Canadian GDP would take a big hit without small businesses
There are many ways to tell whether or not your nation’s economy is performing well. For instance, people can take note of the unemployment or inflation rates, poll their follow consumers about how optimistic they are, or take a host of other actions.
However, many financial experts and other individuals take a look at the country’s gross domestic product (GDP) to determine the trajectory of the nation’s fiscal situation. In layman’s terms, the number represents the value of all the goods and services produced in the country over the year.
As such, there are so many things that have the potential to affect the GDP—small and medium-sized businesses (SMBs) being one of them. Think about all of the items and services that would not contribute to this sum if startups weren’t considered. The financial landscape of Canada would be virtually unrecognizable.
The role of SMBs
There are no buts about it—SMBs are absolutely essential to Canada’s strong GDP. Without their influence, the country likely wouldn’t be able to enjoy the stable economy we’re accustomed to, and we’d lose our status as a big player on the world stage.
Because there are hundreds of thousands of SMBs in Canada, each of which offers a variety of goods and services and brings in a substantial amount of revenue annually, taking them out of the picture would render the GDP laughably weak. This then means that SMBs are critical for not only Canada’s international status, but for the economic situation of each and every citizen. Without a strong GDP, we wouldn’t be able to trade easily with other nations, which would result in many items’ disappearing from our daily lives.
Down to the numbers
A more analytical approach might break the effect on the GDP down to the fact that, as the Canadian Association of Business Incubation reported, 26 per cent of Canada’s GDP is contributed by companies with fewer than 50 employees on the payroll.
This figure varies greatly from province to province, meaning that there would be larger consequences on some areas. For instance, according to Statistics Canada, in 2010, SMBs in both Saskatchewan and British Columbia made up 30 per cent of the region’s GDP. This can be compared to the 19 per cent of the GDP that came from SMBs in Newfoundland and Labrador.
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