Where Canada Stands
In the past few years, entrepreneurs in downtown Toronto have created a host of apps for sale or use globally. Examples include Crowdreel (which categorizes photos on Twitter), Sudoku3D (a 3D take on the classic Sudoku puzzle), Shape Collage (which creates instant photo collages of any shape), and Dictionary.com. Many come out of innovation incubators such as Extreme Venture Partners or Ryerson University’s Digital Media Zone.
Such success stories abound. And it is not surprising to find these examples on university campuses—particularly those that have invested in digital media—and in digital media incubators. But how widespread are they? Are Canadian businesses, as a whole, adopting digital technologies? Are they using such technologies to access global markets to sell both digital and non-digital goods and services?
We have little solid data to answer this question, so we need to take a step backward and first look at where Canada stands in the digital economy. The digital economy can be defined to include all economic activities that the digitization of information permits. This broad definition includes not just digital media-related activities and not just the Internet, but all digital technologies, including mobile technologies.
Canada in the Digital Economy
The evidence is mixed. The Economist Intelligence Unit’s (EIU’s) digital economy rankings placed Canada 11th out of 70 countries in 2010.20 (See Table.) That ranking reflects both the quality of our technology infrastructure and the ability of consumers, businesses, and governments to use that infrastructure to their benefit. (Like any ranking, the method is imperfect, but the result nevertheless gives us a sense of how Canada stacks up.)
Let us first look at the quality of our infrastructure. According to a study by Wolfe and Bramwell, Canada was once a world leader in broadband infrastructure.21 But the EIU noted that all countries have steadily worked to improve their broadband, mobile, and Internet connectivity levels. Many Scandinavian and Asian countries, in particular, now rank higher than both Canada and the U.S. in terms of connectivity and technology infrastructure. And the EIU analysis showed Japan and South Korea as the clear “broadband quality” leaders, due to their widespread adoption of fibre-optic access. Moreover, Canada is one of the few countries in the EIU’s top 20 that has a mobile penetration rate (number of active mobile phone numbers as a share of the population) of less than 100 per cent.
American businesses invest in information and communications technologies at a higher rate than Canadian businesses do, which partly accounts for the Canada–U.S. productivity gap.
How well are Canadians using the technology infrastructure? Canadian consumers are heavy Internet users relative to their global peers, as research organization comScore has reported.22 Still, compared with consumers in the U.S.—a world leader when it comes to adopting technology—Canadians are less likely to buy items online. (One study attributed this largely to the fact that Americans are more likely to have a university degree than are Canadians.23) And in terms of digital skills and literacy, the EIU report gave Canada only a mediocre ranking.24
On the business side, businesses as a whole do not appear to be adopting leading-edge technology practices. The Institute for Competitiveness and Prosperity found that, on average, Canadian companies invest only about two-thirds as much in information and communications technologies as U.S. companies do.25 This lag partly accounts for the Canada–U.S. productivity gap. In addition, our peers in Northern Europe and parts of Asia appear to be leaders in terms of e-payments and e-invoicing systems (as replacements for cheques and paper invoicing). On the bright side, the EIU noted that Canada ranks well—ahead of the U.S., in fact—in terms of creating a solid business environment.
According to the Wolfe and Bramwell study , Canada was one of the first countries to develop an information economy strategy in the 1990s. However, most countries now have digital economy strategies, and Canada has “failed to update this strategy in response to dramatic technological and market changes.”26 Ottawa said it would announce a new digital economy strategy in the spring of 2011 and included a few digital economy‑related announcements in its March 2011 budget. However, the May 2011 election makes that budget irrelevant, and may delay or derail the overall digital economy strategy.
In short, Canada has a relatively solid foundation in terms of both its technology infrastructure and its ability to use it. However, concerted investments by others mean that this country has lost its role as a clear global leader. Technologies continue to change rapidly. Moreover, digital tech-savvy Canadian entrepreneurs do not necessarily reflect widespread company practices.