Key Small Business Statistics - July 2008

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

Gross domestic product (GDP) is a key measure of economic production that 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, for example, revenue, business counts or even employment.

GDP data are not available by firm size, but 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.⁷ Table 10 shows the percentage of small business' contribution to GDP for Canada and each province from 1993 to 2006.

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 2006, small businesses accounted for approximately 23 percent of Canada's GDP. The percentage varies from a low of 15 percent in Newfoundland and Labrador to a high of 27 percent in British Columbia and Prince Edward Island. Over time, the contribution of small businesses to GDP has declined slightly at the national level. In the largest provinces (Ontario and Quebec) and Nova Scotia, the contribution of small businesses has remained fairly constant, while the contribution has been declining in other provinces. This is particularly true for Newfoundland and Labrador and Saskatchewan, whose contributions declined by approximately 30 percent between 1993 and 2006.

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