Can the Canada-U.S. ICT Investment Gap be a Measurement Issue?

In 2011, business sector investment per worker in information and communications technology (ICT) in Canada was only 57.8 per cent of the U.S. level, indicating an ICT investment per worker gap of 42.2 percentage points. Numerous explanations have been advanced to explain this gap, one of which is the ICT investment data from Statistics Canada and the Bureau of Economic Analysis are not strictly comparable. We compare the methodology used to measure ICT investment in Canada and the United States and find that issues related to measurement account for approximately 4 percentage points (10 per cent) of the gap. The gap is concentrated in the software component of ICT investment (90 per cent) and in a small number of ICT-intensive industries, in particular information and cultural industries. The article concludes that the Canada- U.S. ICT investment per worker gap is largely the result of industry-specific factors that affect software investment.