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Canada is losing control of its destiny in today’s knowledge economy: Jim Balsillie

Canada is losing control of its destiny in today’s knowledge economy: Jim Balsillie

Blackberry co-founder Jim Balsillie has written a major think piece in the Globe and Mail that says Canada is lagging behind other countries when it comes to being a player in the knowledge economy. He says the economy of the 1980’s that was based on production has now shifted to a knowledge-based economy and that Canada has not put the necessary government structures in place to fully participate. He describes the tech giants like Google and Facebook whose market value is not based on hard assets like machinery or factories but rather on patents, copyrights, trademarks  and license fees—so called intellectual property (IP). The big four in tech companies Apple, Amazon, Microsoft and Facebook combined are worth $10 trillion but hard assets make up only 4 percent of their worth.

Balsillie says that Ottawa has not developed the capacity to keep up with changes in the global economy and instead has “become dependent on rotting process of outsourcing its own work to costly, controversial and unaccountable consultants” making way for a “shadow public service” as he terms it.

As an example, Balsillie looks at a trading partner such as South Korea and says Canada is trading low-margin beef for high-margin IP intensive technology.

To begin to reverse this downward trend Balsillie recommends re-establishing the Economic Council of Canada. The Economic Council of Canada was established 1963 and dissolved 1993. Its role was to assess medium- and long-term prospects of the economy; to consider ways of strengthening Canada’s international financial and trade position; to study the effects of economic growth and technical change on employment and income; to explore policies to foster regional development; and to study means of increasing Canadian participation in the ownership, control and management of industries in Canada. A federally funded crown corporation, it reported directly to the prime minister. It published an Annual Review of the economy and a periodical, Au Courant. It was dissolved after publishing a report that suggested the economic impact of Quebec Separation might not be as dire as was being claimed. With the abandonment of the Economic Council Privately funded research institutes were left to try to do the type and scope of research the council was doing. The Council was prophetic when it  warned that Canadian business, labour and governments would have to rely on the research done in other countries, which is exactly what Balsillie is  talking about nearly 30 years after the Council was shut down.

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