Michael Mandel: Fixing Canada’s economic slump? There’s an app for that

“You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass,” warned Carolyn Rogers, senior deputy governor of the Bank of Canada, in a recent speech on Canada’s sluggish economic growth. Inflation, high costs of living, and insufficient growth rates continue to dominate Canada’s political narrative. Since 2019, Canada’s economy has grown by an intolerably slow rate of roughly 1.5 percent a year. That’s faster than European states like the United Kingdom and Germany, but much less than the United States.

Within the overall gloomy picture, Canada’s digital sector has been one of the few bright spots. Since 2019, the output of the information and communications technology sector has grown by 21 percent. Data processing was up by 52 percent, and computer systems design was up by 39 percent.

In particular, within Canada’s digital sector, mobile application development and support has turned out to be a vibrant source of growth. Apps are no longer just about playing games or scrolling through social networks. Instead, people are using apps to connect with their health-care providers, interact with their cars, and for banking and shopping. At the same time, mobile apps have become increasingly important to all sorts of businesses—apps to track trucks, to monitor energy systems and forestry operations. The Progressive Policy Institute has estimated there are 385,000 “App Economy” jobs in  Canada as of April 2024, up 47 percent since 2018.

Oddly enough, given the rapid growth of the digital sector, policymakers seem dead set on retroactively implementing a digital services tax that will harm the Canadian digital economy’s ability to compete at the international level and potentially start a trade war with the United States. Even though the tax is nominally directed towards large companies, there will be a knock-on effect on small- and medium-sized developers, since large digital platforms can serve as a springboard for offering smaller players  access to a secure infrastructure, global consumer base, and wealth of additional resources. In the same vein, the Canadian government has also passed the Online Streaming Act, which imposes new content regulations and financial costs on streaming services such as Disney+, Netflix, Spotify, Amazon Prime Video, and Apple TV+/Music.

A combative attitude toward the global market will likely drive talented young tech workers out of the country at a time when Canada needs every advantage—including a skilled workforce. It goes against Canadian interests to target one of the only sectors that has provided growth and productivity gains in recent years. Supporting the advancements of emerging digital developers is crucial if Canada is going to succeed in a global marketplace, where artificial intelligence, augmented reality and intensive data processing have launched new worlds within mobile app development.

This spirit of entrepreneurship, innovation, and overall growth will continue to encourage Canadian businesses to use mobile applications to connect with customers, employ and empower skilled workers, and strengthen competitiveness in global markets.

While Canada’s overall economy struggles, the App Economy continues to be a shining light on what is otherwise an undetermined economic outlook for Canada. This country cannot afford to develop policies that do not aggressively encourage the growth of its digital economy.