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Jim Balsillie is co-founder of the Institute of New Economic Thinking and former chairman and co-CEO of Research in Motion.

Over the past 30 years, technological advances and their economic benefits became rooted in the new rule-of-law framework that allowed for innovation to occur and get to the market. That new global economic framework is based on intellectual-property rights (IPR). Today, intellectual property (IP) is the world's most valuable corporate asset and the companies that own the most IP are the most valuable entities in the world. IP began as an incentive for inventors, then shifted to a tradeable commodity and then, most recently, to a business investment protected by investor-state dispute settlement mechanisms.

Countries that saw these shifts happening over the past three decades upgraded their policy tools by focusing on the IP ownership in their firms and by creating a policy infrastructure to facilitate their prosperity in the 21st century. Canada's unfettered reliance on outdated economic theories, and on experts who did not update their understanding of how the knowledge economy works, continues to interfere with creating policy infrastructure strategies for our 21st-century prosperity.

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Among Canada's high-growth companies, there is a reckoning that without a strategic IP portfolio, there is no "freedom-to-operate" strategy, which is a requirement for scaling up globally. There is also recognition that IP generated and paid for by Canadian taxpayers should stay in Canada and benefit the Canadian economy rather than the economies of foreign countries.

That the most recent federal budget called for a national IP strategy is a good sign that the government is finally contemplating a break away from the Jurassic-period policy ideas that have stifled our innovation outcomes. Whether Canadian policy and business elites will recognize the global economy has changed and that the 21st century requires different approaches from the 19th and 20th centuries remains an open question.

Jim Balsillie explains the difference between traditional

manufacturing-based economies of the 19th and 20th centuries

and the emerging ideas-based economy of the 21st century

TRADITIONAL ECONOMY

IDEAS ECONOMY

Tangible goods

Intangible goods

Ownership of physical

property is a positive

right

Generating (owning)

intellectual property is a

negative right

Production and sale of

physical property to

generate revenue

Amassing intellectual

property and restricting

use to collect ‘rents’

The objective in the

traditional economy is

to move inventory

The objective in the

innovation economy is to

acquire intellectual

property

Traditional good can

only be owned by one

person at one time

(rivalrous)

IP is globally and

simultaneously accessible

by unlimited number of

people (non-rivalrous)

Traditional infrastructure

needed to move goods

across borders to

individual customers

IP is impossible to

determine where it

originates and how it

moves across borders

Companies access

new markets

Technology

entrepreneurs

create new markets

Supply chains feature

multiple vendors

competing with each

other based on cost

competitiveness

 

Supply chains are based

on winner-take-all

economics

Competition rules

prevent monopolies

IP is a

government-created

temporary monopoly

Trade liberalization

increases competition

and reduces prices

Stronger IP protections

decrease competition

and increase prices

Traditional trade

agreements reduce

value of vested

interests

Asset Enhancement

Agreements raise value

of vested IP-based

interests

Currency is a primary

trade adjustment

mechanism

 

IP ownership drives trade

competitiveness

Policy infrastructure for 21st-century economy

21st-century policy infrastructure requires building blocks that

enable Canadian firms to gain and defend their freedom to

operate (FTO). For today’s businesses, an FTO strategy is a

precondition to scale-up globally.

Market for an intangible good

More

freedom to

operate

Innovative

competitor

“A”

Innovative

competitor

“B”

$

Less freedom

to operate

$

$

$

$

Canada’s shrinking innovation outputs since 2000

 

Despite spending billions on innovation inputs, Canada

has failed to achieve growth in innovation outputs.

Change (percentage points)

Contribution of capital intensity

Contribution of multifactor productivity

Contribution of labour composition

1980-2000

2000-2015

2014-2015

-1

-0.5

0

0.5

1%

john sopinski/the globe and mail, sources: JIM BALSILLIE; statistics canada

Jim Balsillie explains the difference between traditional

manufacturing-based economies of the 19th and 20th centuries

and the emerging ideas-based economy of the 21st century

TRADITIONAL ECONOMY

IDEAS ECONOMY

Tangible goods

Intangible goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ownership of physical

property is a positive

right

Generating (owning)

intellectual property is a

negative right

Production and sale of

physical property to

generate revenue

Amassing intellectual

property and restricting

use to collect ‘rents’

