The Paper analyzes the role of government policies in influencing the competitiveness of two Canadian industries: Telecommunications and Software. Telecommunications industry in Canada is subject to a relatively high degree of government intervention in the form of regulation as well as other forms. The “Competitiveness” of the carrier segment was measured in terms of its own performance over the years, and the equipment segment in terms of exports. The software industry though largely in a free market, is still influenced by broad government policies. Its competitiveness was measure by its foreign revenues. The study finds that even in a free market economy like Canada government policies have a vital role to play in promoting the competitiveness of industries. The areas of synergies and dissynergies in government policies and their impact on the industries studied are explored. The findings are also related to Michael Porter's “diamond” model for global competitiveness of industries.