The Role of Government in Fostering Software Development

By some estimates, Canada is currently the third largest software game developer in the world, due in no small part to the government’s tax break policy. Gaming giant Electronic Arts set up a campus in Vancouver, which spawned the development of many other smaller gaming development companies in that region. The role of governments in encouraging the development of software through subsidies or tax breaks can be controversial. Many people fear that tax breaks are mainly beneficial to larger corporations than to smaller outfits, and can lead to an imbalance in local versus international commerce. So what degree of responsibility do governments have in aiding the development of software?

It should be noted that gaming software, unlike most collaboratively developed software, is generally developed and sold for profit, while collaboratively developed ventures usually are aimed at solving problems or improving processes. However, both types of software have value, and in most cases, collaboratively developed software has much greater long term civic benefits than gaming software. Currently, several countries offer gaming developers tax breaks. Whenever a gaming company sets up shop in an area, the economy benefits. Jobs are created, and local vendors receive more business.

Governments have an interest in keeping their economies robust. The U.K.’s recent decision to not extend tax breaks to gaming developers after indicating before the recent parliamentary elections that they would is a step in the wrong direction. Fostering growth during slack economic times is vitally important. The only way to break out of stagnation is to start moving.

Governments need to extend their subsidies to the development of collaborative software as well. While gaming software brings in economic profits, collaboratively developed software creates thriving networks of knowledgeable and motivated participants who produce incredibly effective and useful electronic tools. These networks and their subsequent production of streamlined and beneficial software introduce efficiency and a stronger sense of community to the areas in which they are based.

Of course, collaborative software often results as an indirect effect of government funding for more openly commercial ventures such as gaming development. By creating large local talent pools, collaborative software ventures often form naturally. Like-minded developers who take a greater interest in their community or a particular aspect of an industry may begin working together in their off-hours.

As the old economic infrastructure increasingly falls away and the age of information becomes a de facto commercial reality, governments should play a more active role in investing in and encouraging the growth of the new economy. Canada’s success in this area should serve as a positive example to other governments around the globe. By fostering vibrant talent pools with tax breaks, both the quality of the economy and the software improves.