Jim Balsillie, co-founder of Blackberry, recently criticized Canada’s approach to innovation and trade during a discussion with veteran policy adviser Robert Asselin and journalist John Ivison. Balsillie described the Canadian government’s decision to provide substantial subsidies to foreign companies, such as Volkswagen, for battery cell manufacturing plants as a “catastrophically disastrous move.”

Balsillie, who previously chaired Research in Motion and co-founded the Council of Canadian Innovators, argued that Canada’s trade and competitiveness strategies are outdated. He emphasized that in today’s knowledge economy, prosperity is derived from owning intellectual property. “The issue is Ottawa has had a flawed conception of how businesses prosper and make rents and returns over the last several decades,” he said. He criticized the government’s focus on purchasing technology rather than selling it, stating, “You’re always just going to be at a commodity level of labour, competing against Kuala Lumpur.”

He specifically pointed to François Philippe Champagne, the former industry minister, now finance minister, as a key figure in this flawed approach. Balsillie noted that while the government promotes attracting investment, much of that investment consists of high-value machinery brought in by foreign companies. He stated, “We don’t get all the wealth effects, we don’t get all the profits.” He expressed concern that foreign companies are granted long-term profit exemptions in Canada, which limits the benefits to the Canadian economy.

Balsillie further explained that the focus on maintaining a viable automotive industry is shortsighted. He said, “It’s been palliative to just maintain a diminishing share because the production piece is much, much less valuable and employs fewer people.” He argued that Canada should focus on capturing value in both upstream and downstream aspects of the economy, rather than just midstream.

Asselin, who leads U15, an association of leading research universities, echoed Balsillie’s concerns. He noted that the federal finance department adheres to an outdated “Washington consensus” that views the government’s role as minimal. “I think we’ve realized, to our shock, that the world has changed and that countries are moving fast in terms of economic competitiveness,” he said. Asselin emphasized the need for Canada to align talent, capital, and research in advanced industries to remain competitive.

Balsillie criticized the current economic structure, likening it to that of Russia, and pointed out that Canada has the potential to develop a high-value economy. He stated, “It’s been a catastrophic policy failure in our policy community over the last 30 plus years.” He expressed concern about the lack of mechanisms to retain intellectual property within Canada, citing instances where Canadian research has led to patents granted to foreign companies.

Asselin agreed, stating that the focus should not be solely on job creation but rather on where economic value originates. He highlighted the importance of keeping innovation assets in Canada. He mentioned the establishment of a new defense research bureau, Borealis, as a potential source of new intellectual property, provided it is executed effectively.

Balsillie emphasized the need for a “capture structure” to ensure that innovative ideas are commercialized within Canada. He stated, “We have to get the ex-ante capture structures right before we throw more money into it.” He criticized the current approach, which he believes is based on outdated production economy attitudes, and called for a reevaluation of Canada’s innovation and trade policies.