All sectors commercialize and use knowledge to some extent, but some do so more intensively than others. By measuring the share of high- and medium-high-technology manufacturing in GDP, we can gauge whether a country is a technology maker or simply a technology user.
The past few decades have seen a general decline in the amount of technology manufacturing taking place in Canada and its peer countries. Of Canada’s peer countries, only Ireland, Germany, Switzerland, and Finland have maintained a substantial commitment to technology manufacturing. This reflects economic restructuring toward the use of global supply chains, in which emerging economic powers have taken over a growing share of the world’s manufacturing. More developed economies tend to be users or service providers—as shown by another report card indicator: knowledge-intensive services.
This indicator sheds light on two deep economic trends: First, it highlights that Canada and its peers are seeing a shift from manufacturing to services, which typifies an advanced economy. Although the shift is controversial, it is also inevitable, because many countries, especially in emerging markets, have a manufacturing labour force whose hourly productivity has become increasingly competitive.
At issue is whether expanding the services sectors will offer higher-productivity jobs for future economic sustainability. Some services sectors evidently do add value to Canada’s living standard. But Canada’s relative living standard (measured by income per capita) has grown more slowly than that of many of its peer countries. This indicates that Canada is not always effectively trading highly productive manufacturing jobs for high-value services jobs.
The second deep economic trend is that commodity production, powered by a commodity boom that has marked the first years of the 21st century, has become more central to the Canadian economy.
Canada and Norway, in particular, have been caught in the grip of both these trends leading away from manufacturing. However, Norway manufactures even less than Canada, because both trends—commodity exports and the shift of economic activity towards services—are proportionately greater in Norway than in Canada.
Yes. The U.K., for example, has shed manufacturing activities as its financial services and oil exports have grown. Canada and the U.K. now both have the same declining share of high- and medium-high-technology manufacturing.
Another example is France. In 1980, high- and medium-high-technology manufacturing accounted for 8.3 per cent of GDP. This share fell to 4.7 per cent in 2008—lower than Canada’s share.
Use the pull-down menu to compare the change in Canada’s share of high- and medium-high-technology manufacturing in GDP with that of its peers.
Germany has overtaken Ireland this year to become the leader on this indicator. Ireland drops to second spot. Although Ireland successfully transformed itself into an export platform for high-technology firms like IBM and Intel, high- and medium-high-technology as a share of GDP in Ireland has been falling in recent years—from 21.8 per cent in 2002 to 12.9 per cent in 2007.