Executive summary
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This paper adds to our understanding of the contributions made to the economy by small, medium-sized, and large businesses in Canada. It does this by examining the shares of gross domestic product (GDP) produced by each of these size groups in the business sector.
Previous studies relied predominately on employment, an input to the production process, rather than on a measure of output. This study overcomes this problem by focusing directly on GDP.
The paper estimates business-sector GDP by business-size class from 2001 to 2008. The contribution of large businesses, that is, businesses with 500 or more employees, to business-sector GDP steadily increased from 45.0% in 2001 to 47.9% in 2008. Small and medium-sized businesses, including unincorporated businesses, accounted for the remaining 52.1% in 2008.
The resource boom plays an important role in explaining how the contribution of large businesses increased. Of the $95.3-billion increase in nominal GDP in mining and oil and gas, $87.0 billion, or 91.3%, came from large businesses. As a result, the share of GDP in mining and oil and gas accounted for by large businesses increased from 69.4% in 2001 to 82.9% in 2008.
These developments in mining and oil and gas outweighed the impact of the declining importance of the manufacturing industry, an industry where large firms have dominated historically. Nominal GDP in the manufacturing sector fell by $6.3 billion between 2001 and 2008. This decline can be accounted for entirely by the $12.9-billion fall in manufacturing GDP in the large-business category. The manufacturing GDP of small businesses actually rose at an average rate of 3.1% per year over the 2001-to-2008 period.
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