ICT Investment Gap Between Canada and the United States Grows to 40%

OTTAWA, Nov. 22 /CNW/ - 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 2009. In fact, the investment gap has grown from 37.2 percent to 40.5 percent. According to a new study by the Centre for the Study of Living Standards (CSLS), Canada's rate of ICT investment per worker in 2009 was 59.5 percent of that of the United States. In 2008, it was 62.8 percent.

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."

The Institute for Competitiveness and Prosperity has repeatedly expressed similar views. Its June 2010 report, "Beyond the recovery," suggests "Canadian businesses continue to trail their US counterparts in investing in machinery, equipment, and software to make their workers more productive ... the accumulated effect of this under investment by Canadian businesses each year means that their workers have less capital to support them on the job ... Closing the investment gap offers the potential for closing the prosperity gap ... Closing the prosperity gap would increase annual personal disposable income for the average Canadian household by $12,200."

Improving Canadian business productivity is a central priority for ITAC, which commissions CSLS' annual studies of the ICT investment gap. "Our member companies have all seen the transformational impact of ICT tools and services at the enterprise level," said ITAC President and CEO, Bernard Courtois. "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 and not the reverse.

"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," Courtois said. "The accelerated Capital Cost Allowance provision for computer hardware announced in last year's Federal Budget, and which expires at the end of January 2011, is a good indication that they understand this. But there is more that can be done. The government has thankfully declared ICT Adoption as a key focus of the upcoming national Digital Economy Strategy, so we are looking forward to having this issue formally addressed."

A complete copy of the CSLS study, "Canada-U.S. ICT Investment in 2009: The ICT Investment per Worker Gap Widens" 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 572,700 jobs, $155.3-billion in revenue, $6.2-billion in R&D investment, $30.4-billion in exports and $11-billion in capital expenditures that the ICT industry contributes annually to the Canadian economy. The ICT sector currently represents 4.9 per cent of Canada's gross domestic product (GDP) and accounted for 9.4 per cent of all real GDP growth since 2002. 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