Business investment in key sectors linked with higher living standards significantly weaker in Canada than in U.S. for decades

VANCOUVER—Business investment in high-tech and innovative asset categories that are crucial to raise living standards has been significantly weaker in Canada than in the U.S. for the past 20 years, and the gap has grown larger since 2014, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

VANCOUVER—Business investment in high-tech and innovative asset categories that are crucial to raise living standards has been significantly weaker in Canada than in the U.S. for the past 20 years, and the gap has grown larger since 2014, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Worryingly, Canada has been trailing U.S. investing in those important assets for the past decade or more.”

The study finds that Canada lags significantly behind the U.S. in terms of the share of all business investment going towards the Information and Communications Technologies (ICT) and Intellectual Property Products (IPP) asset categories, the two categories that contribute most significantly to increased productivity and higher living standards.

For example, from 2001 to 2010, only 26 percent of total investment in Canada went to those crucial asset categories, compared to 44 percent in the U.S.

And the gap is growing.

From 2014 to 2021, an even smaller share (23 percent) of total investment in Canada went to these highly-productive asset categories, compared to 44 percent in the U.S.

Conversely, there was relatively much more investment in housing in Canada than in the U.S. from 2001 to 2021, but while Canada suffers from housing unaffordability, residential construction does not contribute significantly to productivity growth.

“The fact that a greater share of investment in the U.S. is concentrated in highly productive asset categories, while investment in Canada is disproportionately focused on housing is a major reason why U.S. productivity has increased faster than in Canada,” Globerman said.

Media Contact:
Steven Globerman, Senior Fellow, Fraser Institute

To arrange media interviews or for more information, please contact:
Drue MacPherson, Fraser Institute
604-688-0221 ext. 721
drue.macpherson@fraserinstitute.org