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While their concerns aren’t directed at the U.S. — Chinese companies like Huawei Technologies Co. are also active in Canada — Americans are central players in the country’s tech sector and Canadians have been willing partners. In fact, Trudeau fashions himself as the salesman-in-chief for the industry, and visited Silicon Valley last year to drum up new business.

Creating innovation assets and then divesting them before commercialization or losing out on the potential to grow companies to global scale is a failure of innovation policy Sean Speer and Robert Asselin

And it’s worked. Foreign investment into the sector has surged. Data compiled by Bloomberg show foreign acquisitions of Canadian software and Internet-based companies has totalled US$8.7 billion in the three years starting 2016 — more than three quarters by Americans — versus just under US$3 billion between 2012 and 2015. U.S. venture capital is also a major source of startup funding, participating in about one-third of all such investments in Canada last year, according to an industry report.

It’s the sort of interest that would typically be welcome in most old economy sectors. But Speer and Asselin argue the economics of knowledge-based growth — which is premised on the idea of generating rents from intangible assets — require a different set of rules. In this economy, once these assets are lost, the benefits to a nation dissipate.

New Paradigm

And Canada has had a middling performance in the intangible economy. Speer and Asselin calculate the share of market capitalization on the country’s stock exchange represented by non-physical assets is below both the U.S. and Europe. Recent figures also show a “significant decline” in the number of Canadian patents over the past decade, according to the report.