Report examines how to repair the flaws in Alberta’s economic structure to stimulate growth
EDMONTON, Alta – BUSINESS – If Alberta’s stagnant economy is to evolve, it will require greater investment in new ideas, says a report by Troy Media.
The report, Diversifying the Alberta Economy: Capitalizing Intangible Assets, was written for the media outlet by economist Robert McGarvey, from Edmonton, and accountant Joe Batty, from Vancouver.
The report outlines the growing importance of intangible assets in the modern economy and presents a methodology to help technology companies capitalize their intangible assets to achieve growth.
However, McGarvey stresses, while the report focuses on Alberta due to the severity of its economic downturn, its recommendations relate to all economies.
Released today, the report is the first of three white papers planned by Troy Media to examine the flaws in Alberta’s economic structure and how they can be repaired in a sustainable fashion.
“Governments have been promising Albertans a more diversified economy for decades,” McGarvey says. “But past diversification attempts failed because governments have either been too deeply involved in diversification by picking winners, owning business outright or too distant by simply leaving diversification to the ‘market’. Both of these strategies have failed to achieve any significant progress.”
An evolving world economy, he adds, now places a higher value on “services and intellectual forms of property” than on manufactured goods.
And that’s the best path to future wealth in Alberta, he argues.
The report points out that although significant research and development takes place in Alberta, the process stalls before ideas can be turned into commodities.
“Alberta’s financial infrastructure . . . (undermines) the free flow of capital” that would “bring ideas to life,” according to the report.
And that, the authors argue, is because assured funding is often only available for idea creation and not commercialization.
According to Batty, $3.6 billion was invested in research and development in Alberta in 2013. Industry was responsible for $2.05 billion of that and one project alone, related to Suncor’s oil sands dry tailings technology, scooped up $1.2 billion of the funding. That same year, the federal and provincial governments invested $829 million in research in Alberta, mostly through universities.
Unfortunately, the return on that public R&D investment is limited, Batty says, because money from provincial investors that could be going into small and medium Alberta business venture funding leaves the province instead.
“Alberta’s innovation is stymied because Alberta’s innovators are unable to gain access to capital and other resources they need to realize their potential,” he says.
He and McGarvey argue that to get out of this investment “starvation zone,” Alberta’s intellectual property needs to be considered an asset by investors.
They say that to take advantage of these “intangible assets,” a change in accounting perspective is required, one that Tony Baron, Executive Committee member of the Economic Research Council and former Managing Director of Chase Manhattan Bank in the UK, agrees with. “It’s an idea who’s time has come,” he says. “The economies of all developed nations need this kind of new thinking urgently. This white paper make a positive contribution to the challenge of reinvigorating growth.”
But once these assets have an assigned value, it will be easier for the corporate world to direct capital to their development.
“Alberta is rich in innovation and has expertise of all sorts . . .,” the report says. “What it lacks is access to finance.”
Diversifying the Alberta Economy: Capitalizing Intangible Assets is the first of three reports from Troy Media.
© 2016 Distributed by Troy Media