ICT Investment Gap Between Canada and the United States Continues to Hold

OTTAWA , Jan. 12 /CNW Telbec/ - Canada , which has a long history of under investing in productivity-enhancing information and communications technology tools and services, particularly in comparison with the United States , showed no improvement in its performance in 2008. According to a new study by the Centre for the Study of Living Standards (CSLS), Canada's rate of ICT investment per worker in 2008 was 62.1 per cent of that of the United States .

The CSLS has conducted groundbreaking research that directly links Canada's under adoption of technology to the relatively poor productivity of our economy in comparison with competitor nations such as the United States . Many influential organizations concerned about Canada's capacity for innovation and competitiveness have underscored the need to improve our performance in this important area.

In its April 2009 report on innovation, the Council of Canadian Academies noted that "Investment in advanced machinery and equipment is a principal source of productivity growth, both through its direct labor-augmenting effect and through its induced impact on innovation, including innovations in the business reorganization required to fully exploit the new machinery and equipment." The report, from its Expert Panel on Business Innovation, goes on to point out that "... the ICT investment picture is consistent with the view that Canadian businesses on the whole ... are technology followers, not leaders and are reluctant to adopt new practices until they have been well proven south of the border. In today's fast paced world that strategy is unlikely to work as a well as it once did."

Ontario's Task Force on Competitiveness, Productivity and Economic Progress has repeatedly expressed similar views. Its most recent report, "Navigating through the Recovery," suggests "Closing the investment gap offers the potential for closing the productivity gap ... At the most basic level research by OECD and others indicate that equipping staff with computers and software increases firm and national productivity. At the second level, connecting computers in networks and drawing on more technologies can drive productivity even higher. But the most significant benefit of ICT adoption can be that it enables profound transformation of business through changes in business process or organization design or both."

Improving Canadian business productivity is a central priority for ITAC, which commissions CSLS' annual studies of the ICT investment gap. "As individual companies, we have seen the transformational impact of ICT tools and services at the enterprise level," said ITAC Chair and Vice-President, Software, General Business, IBM Corp., Tom Turchet. "As an industry, we know that our relatively weak adoption of ICT is a major drag on Canada's competitiveness and overall economic performance. As an association we have been trying to get the word out about the benefits of stronger ICT adoption across the whole economy. The work of the Centre for the Study of Living Standards provides us with a useful data point; I just wish the indicators were showing signs of improvement."

"The need for improvement in our use of technology has been central to discussions that our association has had with public policy makers at the Federal and Provincial levels," he said. "The accelerated Capital Cost Allowance provision for computer hardware announced in last year's Federal Budget is good indication that they understand this. But there is more that can be done. We are expecting an announcement about a digital economy strategy for Canada any time now and are hopeful that this will be addressed."

A complete copy of the CSLS study, "The Canada-U.S. ICT Investment Gap in 2008: Gains in Communications Equipment and Losses in Computers" is available at www.itac.ca.

The Information Technology Association of Canada (ITAC) is the voice of the Canadian information and communications technologies (ICT) industry. ITAC represents a diverse ICT community spanning telecommunications and internet services, ICT consulting services, hardware, microelectronics, software and electronic content. ITAC's community of companies accounts for more than 70 per cent of the 572,000 jobs, $149.4 billion in revenue, $6.22 billion in R&D investment, $22.6 billion in exports and $11.8 billion in capital expenditures that the ICT industry contributes annually to the Canadian economy. ITAC is a prominent advocate for the expansion of Canada's innovative capacity and for stronger productivity across all sectors through the strategic use of technology.

For further information: Lynda Leonard, Senior Vice President, ITAC, [phone] ext. 223; Brendan Glauser, Manager of Communications, ITAC, [phone] ext. 224