According to a study by the Montreal Economic Institute (IEDM), the Canadian economy lags behind the other seven major world powers and is less productive due to a lack of investment.
Each hour worked in Canada would have been worth US$53.30 in 2022, ranking the country second to last among the G7 countries, just ahead of Japan.
This compares to the G7 average of $63.90 in value added per hour worked. The United States tops the chart at $72.10.
Thus, Canada would not be able to generate as much economic wealth per unit of time as its southern neighbor.
“The lag in productivity in Canada is worrying and has a direct impact on our standard of living,” said Renaud Brossard, Senior Director of Communications at MEI and one of the study’s authors.
“The less value an hour’s work creates, the less earning potential it has,” he added.
In particular, this drop in productivity could lead to a loss of competitiveness and limit employment growth.
According to the report, the lack of private investment would mean that this productivity would be slightly lower. For example, Canada ranked last among comparable economies in private non-residential investment per job in 2018.
“Canada’s regulatory and tax system is not attractive enough for investors,” argues Mr. Brossard. “And our governments may try to solve this problem with subsidies, but their investment capacity remains very small compared to that of the market.”