The objective in the

traditional economy is

to move inventory

The objective in the

innovation economy is to

acquire intellectual

property

Traditional good can

only be owned by one

person at one time

(rivalrous)

IP is globally and

simultaneously accessible

by unlimited number of

people (non-rivalrous)

Traditional infrastructure

needed to move goods

across borders to

individual customers

IP is impossible to

determine where it

originates and how it

moves across borders

Companies access

new markets

Technology

entrepreneurs

create new markets

Supply chains feature

multiple vendors

competing with each

other based on cost

competitiveness

 

Supply chains are based

on winner-take-all

economics

Competition rules

prevent monopolies

IP is a

government-created

temporary monopoly

Trade liberalization

increases competition

and reduces prices

Stronger IP protections

decrease competition

and increase prices

Traditional trade

agreements reduce

value of vested

interests

Asset Enhancement

Agreements raise value

of vested IP-based

interests

Currency is a primary

trade adjustment

mechanism

 

IP ownership drives trade

competitiveness

Policy infrastructure for 21st-century economy

21st-century policy infrastructure requires building blocks that

enable Canadian firms to gain and defend their freedom to

operate (FTO). For today’s businesses, an FTO strategy is a

precondition to scale-up globally.

Market for an intangible good

More

freedom to

operate

Innovative

competitor

“A”

Innovative

competitor

“B”

$

Less freedom

to operate

$

$

$

$

Canada’s shrinking innovation outputs since 2000

 

Despite spending billions on innovation inputs, Canada

has failed to achieve growth in innovation outputs.

Change (percentage points)

Contribution of capital intensity

Contribution of multifactor productivity

Contribution of labour composition

1980-2000

2000-2015

2014-2015

-1

-0.5

0

0.5

1%

john sopinski/the globe and mail, sources: JIM BALSILLIE; statistics canada

Jim Balsillie explains the difference between traditional

manufacturing-based economies of the 19th and 20th centuries

and the emerging ideas-based economy of the 21st century

TRADITIONAL ECONOMY

IDEAS ECONOMY

Tangible goods

Intangible goods

Ownership of physical

property is a positive

right

Generating (owning)

intellectual property is a

negative right

Production and sale of

physical property to

generate revenue

Amassing intellectual

property and restricting

use to collect ‘rents’

The objective in the

traditional economy is

to move inventory

The objective in the

innovation economy is to

acquire intellectual

property

Traditional good can

only be owned by one

person at one time

(rivalrous)

IP is globally and

simultaneously accessible

by unlimited number of

people (non-rivalrous)

Traditional infrastructure

needed to move goods

across borders to

individual customers

IP is impossible to

determine where it

originates and how it

moves across borders

Companies access

new markets

Technology

entrepreneurs

create new markets

Supply chains feature

multiple vendors

competing with each

other based on cost

competitiveness

 

Supply chains are based

on winner-take-all

economics

Competition rules

prevent monopolies

IP is a

government-created

temporary monopoly

Trade liberalization

increases competition

and reduces prices

Stronger IP protections

decrease competition

and increase prices

Traditional trade

agreements reduce

value of vested

interests

Asset Enhancement

Agreements raise value

of vested IP-based

interests

Currency is a primary

trade adjustment

mechanism

 

IP ownership drives trade

competitiveness

Policy infrastructure for 21st-century economy

21st-century policy infrastructure requires building blocks that

enable Canadian firms to gain and defend their freedom to

operate (FTO). For today’s businesses, an FTO strategy is a

precondition to scale-up globally.

Market for an intangible good

More

freedom to

operate

Innovative

competitor

“A”

Innovative

competitor

“B”

$

Less freedom

to operate

$

$

$

$

Canada’s shrinking innovation outputs since 2000

 

Despite spending billions on innovation inputs, Canada

has failed to achieve growth in innovation outputs.

Change (percentage points)

Contribution of capital intensity

Contribution of multifactor productivity

Contribution of labour composition

1980-2000

2000-2015

2014-2015

-1

-0.5

0

0.5

1%

john sopinski/the globe and mail, sources: JIM BALSILLIE; statistics canada

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