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The Intangible Shift: Changing gears to compete in the new economy

As the Canadian economy is more and more relying on intangible assets and investments, such as data or digital services, Canada’s public and private sectors need more clarity on how the rules of the economy are changing and help in identifying key policy and business strategy changes that can help position the country for success.

An intangible asset can include any non material good such as  data, digital services, brands, design, marketing, and firm-specific training. A tangible asset can include any material good such as buildings, machinery, equipment, and product inventories. Even though intangible assets have not overgrown tangible ones just yet, Canada has to gain a better understanding of how they work in order to thrive on the international level. Indeed, across Canada, investments in intangible assets are growing rapidly, contributing to significant improvements in economic output and productivity. Canadian firms exhibit particular strength when it comes to investing in branding, talent, and organizational improvements. However, compared to peer jurisdictions, Canadian firms invest less in some key intangible assets: industrial R&D and ICT.

To strengthen its intangible economy, Canada might consider building on areas of strength, while also improving on industrial R&D and intangible ICT investments. This, however, often requires complementary investments in other intangibles, such as managerial expertise, business processes, and skills training.

Some key takeaways from this report are:

  • Although Canada has experienced a substantial increase in intangible investments across many sectors, we lag behind our international peers in terms of the pace and scale of our intangible shift, putting our economy at risk of falling behind. There is an urgent need for new policies and business strategies to enhance Canada’s competitiveness in the age of intangibles.
     
  • Accelerating the intangible shift in Canada, to ensure that all firms, workers, and communities can share in the growth and prosperity benefits, will require new thinking and policy in innovation financing, data governance, intellectual property (IP), trade, competition, skills and education, distribution, and other key areas.
     
  • Canada’s economy is undergoing a fundamental shift. A rising share of economic growth and prosperity is being driven by intangible assets and investments — including data, digital services, brand equity, marketing, and training.

Discussion

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