News
Small and medium businesses produce more GDP

May 30, 2011 – A new study from StatsCan, Small, Medium-sized and Large Businesses in the Canadian
Economy: Measuring Their Contribution to Gross Domestic Product in 2005,
provides that agency's first estimates of gross domestic product (GDP) in the
business sector based on firm size.

Small and medium-sized businesses, that is, those with fewer
than 500 employees, accounted for just over one-half of GDP in the
business sector in 2005.

In this study, a firm is defined as an aggregation of all enterprises
controlled through majority ownership by a parent enterprise.

In 2005, small and medium-sized businesses, including unincorporated
businesses, represented 54.3 per cent of GDP produced in the business sector.
Large firms with 500 or more employees accounted for 45.7 per cent.

The share of GDP represented by large businesses varied across the
components of GDP. Large businesses accounted for the majority of
operating surplus and supplementary labour income, but for less than
half of overall labour income and indirect taxes less subsidies.

One reason for this is that small and medium-sized businesses are
more labour intensive. They accounted for 58.1 per cent of the labour income
component of GDP and for 40.1 per cent of the operating surplus, the component
associated with the return to capital.

The share of GDP attributable to large businesses also varied widely
by industry. Large firms accounted for a substantial share of production
(more than 50 per cent of GDP) in utilities, information, mining and oil and
gas, manufacturing, and transportation and warehousing.

Large businesses accounted for a relatively smaller share (less
than 10 per cent of GDP) in construction, other services, education, health, and
agriculture, forestry and fishing.