Canada’s digital trade advantage: Strengths, gaps and global competitiveness

Digitalization has reshaped the world of trade. Initially, e-commerce was the prime focus, but a growing share now involves digitally delivered services, including software, research and development (R&D), financial services, audio-visual content, information services and telecommunications. 

According to the World Trade Organization (WTO), as of 2024, digitally delivered services account for 56% of global service exports. In Canada, Statistics Canada estimates that 54% of its exports were digitally delivered, based on the most recent data from 2022.

Over the past decade, Canada’s digitally delivered service exports have grown significantly, reflecting rising global demand for highly skilled, knowledge-intensive activities. Much of the growth has been in professional and technical services, information technology (IT) and R&D-related services.

Canadian imports of digitally delivered services have also increased, particularly in software, data processing and intellectual property (IP) licensing, reflecting Canada’s dependence on international digital platforms and technology ecosystems.

Despite the increase in global exports of digitally delivered services, Canada’s share has been on the decline since 2020, driven by drops in R&D, audio-visual services, architectural, engineering, scientific and technical services.

Figure 1: Total Canadian exports of digitally delivered services and share of the world (%)

To understand Canada’s competitive position within digitally delivered service sectors, EDC Economics conducted a revealed comparative advantage (RCA) analysis.

An RCA measures a country’s export strength—or weakness—in a specific good or service relative to the world average. For example, if Canada exports a lot of one product, compared to how much the rest of the world exports, it has a strong advantage in exporting that product.

We take the analysis further by comparing Canada with countries that have broadly similar economies and growth trajectories. We limited our analysis to 37 other countries that are members of the Organization for Economic Cooperation and Development (OECD). 

The results show that Canada holds a clear comparative export advantage in:

• Research and development services; and
• Audio-visual and related services.

Canada’s advantage in R&D services reflects the strong presence of universities, public research institutions, and highly skilled labour in scientific and engineering fields. For audio-visual services, Canada benefits from competitive production ecosystems, tax incentives for film and media, and geographic, language and cultural ties to the U.S. market.

Our RCA results suggest that Canada’s strengths are rooted in a highly skilled workforce and strong creative and technical capabilities, rather than in digital-driven infrastructure or platform-based business models.

Although Canada demonstrates a clear comparative advantage in R&D services, it captures less economic value than its research capacity would suggest. Canada also captures relatively little income from intellectual property (IP), as it imports more IP than it exports. This reliance on imports has two key implications:

1. Commercialization deficit: Canada generates high-value research, but often fails to commercialize it domestically. As a result, Canadian firms pay foreign licensing fees, while downstream revenues flow abroad.
2. Leakages in innovation value chains: The inability to retain IP ownership limits the downstream gains from Canada’s R&D strengths, weakening the long-term competitiveness of Canadian digital service exporters.

The contrast between the high R&D RCA and low IP RCA illustrates a fundamental asymmetry: Canada is good at producing ideas, but poor at capturing their commercial value.

Building on the RCA findings, several areas stand out as potential growth opportunities for Canada’s digitally delivered trade services:

• Strengthening high RCA sectors: Canada should continue to leverage and expand sectors where it shows strong comparative advantage.
• R&D services: Strengthen domestic commercialization pipelines, university-industry partnerships, and support for scaleups.
• Audio-visual services: Maintain competitiveness in film, digital media, gaming and animation through incentives and talent development.
• Improving IP generation and retention: A key opportunity lies in addressing the country’s persistent IP commercialization gap.
• Expanding information, communication & technology (ICT) and professional services: These categories show strong growth trajectories globally—nearly 27% between 2022 and 2024 (compared to –1.4% for Canada within the same period). Canada could benefit from directing greater investment and policy focus toward expanding these service segments.

Digitally delivered trade services are rapidly reshaping global commerce and Canada has demonstrated clear strengths in research and development and audio-visual services. Yet, these advantages haven’t fully translated into broader export success, particularly in services that support Canada’s traditionally strong sectors, like mining, extractives and agriculture.

Despite our expertise in these fields, the value-added services that could amplify their global reach—including engineering, technical consulting and digital solutions tailored to resource industries—remain underrepresented in Canada’s export portfolio. To unlock greater competitiveness, Canada should focus on expanding digitally delivered services that reinforce our established sectoral strengths, while also addressing persistent gaps in IP commercialization and digital infrastructure. By anchoring growth in sectors where Canada already excels and strengthening the link between innovation and market-ready services, Canada can better capture value in the evolving global digital economy.

As digital trade grows, EDC helps Canadian exporters turn digitally delivered services into global opportunities. EDC can act as a convenor and ecosystem catalyst, bringing together Canadian exporters, global partners and investors to expand market access, reduce risk and help digital firms scale internationally.

EDC offers:

• Market insights and intelligence to identify global digital trade opportunities and assess export readiness
• Financing and insurance solutions tailored to digital-first and service-based exporters
• Connections to international buyers and partners through EDC’s global network
• Advisory support to help manage risks related to intellectual property, data governance and commercialization.

To connect with an EDC export advisor, visit the Export Help Hub and sign up for a MyEDC account.