Canada’s Tech Sector Rivals Energy, Finance

A new study puts Canada’s tech sector ahead of finance and insurance and on par with mining and energy in terms of economic contribution.

The report by the Brookfield Institute for Innovation + Entrepreneurship (BII+E) at Ryerson University broadens the definition for the tech sector to include aerospace and pharmaceuticals, and pegs the tech sector contribution in 2015 at $117 billion, or 7.1 percent of Canada’s economic output.

The new numbers underscore the degree to which tech startup ecosystems have assumed a position of paramount importance to economies worldwide. Industries across the board, from healthcare to energy to finance, are seeking to leverage technology to make their operations more efficient and address consumer demand for more convenience.

Comparing Tech With Energy and Finance

The “mining, quarrying, and oil and gas extraction” sector accounts for 7.80 percent of domestic output, according to the latest April 2016 data from Statistics Canada. Finance and insurance, meanwhile, accounts for 7.06 percent.

A direct comparison using Statistics Canada data is difficult because technology falls across more than one industrial category, including “information and cultural industries” and “professional, scientific and technical services.”

BII+E said it developed its tech sector definition “from the ground up by adopting and applying methodologies first used by UK organization Nesta, the United States Bureau of Labor Statistics, and the Brookings Institution.”

That problem is the heart of the study. Official statistics sort businesses by what they produce, so a software company, a telecom provider and a drug maker land in different boxes, and “tech” never shows up as one line. Energy and finance each have their own category, which makes them easy to measure and easy to talk about. Tech has to be rebuilt from pieces before anyone can compare it.

The way it’s rebuilt changes the answer. A narrow definition that counts only software and IT services gives a much smaller number than one that adds aerospace and pharmaceuticals, as BII+E did. Neither is wrong, but a headline comparison is only meaningful if you know which definition sits behind it.

What Statistics Canada Found Later

Statistics Canada took up the measurement question itself a few years later. In May 2019, it released its first estimates of the “digital economy”, meaning activities that enable digitization or are highly affected by it, such as IT equipment, telecommunications, e-commerce and digitally delivered products.

Its estimate put the digital economy at $109.7 billion in 2017, or 5.5 percent of total economic activity. The agency noted that, as a share of the economy, it was larger than mining, quarrying and oil and gas extraction (4.8 percent) in 2015. From 2010 to 2017, the digital economy’s output grew 40.2 percent, compared with 28.0 percent for the economy as a whole.

The agency also counted 886,114 jobs tied to digital economic activity in 2017, or 4.7 percent of all jobs in Canada. Those jobs grew more than four times as fast as overall employment between 2010 and 2017.

These figures don’t line up neatly with BII+E’s. The two measure different things, over different years, with different boundaries: BII+E started from a list of industries, while Statistics Canada built its estimate around digital infrastructure, e-commerce and digitally delivered products. What they share is the direction of travel. Both found a part of the economy that had become as large as Canada’s traditional resource industries and was growing faster than the economy around it.

What Became of the Brookfield Institute

The institute behind the 2016 study no longer exists under that name. Ryerson University became Toronto Metropolitan University, and in 2023 the university combined the Brookfield Institute with its Leadership Lab to create the Dais, a public policy and leadership institute led by Executive Director Karim Bardeesy.

Innovation and technology remain one of the Dais’s three areas of focus, alongside education and skills, and democracy and trust. Its stated aim is to grow a more inclusive economy through innovation while using technology responsibly.

Why the Numbers Still Matter

How a sector is counted shapes how it’s treated. Governments set budgets, tax credits and training programs partly on the size of an industry, and a sector that’s hard to see in the official statistics can be easy to overlook.

For founders and investors, the lesson is to read sector statistics carefully. A claim that tech is “bigger than energy” or “smaller than finance” depends on the definition, the year and the measure used. The useful question isn’t which number is right, but what each one is counting, and whether it’s counting the part of the economy you actually care about.