The Growth and Development of New Economy Industries

Abstract

This study explores the industrial dimensions of the New Economy. It examines the growth and development of industries that provide the technological and scientific foundations for the New Economy — a collection of information and communications technology (ICT) industries, both in services and in manufacturing, along with a larger group of science-based industries, which includes most elements of the technology sector, along with many other goods and service industries that make proportionately large investments in research and development (R&D) and human capital. Focusing on the 1980s and 1990s, our comparative profile examines whether the production and performance characteristics of ICT and science industries differ from more traditional elements of the business sector. A range of production characteristics and performance measures are examined. We explore differences in labour markets by examining the knowledge-intensity of the (industry) workforce, the growth in labour quality, and patterns of remuneration. Our analysis of capital structure includes investment-to-GDP and investment-to-labour ratios, based, first, on all capital investments, and second, on a subset of high-technology assets (computers, software and communications equipment). Patterns of R&D expenditure are also evaluated. Our exploration of industry performance is based on patterns of labour and multifactor productivity. Differences in corporate profitability are examined, focusing on margins and rates of return. We also investigate Canada’s trade in ICT and science-based commodities.