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What Explains the Canada-US ICT Investment Gap?

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  • Andrew Sharpe

Abstract

It is widely recognized that machinery and equipment investment intensity is less in Canada than in the United States. What is less well know is that it is information and communications technology (ICT) investment that largely accounts for this gap. The author documents trends in ICT investment in both Canada and the United States and attempts to explain why ICT investment per worker in the Canadian business sector in 2004 was only 45 per cent of that in the US business sector. While no definitive explanation emerges, among the factors he identifies as playing a role are industrial structure, firm size distribution of employment, the price of labour compared to ICT investment goods, and the underestimation of ICT investment in official statistics.

Suggested Citation

  • Andrew Sharpe, 2005. "What Explains the Canada-US ICT Investment Gap?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 11, pages 21-38, Fall.
    • Handle: RePEc:sls:ipmsls:v:11:y:2005:4
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    References listed on IDEAS

    as
    1. Bruce T. Grimm & Brent R. Moulton & David B. Wasshausen, 2005. "Information-Processing Equipment and Software in the National Accounts," NBER Chapters, in: Measuring Capital in the New Economy, pages 363-402, National Bureau of Economic Research, Inc.
    2. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January.
    3. Someshwar Rao & Jianmin Tang & Weimin Wang, 2004. "Measuring the Canada-U.S. Productivity Gap: Industry Dimensions," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 3-14, Fall.
    4. Silvia Fabiani & Fabiano Schivardi & Sandro Trento, 2005. "ICT adoption in Italian manufacturing: firm-level evidence," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(2), pages 225-249, April.
    5. Elad Gafni, 2005. "The Diffusion and Adoption of Advanced Technologies in Canada: An Overview of the Issues," CSLS Research Reports 2005-05, Centre for the Study of Living Standards.
    6. Andrew Sharpe, 2004. "Ten Productivity Puzzles Facing Researchers," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 15-24, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jasmin Thomas, 2016. "New Evidence on the Canada-U.S. ICT Investment Gap, 1976-2014 Selected OECD Countries, 1986-2013," CSLS Research Reports 2016-17, Centre for the Study of Living Standards.
    2. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    3. Andrew Sharpe, 2007. "Lessons for Canada from International Productivity Experience," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 20-37, Spring.
    4. Jasmin Thomas, 2016. "Explaining Industry Differences in IT Investment Per Worker Between Canada and the United States, 2002-2013," CSLS Research Reports 2016-01, Centre for the Study of Living Standards.
    5. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.

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    More about this item

    Keywords

    Productivity Growth; Productivity; Labour Productivity; Industrial Organization; United States; Canada; ICT; Information Technology; Information Communications Technology; Investment; Investment Gap;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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