– The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies through research that is nonpartisan, evidence-based and subject to definitive expert review.
CANADA – Business investment per worker in Canada is at its worst level compared to the United States in more than a quarter century, according to a new C.D. Howe Institute report.
In “Equipment Failure: Feeble Business Investment Costs Canadians their Competitive Edge,” authors William B.P. Robson, Aaron Jacobs and Benjamin Dachis analyze trends in business investment per worker in Canada and abroad, and come away with ominous news about how prepared Canadian workers will be to compete globally.
“We find that after years of narrowing the gap between investment per worker in Canada and abroad, capital investments by Canadian businesses have fallen sharply,” commented Robson. “This means fewer investments in everything from the machinery and equipment workers use in their jobs to the intellectual property that drives productivity.”
He added: “Unfortunately, Canada’s business investment in 2017 looks bleak, particularly compared to the United States, our largest trading partner.”
Canadian workers in 2017 will probably receive just 55 cents of new investment for every dollar received by US workers, down from a high of 77 cents in 2013. Compared to workers in the OECD—a basket of market-oriented economies including Germany, Japan and the UK—Canadians will likely register a dismal 67 cents for every dollar of investment elsewhere.
Within Canada, Alberta and Saskatchewan will see the steepest declines in investment per worker relative to the US. The level of investment in tools and equipment is especially dire in Central Canada and the Maritimes. For every dollar an American company invests, workers in Ontario are set to get 42 cents. In Quebec, that number is a dismal 37 cents.
The authors encourage policymakers to adopt the following measures to promote business investment: trade liberalization, faster and more certain regulatory processes, affordable electricity and lower taxes on non-residential investment.
