Key Small Business Statistics - July 2005

What is the contribution of small businesses to Canada's gross domestic product?

Gross Domestic Product (GDP) is a key measure of economic production, which can be used to compare any two industries' value added. Value added is 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. Because it measures unduplicated value added, GDP is considered more useful for gauging economic performance than, say, revenue, business counts or even employment.

The Organisation for Economic Co-operation and Development (OECD) has published estimates of the contribution to GDP by small and medium-sized businesses in member countries. Its 2000 Canada profile (based on 1998 data) states that 43% of private sector GDP can be attributed to SMEs, where SMEs are defined as businesses with fewer than 500 employees.

In Canada, 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.⁵ The percentage of small business's contribution to GDP for Canada and each province from 1993 to 2003 is shown in Table 9.

Table 9: Small Business Contribution to GDP by Province, 1993 to 2003^1,2

Province	Contribution to GDP (percent)
	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003
Source: BC Stats. 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 are due to revisions made to the overall GDP estimates.
Newfoundland and Labrador	21	20	21	21	21	19	17	17	18	16	15
Prince Edward Island	34	33	34	28	27	26	25	30	28	31	27
Nova Scotia	24	24	27	26	24	23	22	25	24	24	24
New Brunswick	26	25	27	25	24	23	22	23	23	24	24
Quebec	26	26	27	26	24	23	23	25	25	26	26
Ontario	22	22	24	23	22	22	22	22	23	23	23
Manitoba	24	24	25	26	24	22	21	21	22	23	23
Saskatchewan	29	27	29	31	26	27	25	22	23	24	23
Alberta	26	25	28	26	26	27	24	22	23	27	24
British Columbia	32	31	32	31	30	29	27	27	28	30	30
Canada	25	24	26	25	24	24	23	23	24	25	24

BC Stats' definition of small business is limited 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 2003, small businesses accounted for approximately 24% of Canada's GDP. The percentage varies from a low of 15% in Newfoundland and Labrador to a high of 30% in British Columbia.

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5. A background note describing the method in somewhat greater detail is available upon request by contacting Customer Services at sbrp-rppe@ic.gc.ca.