1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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Boosting productivity through greater small business dynamism in Canada

Small business dynamism is a feature of an SME sector that contributes to overall productivity growth, not an end in itself. Such dynamism increases productivity growth by reallocating resources towards more productive firms and strengthening the diffusion of new technologies. Small business dynamism in Canada has declined in recent decades, as in other OECD countries, but overall it remains in the middle of the range, with some indicators above average and others below. Framework economic policies are generally supportive of small business dynamism, especially labour regulation, but there is scope to reduce regulatory barriers to product market competition. Canada has many programmes to support small businesses. Some of the largest programmes are not well focused on reducing market failures. Focusing support more on reducing clear market failures would increase the contribution of these programmes to productivity growth and living standards. This would likely entail redirecting support from small businesses in general to start-ups and young firms with innovative projects, which would boost small business dynamism. This Working Paper relates to the 2016 OECD Economic Survey of Canada (www.oecd.org/eco/surveys/economic-survey-canada.htm)

English French

Keywords: entry, exit, start-ups, SMEs, venture capital
JEL: O51: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Economywide Country Studies: U.S.; Canada; D52: Microeconomics / General Equilibrium and Disequilibrium / Incomplete Markets; L26: Industrial Organization / Firm Objectives, Organization, and Behavior / Entrepreneurship; H25: Public Economics / Taxation, Subsidies, and Revenue / Business Taxes and Subsidies including sales and value-added (VAT)
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