Toronto Metropolitan University – The Dais – Waiting For Takeoff, December 2024: “Executive Summary – Artificial intelligence (AI) is the most discussed technology of recent years. Advocates promise that it will help overcome productivity challenges and radically transform the economy through increased wage gains and higher economic output, among other benefits. This conversation about the intersection of AI and productivity growth is particularly important in Canada today, amidst concern about a “productivity crisis.” Productivity is a key ingredient in future economic growth and standard of living, as it offers the potential to increase output without increasing inputs—like worker hours, natural resources, and investment costs. Yet, in past waves of innovation, we have seen patterns where a technology achieves widespread adoption, without any evidence of it increasing productivity. The late American economist Robert Solow famously remarked that “You can see the computer age everywhere but in the productivity statistics.” Will this time be different? Understanding whether AI will follow the same trends as previous waves of innovation is essential. Gaining this understanding will inform economic policy, business investment decisions, workforce planning, and broader discussions about AI’s benefits and drawbacks. In this study, we tackle the critical question of whether AI adoption leads to productivity improvement at the firm level. Key Findings – Using high-quality data from Statistics Canada’s Survey of Digital Technology and Internet Use and the Business Research Microdata, accessed through the Canadian Research Data Centre Network, we looked at firms that adopted AI between early 2020 and late 2021, to understand whether the adoption of AI technologies translated to short-term firm-level productivity gains. When we define “short-term” as one to two years post adoption, we find the following:

• Evidence of productivity gains from AI use is mixed. There is no conclusive evidence of a strong positive or negative relationship between AI adoption and short-term productivity improvement.
• There was no significant relationship between the adoption of AI in this period and either Total Factor Productivity (TFP) levels or TFP growth (efficiencies in output production which do not stem from added labour or capital inputs) in the short-term.
• The set of firms that adopted AI were already more productive than their peers, but the decision to adopt AI did not increase the rate at which their productivity grew.

While this is the first report in Canada to provide a look into the relationship between AI adoption and firm productivity, the overall rates of AI adoption in the Canadian economy remain low, and at an early stage. As applications in AI become more widespread and are increasingly embedded across various operations, there could be an increased chance for potential efficiencies to translate into increased productivity…”