Archived — Key Small Business Statistics - July 2012
What is the contribution of small businesses to Canada's gross domestic product?
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Gross domestic product (GDP) is a key measure of economic production that can be used to compare any two industries' value added, i.e., the value that an industry, through its activities, adds to its inputs. The main advantage of the GDP concept is that it avoids double counting; hence, it is considered superior in gauging economic performance over, for example, revenue, business counts or even employment.
The Government of British Columbia's Statistical Service (BC Stats) has developed a method to determine the small business contribution to GDP by province using the income-based approach of the System of National Accounts.Footnote 7 Table 9 shows the percentage of small businesses' contribution to GDP (including public and private sectors) for Canada and each province from 2001 to 2010.
|Province||Contribution to GDP (Percent)|
Source: British Columbia's Statistical Service, Small Business Profile 2011: British Columbia.
|Newfoundland and Labrador||20||19||18||21||19||19||18||18||20||19|
|Prince Edward Island||33||32||29||31||30||30||29||29||29||26|
BC Stats' definition of small business is restricted to businesses with fewer than 50 employees, plus those operated by the self-employed with no paid employees. By this definition, it is estimated that, in 2010, small businesses accounted for approximately 27 percent of Canada's GDP. The percentage varies from a low of 19 percent in Newfoundland and Labrador to a high of 30 percent in Saskatchewan and British Columbia. Over the 2001 to 2010 period, the contribution of small businesses to GDP increased slightly at the national level from 26 percent in 2001 to 29 percent in 2007 and 2008 and to 28 percent in 2009 and 27 percent in 2010. The largest increase occurred in Saskatchewan, where the GDP contribution was 26 percent in 2001 and 35 percent in 2009. The GDP contribution decreased most in Prince Edward Island, where it fell from 33 percent in 2001 to 26 percent in 2010.
Figure 9 shows the contribution to GDP by firm size for only one year, 2005, using a different methodology. In a recent study, Statistics Canada found that small businesses (here defined as those with 1 to 100 employees) accounted for about 42 percent of private sector GDP and SMEs (those with 1 to 499 employees) accounted for about 54 percent (Figure 9.1). Industry Canada's estimates indicate that, when taking into account both the public and the private sectors, small businesses in the private sector account for about 31 percent of GDP, while medium-sized businesses account for 9 percent (Figure 9.2).
Source: Statistics Canada, Small, Medium-Sized and Large Businesses in the Canadian Economy: Measuring Their Contribution to Gross Domestic Product in 2005, June 2011; Industry Canada calculations.
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