OPINION: Canadian Investment in Intellectual Property Products is Too Low

May 9, 2022

Minister, your 2022 federal budget rightly highlighted the importance of economic growth for Canadians’ future prosperity and the fiscal health of Canadian governments.

Much of the budget’s message was sober. It cited OECD projections ranking Canada’s prospects for real growth in the decades ahead last among all OECD countries. Your budget also pointed to a major reason for this bleak prospect, saying: “Solving Canada’s main innovation challenges – a low rate of private business investment in research, development, and the uptake of new technologies – is key to growing our economy and creating good jobs.”

We agree that low investment in general is a problem, and with the emphasis you placed in your budget on investment in intellectual property products (IPP). Along with business investment in non-residential structures, and in machinery and equipment, investment in such assets as computer software, databases, mineral exploration and other intangibles equips workers with tools to raise their output and incomes.

The surge in digital activity during the pandemic highlighted the transformational power of IPP investments. Such investment may be uniquely important in driving innovation and higher productivity in the industries that will be most important in the future.

That is why the latest data on business investment from Statistics Canada are so discouraging. Business investment in IPP has been lacklustre for years, and there is no sign that the pandemic made any positive difference. Lacklustre aggregate investment combined with a growing workforce means that IPP investment per available worker is going nowhere.