Depending on Definitions, Canada’s Tech Sector Bigger Than Anticipated

July 28, 2016

A recently released report finds evidence that Canada’s tech sector – when properly defined – plays an important role in the nation’s economy. In The State of Canada’s Tech Sector, authors Creig Lamb and Matthew Seddon develop a definition of the tech sector based on those industries employing an oversized share of technology occupations. Ultimately, they suggest that the sector is responsible for $117 billion (88.9 billion USD) in economic output, roughly on par with finance and insurance and construction as a percent of total GDP (7.1 percent).

In the report, Lamb and Seddon – policy advisors from the Brookfield Institute for Innovation + Entrepreneurship (BII+E), a newly founded, nonpartisan research institute housed within Toronto’s Ryerson University – attempt to more accurately capture the contribution of the tech sector to Canada’s economy by developing ground-up definitions and applying methodologies originally used by the UK’s Nesta, the Brookings Institution and the United States Bureau of Labor Statistics. Although the technology sector is traditionally defined by the companies within the information and communications technology (ICT) industry, the authors developed their new definition through a three-stage process:

  • First, using Employment and Social Development Canada’s (ESDC) occupation descriptions, Lamb and Seddon determined which occupations could be considered “tech occupations” based on the types of activities performed and skills required;
  • Second, the authors analyzed the proportion of tech occupations across each industry; and,
  • Third, the authors identified the industries where tech occupations comprised more than 15 percent of total employment.

Based on this process, the authors developed a definition that includes 22 industries, comprised of: 10 in manufacturing; six in the information and cultural industries; four in professional, scientific and technical services; one in wholesale trade; and, one in other services..

Using this definition, Lamb and Seddon find that the tech sector is a critical component of Canada’s economy – responsible for $117 billion (88.9 billion USD) in economic output, and roughly on par with finance and insurance and construction as a percent of total GDP (7.1 percent). Other findings from the report include:

  • 864,000 Canadians were employed in the tech sector, which represents approximately 5.6 percent of Canada’s total employment;
  • The tech sector invested more than $9.1 billion (6.9 billion USD) in research and development, by far the most of any private sector;
  • Approximately 71,000 firms are included in the tech sector, which represents 6.1 percent of all Canadian businesses; and,
  • Tech sector employees earned approximately $67,000 a year (50,881 USD), nearly 40 percent more than the national average of nearly $48,000 (36,452 USD).

The report also includes regional breakdowns and a downloadable infographic that visually demonstrates the report’s key findings.

While the Brookfield Institute report examines Canada as a whole, a recent study from the Institute for Competitiveness and Prosperity pays particular attention to industry clusters in Ontario. The report, Clusters in Ontario: Creating an Ecosystem for Prosperity, identifies five traded clusters where the province has a competitive advantage: automotive; marketing, design, and publishing; communications equipment and services; financial services; and, hospitality and tourism. The Canadian government is currently gathering public input to inform its innovation agenda, which will enact a series of programs that seek to better support Canada’s tech sector and other notable clusters.

Read The State of Canada’s Tech Sector here: http://brookfieldinstitute.ca/wp-content/uploads/2016/07/The-State-of-Canadas-Tech-Sector-2016-V2.pdf

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