Archived — Key Small Business Statistics - August 2013
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. Although the studies below expand the scope of the definition of small business to include businesses with no paid employees, the self-employed and indeterminate businesses, these are the only studies available that measure the contribution of small businesses to GDP. Due to the different approaches to measuring GDP, estimates vary greatly.
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 9 Table 8 shows small businesses' contribution to GDP (including public and private sectors) for Canada and each province from 2002 to 2011.
|Province||Contribution to GDP (Percent)|
|Source: British Columbia's Statistical Service, Small Business Profile 2012: British Columbia.
Note 1: In these data, small businesses comprise businesses with fewer than 50 employees, plus those operated by the self-employed with no paid employees.
Note 2: Differences between these data and those published in previous versions of Key Small Business Statistics reflect changes to the underlying data on which the numbers are based, as well as a refinement of the methodology used to generate the estimates.
|Newfoundland and Labrador||19||18||21||19||19||18||18||20||19||20|
|Prince Edward Island||32||29||31||30||30||29||29||29||26||32|
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 2011, small businesses accounted for approximately 27 percent of Canada's GDP. This level of contribution has remained consistent over the past decade. The contribution to GDP ranges from a low of 20 percent in Newfoundland and Labrador to a high of 32 percent in Saskatchewan and Prince Edward Island. The largest increase in the contribution to GDP occurred in Saskatchewan, where it was 26 percent in 2002 and 32 percent in 2011. The contribution to GDP decreased most in Nova Scotia and New Brunswick, where it fell 3 percent over the period.
In a recent study, Statistics Canada found that, in 2008, small businesses (here defined as those with 1 to 99 employees) accounted for about 41 percent of private sector GDP. In contrast, large businesses accounted for the most, with 48 percent of GDP, and medium-sized businesses the least, with 11 percent of GDP. Of the total economy, small businesses in the private sector accounted for about 30 percent of GDP, while medium-sized and large firms accounted for 9 and 36 percent of GDP respectively. The public sector accounts for the remaining 25 percent.Footnote 10
Figure 13 compares the share of GDP by size of business across different industries in 2008. Small business GDP contributions were highest from agriculture (92.8 percent), health (82.4 percent), other services (81.0 percent) and education (79.1 percent). In contrast, small businesses contributed far less to the GDP from utilities (2.6 percent), mining (8.6 percent), information (10.3 percent) and manufacturing (25.5 percent).
Source: Statistics Canada, The Growth of Large Firms in Canada, 2008, and calculations by Industry Canada.
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