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

An introduction to intangibles, their significance, and the issues they raise for policymakers, business leaders, and other stakeholders

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

Illustration by: Huzaifa Mohamedbhai

Creig Lamb

Alumni, Senior Policy Analyst

Daniel Munro

Research Advisor

February 13, 2020

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About this Report

In Canada, a rising share of economic growth and prosperity is being driven by intangible assets and investments, such as data, digital services, brands, design, marketing, and firm-specific training—and a declining share by tangible assets, such as buildings, machinery, equipment, and product inventories.

Firms and countries investing in intangibles are experiencing faster growth and substantial productivity improvements—a critical development at a time when long-term prospects for growth are stagnating and one that Canada cannot afford to miss. Although intangibles are on the rise in Canada, we lag many peer countries on the pace and scale of our intangible shift. Canadian businesses in all sectors would benefit from greater investment in a variety of intangibles, but too few are seizing the opportunities.

This foundational report provides an introduction to intangibles, including their significance and the issues they raise, for policymakers, business leaders, and other stakeholders. It also launches our Intangible Shift research series, which will examine, in detail, key challenges and opportunities associated with the shift towards an intangible economy. Our aim is to provide decision makers across Canada’s public and private sectors with clarity on how the rules of the economy are changing and to identify key policy and business strategy changes that can help position Canada for success.

Those who understand the new economics of intangibles will be better positioned to design effective policies and business strategies. Canada’s future competitiveness, and the well-being of individuals and communities, depends critically on how well businesses and policymakers manage the intangible shift.

Read this report to help you:

Understand what the intangible economy is and what makes it unique
Learn about the size of Canada’s intangible economy, how investments in intangibles contribute to economic growth, and how this has changed over time
Identify key areas of strength and weakness in Canada’s intangible economy
Identify key policy areas that require further insight and action

Key findings from the report:

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.
Tangible and intangible investments are alike in at least one key sense: Firms make upfront investments in assets that they expect will generate long-term returns. But in other ways, intangible investments and assets are very different. As business investment increasingly shifts to intangibles, existing frameworks for fostering innovation, growth, and distribution must be updated to accommodate new economic realities.
Although Canada has experienced a substantial increase in intangible investments across many sectors, we lag 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, could require new thinking and policy in areas ranging from financing, data governance, and intellectual property (IP), to trade, competition, skills, and distribution.
This report launches our research series, The Intangible Shift, which will explore how the rules of the economy are changing and identify policy options to ensure that Canada can compete effectively.

Methodology

This foundational report provides a review of existing literature and data on intangible assets, with a focus on sources that reveal the unique behaviour of intangible investments, the increasing importance of these assets in developed economies, and key areas of policy and business strategy affected by the intangible shift. This work is conducted in consultation with a group of advisors and other experts who offer insight on the social, economic, and policy implications of intangibles.

Expert Advisory Board

This research series will benefit from the insights and guidance of an advisory board of international experts, including:

Stian Westlake, Senior Fellow, Nesta
Cam Vidler, Leader, Public Sector at Green Shield Canada
Graeme Moffatt, Senior Fellow, Munk School of Global Affairs and Public Policy
Danielle Goldfarb, Head of Global Research, RIWI Corp
Eric Santor, Advisor to the Governor, Bank of Canada

Creig Lamb

Alumni, Senior Policy Analyst

Daniel Munro

Research Advisor

February 13, 2020

Read Report PDF Print Page

Deep Dive

Jul 14, 2020

Financing the Intangible Shift

It is important that Canada continues to explore models of financing for intangible-intensive firms to strengthen both the country’s post-pandemic recovery and the intangible economy overall.

Daniel Munro + Creig Lamb

Abstract illustration of staircase made of money on burgundy background.

Apr 15, 2020

We Shall Have Spring Again: Preparing for the return of intangibles

As part of our ongoing Intangible Shift research series, we examine the implications of the COVID-19 crisis on, and recovery prospects for, Canada’s intangible economy

Daniel Munro + Creig Lamb

We Shall Have Spring Again: Preparing for the return of intangibles

Dec 4, 2019

Managing the Intangible Shift: Positioning Canada to compete in an intangible economy

Canada’s future competitiveness, and the well-being of individuals and communities, depends on how well businesses and policymakers understand and manage the shift to an intangible economy

Creig Lamb + Daniel Munro

Managing the Intangible Shift: Positioning Canada to compete in an intangible economy