards the aerospace sector. in order to provide a baseline to evaluate the degree of public sector involvement, the research will also examine the province's successfûl pharmaceuticd sector Drawing on the concept of the multi-firm production network characterized by extensive inter-fm learning, the research will describe the types of industrial clusters which can exist, and the benefits which accrue to participating firms. It will then show that the Quebec aerospace sector is indeed a successtiil and self-sustainhg agglomeration of firms. Furùier, this research will suggest that public policy initiatives have had a degree of impact, if only indirect, on both the inception of and the ongoing development of the sector. Finally, the research will identify several factors, notably the ascendancy of conservative fiscal policy and the hcreasing importance of multilateral trade iii agreements, which have led to the changes in the way the pubiic sector supports and encourages the sector. Acknowlcdgmcnb Severai people have made invaluable contributions during the various phases of this research. 1wish to express my appreciation to the managers and representatives of various aerospace firms who made themselves available to me for interviews, and who also provided important pieces of secondary research which are usually difficult for industry outsiders to obtain. For reasons of confidentidity, 1 cannot acknowledge thern by name. 1 extend my thanks to the many govenunent oficials who took time to meet with me and provide criticai insights into my research. in particular, I wish to thank Mr. GilIes Brabant of the Quebec government Ministry of Industry, Trade, Science & Technology and to Mr. Jean Claude Cyr of the Caisse de dépot et placement du Québec. Sincerest thanks are also due to Mme. Georgette Putzel, who graciously helped with the French punctuation throughout the text. 1 am gratefÙ1 to Prof. William D. Taylor of Concordia University for serving as the interna1 examiner for the final defense of the thesis. 1 would also like to thank Prof. Chris Bryant of the Université de Montréal for serving as the extemai examiner for the hai defense of the dissertation. Sincerest thanks are due to Prof. John de la Mothe of the University of Ottawa who served on my thesis committee and who provided ongoing guidance despite being based outside of Montreal. A very special thank you to Prof. Michael Carney of Concordia University, who, as a member of the thesis cornmittee, was a continuous source of suggestions and assistance throughout my research. 1 extend my sincerest appreciation to my advisor, Prof. Harold Chomey of Concordia University, whose enthusiasm and support were especially cntical to the completion of this research. To my wife, Sheila Stober, 1 would like to express my deepest gratitude for her understanding, dail y support and dailhg patience.