Capital Investment in Canada: An International Comparison
— Published on October 11, 2018
- 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 2017 compared to earlier periods. Furthermore, from 2015 to 2017, 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 2015, Canada’s investment growth rate dropped substantially below that of the United States and several 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 2016. Canada’s relatively weak corporate investment performance was particularly marked from 2010 to 2016.
- 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. From 2010 to 2016, the shares of these assets in total investment in Canada declined relative to the shares of those assets in total investment for the other OECD countries studied.
- 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.