An Analysis of the Canada-U.S. ICT Investment Gap: An Update to 2013

Jasmin Thomas

No 2015-01, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: Canada’s productivity performance reflects in large part our innovation record, both in terms of business sector R&D and information and communications technology (ICT) investment. The objective of this report is to examine the country’s ICT investment performance since 2000. The key finding is that, since the 2008 peak, business sector ICT investment in Canada has performed poorly, both relative to the Canadian non-business sector and to the business sector in the United States. By 2013, four years after the 2009 recession, nominal ICT investment in the business sector in Canada had failed to regain the 2008 level, falling on average 1.0 per cent per year over the 2008-2013 period. In contrast, despite government belttightening, nominal investment in the non-business sector in Canada advanced at a 2.0 per cent average annual rate. Equally, the United States, which experienced a more severe downturn than Canada, saw business sector nominal ICT investment grow at a 1.5 per cent average annual rate between 2008 and 2013. The fall in nominal ICT investment in Canada, combined with the increase in the United States, resulted in an 8.5 percentage point fall in the ICT investment per worker in Canada from 59.6 per cent of that of the US business sector in 2008 to 51.1 per cent in 2013. More research is needed to understand the reasons for the weak post-2008 ICT investment performance of Canada’s business sector.

Keywords: Canada; United States; Software; Investment; Gap; Productivity; Business Sector; ICT; Computers; Communications; Labour Productivity; Growth; Productivity Growth (search for similar items in EconPapers)
JEL-codes: D24 E22 J24 L86 N92 O47 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-eff, nep-ict and nep-mac
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Citations: View citations in EconPapers (3)

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