Canada's Tech Sector: An Economic Goliath

Apps to Aerospace: Canada’s future as a tech giant

By Creig Lamb and Matthew Seddon
July 25, 2016

At the Brookfield Institute for Innovation + Entrepreneurship (BII+E), we have already sought to explore the disruptive potential of technology on the Canadian workforce. However, we feel it is equally important to identify and demonstrate the incredible potential of the tech sector in improving Canada’s capacity for innovation, and in turn, economic growth. As Navdeep Bains, Minister of Innovation, Science and Economic Development, said in launching the national discussion about Canada’s new innovation agenda, our objective should be “creating good-paying jobs for the middle class, driving growth across all industries and improving the lives of all Canadians.”

Our latest report, The State of Canada’s Tech Sector, 2016 shows that the tech sector is a cornerstone of Canada’s knowledge economy. It is a massive contributor to the country’s current and future economic success and is one of the fundamental drivers of Canadian innovation. Any efforts from the federal government to improve innovation in the country should certainly consider the needs of Canada’s tech sector.

Let’s call it like we see it

The State of Canada’s Tech Sector, 2016 was inspired by a need to strengthen the way economists, academics and policymakers have traditionally thought about the tech sector – as one industry among many, often referred to as the “information and communications technology sector”. We felt that this traditional definition of the sector, within a single vertical, understated the impact of the tech sector, since many of the tools, techniques and skills that we associate with “high-tech” are in fact used across a much broader section of the economy. And we’re not the only ones that thought so. We applied a methodology employed by Nesta, the United States Bureau of Labor Statistics, and the Brookings Institution to determine which of Canada’s industries employ enough tech professionals to be considered members of the tech sector.

Through this new lens, we see that Canada’s tech sector is much bigger and more diverse than our current definitions capture, ranging from digital technologies to aerospace and pharmaceuticals. By using this new, broader definition, we felt we could better quantify the sector’s contribution to the Canadian economy as well as the country’s innovation and entrepreneurship ecosystem.

A great example of a job that would not have previously been included in the traditional definition of the tech sector is that of the chemical engineer, who uses the principles of math and science, combined with the latest technology, to produce everything from pharmaceuticals to cutting-edge food products.

What did The State of Canada’s Tech Sector, 2016 teach us?

The State of Canada’s Tech Sector, 2016 illustrates how vibrant, diverse and innovative the Canadian tech sector really is. This report is timely given conversations happening across the country with respect to Canada’s new innovation agenda, Canada’s job training and skills gap, and the country’s shift from natural resources.

The tech sector’s impact is undeniable – approximately the same as Canada’s mighty finance and insurance sector, contributing $117 billion to Canada’s economy and employing 864,000 Canadians. And it is an industry distributed across the nation, creating opportunities across Canada.

Canada’s tech sector is by far the country’s largest contributor to business enterprise research and development spending, making it the lynchpin of Canada’s knowledge economy. Tech sector firms also increase the innovation in other Canadian industries by introducing new solutions that improve products and lower costs.

Our prediction is that the Canadian tech sector will continue to expand and will not be nearly as subject to the booms and busts that our resource or real estate industries face. As the tech sector grows, the Canadian economy will become more resilient and less volatile, which can only improve the prosperity of all Canadians. If we play our cards right.

At BII+E, we believe our role is to help Canadians better understand the prevalence of the tech sector, both regionally and nationally, to identify the year-after-year impact it will have on employment, compensation and investment in R&D, crucial evidence for policy makers and opinion leaders. Now that we know how important the tech sector is to Canada, it will be important for both public and private sectors to take deeper dives into whether firms in the tech sector have the talent, financing and supports needed to continue, thrive and scale.

Download the full report here. Also included as part of the report are regional breakdowns and a downloadable infographic, visually demonstrating the report’s key findings.

For media enquiries, please contact Coralie D’Souza, Director of Communications, Events + Community Relations at the Brookfield Institute for Innovation + Entrepreneurship.

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