What images spring to mind when you hear the term Canadian cultural sector? Maybe it’s grand Cirque du Soleil performances, the majestic P.E.I. landscape that inspired Lucy Maud Montgomery’s Anne of Green Gables, intricate Indigenous artworks and our talented Canadian singers and actors, like Drake, Justin Bieber, Céline Dion and Dan Levy. There are dozens of American films and television shows you probably didn’t realize were filmed in Canada.
Cultural industries encompass all these activities and much more. In fact, the cultural sector contributed more than $57 billion to Canada’s gross domestic product (GDP) in 2019 and supported nearly 673,000 jobs across the country. EDC Economics dug deeper into the Canadian cultural sector to quantify the total addressable market for our cultural exports. Leveraging detailed datasets from a range of sources, including Statistics Canada, we found a number of interesting insights.
First, between 2010 and 2015, there were more than 55,000 firms in Canada producing cultural goods and services. Of these firms, only slightly more than 3,800, or 7%, actually engaged in exporting activities. While this number may seem very small, it’s still higher than the overall share, where less than 5% of all Canadian goods and services producers exported over the same time period.
These cultural sector firms generated, on average, $16 billion in exports annually between 2010 and 2015. Although cultural goods exporters outnumber services exporters, firms producing cultural services tend to account for greater export revenues—with $8.3 billion generated by cultural services exports, compared to $7.2 billion in cultural goods exports. This is in sharp contrast to the aggregate Canadian numbers for all goods and services exporters.
From a sectoral perspective, the dominance of cultural services exports is perhaps more intuitive when we consider the digitization of media, and the rise of new media services, that undoubtedly make it easier for cultural services producing firms to connect with and sell to consumers in international markets.
While these descriptive statistics are useful, the most eye-opening finding of this analytical exercise was the sheer untapped opportunity that exists to grow Canada’s cultural exports. There are anywhere between 2,400 and 7,800 Canadian cultural goods and services producers who could sell abroad, but aren’t yet engaging in international export activity. Together, they could generate up to $6.4 billion in annual export revenues—and this is a conservative estimate.
These potential exporters share a very similar profile to current exporters, in terms of their size, capital intensity and ownership structures. Simply put, there are thousands of firms in our cultural sector that could benefit from exporting, and we need to be finding ways to encourage them to pursue international trade opportunities.
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Of course, we can’t ignore the pandemic’s impact on the cultural sector. The latest available data tell us that the cultural sector’s contribution to GDP dropped by 10% in 2020. The sector’s revenues recovered slightly in 2021, but at the end of the year were still trending lower than pre-pandemic levels. Lockdowns also impacted jobs. The sector shed nearly 75,000 jobs in 2020, and at the end of 2021, it still supported approximately 17,000 fewer jobs than it did pre-pandemic. It’s likely that companies’ export fortunes were similarly impacted. The true extent of that impact will only be known once updated data are available.
The bottom line?
So, what happens now? Well, the cultural sector did go through something similar in the aftermath of the 2008 Great Recession. But, after a rough few years, the number of businesses providing cultural goods and services increased by more than 60% in 2012, and held steady. While the financial crunch negatively impacted the ability of businesses to stay afloat, once the economic context improved, new companies were set up and the sector as a whole was able to grow.
It’s probable that we’ll see a similar trend in the post-pandemic period. Once again, there’ll be firms who are well-suited to export, but who aren’t yet making a move to grow their international sales. We can already guess that such companies will number in the thousands, and have the potential to increase the sector’s exports considerably. The onus—at least partly—rests on our ability to provide the necessary resources to enable our cultural firms to thrive in a competitive global environment.
This week, a very special thank you to Meena Aier, director of EDC’s Research and Analysis department. On behalf of all of us here at EDC Economics, we wish you a huge congratulation and all the best! We look forward to you rejoining us in 2023. Thanks also to our former colleagues, Beiling Yan and Stephen Tapp, who conducted much of the analysis in this commentary.
As always, at EDC Economics, we value your feedback. If you have ideas for topics that you would like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.
