New Evidence on the Canada-U.S. ICT Investment Gap, 1976-2014

Abstract

Productivity growth results in part from investment in information and communications technologies (ICT). To better understand Canada’s poor productivity growth relative to the United States since 2000, this report provides a detailed examination of ICT investment trends in the two countries. The report finds that real ICT investment in the total economy in Canada has yet to recover from the 2008-2009 recession, while it has not suffered the same fate south of the border. Between 2008 and 2014 real ICT investment in Canada fell 1.0 per cent per year, compared to a 2.9 per cent per year increase in the United States. The gap was even greater for real ICT investment per job, down 1.8 per cent per year in Canada versus a 2.8 per cent annual increase in the United States. The weaker ICT investment growth in Canada resulted in a large increase in the Canada-US ICT investment gap from 31.6 percentage points to 43.7 points, as nominal ICT investment per job fell from 68.4 per cent of the US level in 2008, the highest value ever achieved, to 56.3 per cent in 2014.

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