Canada’s economic security lies in growing its ‘intangible economy’: Balsillie

“Canada is first world in its input and third world in its output”, according to the chair of the Council of Canadian Innovators Jim Balsillie told the House of Commons Industry committee Tuesday, as he called for the government to “rebuild the Economic Council of Canada to create in-house capacity for the analysis of the contemporary economy”. Balsillie, testified before the House of Commons’ Industry Committee regarding competitiveness in what he called the "intangibles economy," which incorporates intellectual property (IP) and data. “Competitiveness in the intangibles economy means the ability to capture economic rents that flow to IP owners and to those who control data assets that also power rent capture. Canada only had policies for the traditional production based economy, which is shrinking in importance as the digital transformation continues to transform all industries,” he said. Balsillie told the committee that tactics for competitiveness in the traditional economy, such as countries offering land at a concessional rate or provided tax benefits to attract multinational companies are not useful for the intangible economy as they don’t see as much return. “As economic returns increasingly shifted to owners of IP and more recently data, this strategy amounted to capturing the low-rent district in the global economy – equivalent to competitively priced, low-income jobs in an Amazon fulfillment centre, while the highly profitable data-driven rents accrued to Jeff Bezos,” he said. He said the economic council needs to develop better “in-house capacity for the analysis of the contemporary economy.” “The nature of today’s global economy requires an unprecedented amount of horizontal integration, analytical depth, and rapid response to deal with the accelerated pace of innovation and the powerful feedbacks and spillovers that emerge in our networked society.” When asked by Bloc Quebecois MP Sebastien Lemire what the government could do to reduce the weaknesses of its businesses and reduce the obstacles to our competitiveness in the digital world, Balsillie said it needs to grow and control the intangible assets of its intellectual property and data. “We can't be doing things like Sidewalk Toronto with Google, where they get richer, or we court Amazon, or Facebook because we get the low-cost jobs. It's a race to the bottom, and they get the wealth effect,” he said. “That's why I propose this economic council because these are integrated cross cutting areas where you need the expertise.”

Canada’s economic security lies in growing its ‘intangible economy’: Balsillie

Brief | April 20, 2021

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Canada’s economic security lies in growing its ‘intangible economy’: Balsillie

Brief | April 20, 2021

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