Are we fostering ‘fake’ startups? Separating fact from hyperbole

Diane Francis loves to stir the pot. Her column, Grants to ‘fake startups’ won’t build Silicon Valley North. They will only spawn Bombardier-like boondoggles, got a lot of blood boiling – particularly in Atl. Canada for whom she lobbed some particular verbal grenades.

All I can say is that in the past few years, this region has done – the Maritimes – has done particularly well when it comes to the contribution of the IT sector to GDP growth. New Brunswick and Nova Scotia had a few years in the valley but between 2014 and 2016 the two provinces are leading the country for IT GDP growth.  Note that I excluded telecommunications (the C in ICT) because most of that GDP is from your spending on Netflix and cellphones.  I also exclude IT manufacturing (computers, etc.) because like just about all other non-natural resources-based manufacturing it is most done in Quebec and Ontario.

With these caveats something seems to be working right now in the Maritimes – fake companies or not. Maybe it is fake GDP?it2

It is important to put  things in perspective.  The entire IT sector in New Brunswick (as defined above) contributed $370 million in real GDP to the province in 2016 – or 1.4% of total GDP.    To put that in context, if the IT industry doubled its GDP contribution in a single year it would only boost provincial GDP by 1.4%.   We need, IMO, to get back to 2-3% GDP growth per year in this province so don’t expect the IT industry to do the heavy lifting.