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What Explains the Canada-U.S. Software Investment Intensity Gap?


  • Andrew Sharpe



In 2012, business sector software investment per worker in Canada was 40.7 per cent of that in the United States. The objective of this report is to deepen our understanding of the reasons for which Canadian businesses invest substantially less in software than their U.S. counterparts. The report reviews the state of the software investment landscape in Canada, discusses the views of industry experts obtained through key informant interviews, and assesses possible explanations for the software gap. About one-third of the gap can be assigned to differences in labour productivity, industry structure, and measurement methodologies between the two countries. The remaining two-thirds are more difficult to explain.

Suggested Citation

  • Andrew Sharpe, 2014. "What Explains the Canada-U.S. Software Investment Intensity Gap?," CSLS Research Reports 2014-04, Centre for the Study of Living Standards.
  • Handle: RePEc:sls:resrep:1404

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    References listed on IDEAS

    1. Fran├žois Lequiller & Nadim Ahmad & Seppo Varjonen & William Cave & Kil-Hyo Ahn, 2003. "Report of the OECD Task Force on Software Measurement in the National Accounts," OECD Statistics Working Papers 2003/1, OECD Publishing.
    2. Baldwin, John R. & Macdonald, Ryan, 2009. "PPPs: Purchasing Power or Producing Power Parities?," Economic Analysis (EA) Research Paper Series 2009058e, Statistics Canada, Analytical Studies Branch.
    3. Andrew Sharpe, 2006. "The Relationship between ICT Investment and Productivity in the Canadian Economy: A Review of the Evidence," CSLS Research Reports 2006-05, Centre for the Study of Living Standards.
    4. Theo S. Eicher & Thomas Strobel, 2008. "The Rise and Fall of German Productivity Software Investment as the Decisive Driver," CESifo Economic Studies, CESifo, vol. 54(3), pages 386-413, September.
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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. 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.

    More about this item


    Canada; United States; Software; Investment; Gap; Productivity; Business Sector;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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