The Canadian information and communications technology sector still shows signs of dynamism, despite the roller-coaster rise through the boom-and-bust years 1997 to 2003, says Statistics Canada.
With increases in stock prices, output and employment, high-tech industries were an important engine of economic growth during the latter part of the 1990s, said StasCan's study, called An Anatomy of Growth and Decline: High-tech Industries through the Boom and Bust Years, 1997 to 2003. And the post-2000 slump also had a dramatic effect on the information and communications technology (ICT) sector, which experienced a sharp reversal from which it has not yet fully recovered.
But after considerable retrenchment, ICT firms continued to create new businesses at a rate that exceeded the rest of the business sector.
ICT saw high rates of economic growth as measured by gross domestic product during the late-1990s, when GDP growth in the sector averaged 19 per cent a year between 1997 and 1999. Since 2000, however, GDP growth in the sector has been weak. In 2000, economic output declined 2.6 per cent. In 2002, GDP grew only 1 per cent, and in 2003 it went up 2.5 per cent. Only in 2003 did output in ICT return to its 2000 levels.
ICT employment followed a pattern similar to that of the GDP. Employment growth averaged 13 per cent a year between 1997 and 1999, with employment declining after 2001, particularly in manufacturing.
High rates of entry of new businesses, however, are an indication that the sector's businesses and their financial backers see opportunities to develop new products that may drive growth in the long run. An entry rate refers to new jobs in newly formed businesses.
Between 1998 and 2000, entry rates in the ICT sector were between 25 and 44 percentage points above the rest of the business sector.
After 2000, entry rates remained relatively high in 2001 they were 16 percentage points above the rest of the business sector, and in 2002, they were 14 percentage points higher.
In 2003, entry rates rose to 40 percentage points above the business sector, a rate close to that of the ICT boom years.
Although these high entry rates have not yet translated into strong employment growth, they do suggest firms continue to see new market opportunities, StatsCan says.
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