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What Explains the Canada-US ICT Investment Intensity Gap?

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Author Info
Centre for the Study of Living Standards ()
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.

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Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2005-06.

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Date of creation: Jun 2005
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Handle: RePEc:sls:resrep:0506

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Related research
Keywords: Machinery and equipment investment information and communications technology ICT Investment gap Business sector Industrial structure Firm size

Find related papers by JEL classification:
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
M00 - Business Administration and Business Economics; Marketing; Accounting - - General - - - General
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Z10 - Other Special Topics - - Cultural Economics - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Sabourin, David & Baldwin, John R. & Smith, David, 2003. "Impact of Advanced Technology Use on Firm Performance in the Canadian Food Processing Sector," Economic Analysis (EA) Research Paper Series 2003012e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
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  3. Chowhan, James, 2005. "Who Trains? High-tech Industries or High-tech Workplaces?," The Canadian Economy in Transition 2005006e, Statistics Canada, Micro economic Studies and Analysis Division. [Downloadable!]
  4. Andrew Sharpe, 2003. "Why Are Americans More Productive Than Canadians?," CSLS Research Reports 2003-03, Centre for the Study of Living Standards. [Downloadable!]
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    Other versions:
  6. Andrew Sharpe, 2003. "Why are Americans More Productive than Canadians?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 6, pages 19-37, Spring. [Downloadable!]
  7. 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. [Downloadable!]
  8. Andrew Sharpe, 2004. "Ten Productivity Puzzles Facing Researchers," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 15-24, Fall. [Downloadable!]
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  10. Silvia Fabiani & Fabiano Schivardi & Sandro Trento, 2005. "ICT adoption in Italian manufacturing: firm-level evidence," Industrial and Corporate Change, Oxford University Press, vol. 14(2), pages 225-249, April.
  11. Productivity Commission, 2004. "ICT Use and Productivity: A Synthesis from Studies of Australian Firms," Development and Comp Systems 0410005, EconWPA. [Downloadable!]
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  13. Audretsch, David B & Elston, Julie Ann, 1994. "Does Firm Size Matter? Evidence on the Impacts of Liquidity Constraints on Firm Investment Behaviour in Germany," CEPR Discussion Papers 1072, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  14. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January. [Downloadable!] (restricted)
  15. Bronwyn H. Hall, 2004. "Innovation and Diffusion," NBER Working Papers 10212, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall. [Downloadable!] (restricted)
  17. Dirk Pilat, 2005. "Canada's Productivity Performance in International Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 24-44, Spring. [Downloadable!]
  18. Nadim Ahmad, 2003. "Measuring Investment in Software," OECD Science, Technology and Industry Working Papers 2003/6, OECD Directorate for Science, Technology and Industry. [Downloadable!]
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