An International Comparison of Capital Expenditures
— Published on August 10, 2021
- Capital investment contributes to economic growth and higher standards of living through its link to increased labour productivity and technological change.
- The growth rate of overall capital expenditures in Canada slowed substantially from 2005 to 2019. Furthermore, from 2015 to 2019, the growth rate was lower than in virtually any other period since 1970.
- As recently as 2000 to 2010, overall capital investment in Canada enjoyed a substantially higher growth rate than in other developed countries, but from 2010 to 2019, Canada’s in-vestment growth rate dropped substantially below that of the United States and many other developed countries.
- Further, corporate investment in Canada as a share of total investment was the lowest among a set of developed countries from 2005 to 2019.
- That relatively weak recent performance is mirrored in the lower shares of two key categories of business investment in Canada: machinery and equipment and intellectual property products. While the shares of these two asset categories in total investment was typically lower in Canada than in the US and several other developed countries for which data are available, the shares of these assets in total investment in Canada declined even more relative to the shares of those assets in total investment for the other OECD countries studied post-2010.
- This bulletin’s international comparison supports concerns raised elsewhere about the future competitiveness and productivity performance of Canada’s business sector compared to other developed countries. Against this background, improvements to the environment for business investment in Canada should be a priority for the federal and provincial governments.
More from this study
Subscribe to the Fraser Institute
Get the latest news from the Fraser Institute on the latest research studies, news and events.