Opinion: Canada needs better economic data to inform 21st century decision making
The North American Industry Classification System (NAICS) does not have a category for artificial intelligence
In British Columbia and across the country, we need to start measuring the impact of new industries that will help us thrive tomorrow.
It’s one of the most powerful economic decision-making tools in Canada, but how many people know what it means?
NAICS stands for “North American Industry Classification System,” and behind those innocent-sounding words is how all governments in Canada are involved in the economy and the performance of the industrial sector. This is the framework for measuring which sectors are expanding and could accelerate this growth, which are in difficulty and which are in decline.
The only problem is… NAICS reflects the economic reality of the 20th century, not the 21st. Here is how the NAICS codes classify industrial sectors:
A question that comes to my mind: where is the tech sector?
Mainly in professional, scientific and technical services. But part of it is also found in the information and cultural industries. Some are in the making. Some are in the arts, entertainment and recreation. Some are in the management of corporations and businesses. And that’s before we even got into the idea that every business today is a technology business.
If you don’t accurately capture the size of an industry, how do you decide what training and resources it needs? How do you measure the total amount of tax revenue that a sector contributes to financing essential public services?
There are many data categorization issues in British Columbia. Another example is that we have no reliable mechanism to capture the value of our exports of services, including software, much of which is sold as a service (SaaS) these days. It might not matter if services were a small part of our economy, but they account for 75 percent of British Columbia’s gross domestic product and 80 percent of its jobs.
In the past, little data was published on provincial exports of services. In British Columbia, we measured goods exports, therefore, is what has been reported and analyzed, and what has dominated the discussion on industrial sectors in the province, despite the importance of services to the economy as a whole. More recently, the growing economic importance of services has gained attention, with additional reports from Statistics Canada. But there is still little activity in British Columbia on this front – Budget 2021 mentioned a one-year delay in reporting provincial data on services exports.
By flipping the NAICS list, it reveals so much about the past, although it is intended as a tool for measuring the present and mapping the future. Think about one big trend that is impacting all industries: artificial intelligence. AI-based and enabling technologies are the foundation of the economic architecture of the future. But in the NAICS system, there is no way to rank AI companies and jobs, so we don’t have data to measure progress in this area.
This is also important when it comes to recruiting the best foreign talent to work for Canadian AI companies. Because there is no industry or profession “IA” code, it is difficult to obtain immigration work visas for people with essential skills in machine learning, neural network design. , etc. To give praise where it’s due, Quebec managed to fix this problem.
Statistics Canada also deserves credit for having already tackled a similar problem. Although clean tech is not tracked by NAICS, in 2017 the federal government provided $ 14.5 million to launch a Clean Technology Data Strategy. This program aims to provide better data on the industry to strengthen the evidence base for decisions, improve our understanding of the emerging cleantech landscape, and ensure the creation of impactful policies and programs to support the production and adoption of clean technologies.
The work done for clean technologies shows that it is possible to develop and put in place better structures that can allow us to effectively measure new industries. All it takes is a data-driven mindset and a modest investment. Without this investment, it will always be impossible to plan and deliver properly for today’s world, let alone tomorrow’s.