Wednesday, May 7, 2025

Businesses In Canada Don’t Want To Invest, New Study Reveals

A recent C.D. Howe Institute study revealed that business investment in Canada — which has been weak since 2015 — has pushed down investment per available worker to half of what it is in the United States.

The study compares figures between Canada, the US, and countries that make up the Organization for Economic Cooperation and Development (OECD) and focuses on new investment per available worker. In 2022, workers in Canada will get only 73 cents of new capital for every dollar invested in workers in other OECD countries.

“Having investment per worker much lower in Canada than abroad tells us that businesses see less opportunity in Canada, and prefigures weaker growth in Canadian earnings and living standards than in other OECD countries,” according to the study authored by William B.P. Robson, chief executive officer of C.D. Howe Institute, and Mawakina Bafale, a research assistant.

Authors’ calculations based on OECD Economic Outlook Database No. 111.

This scenario has been unfolding since 2015 following the oil crash of 2014. Capital spending in the mining, quarrying, and oil and gas extraction industry has continuously declined since it peaked in 2014. Investment in structures was slashed by 61% from 2014 to 2021, while investment in machinery and equipment fell 53% during the same period.

The study points out that the recent increase in oil and natural gas prices did not result in a comparable rebound in capital spending. This can be attributed to a “hostile regulatory environment” and skepticism over the future of fossil fuels.

Another contributor to the low business investment — albeit in a more subtle manner, as the study’s authors described — may be low national savings, with an “outsized share” of funds going into residential investment. The government’s in-house spending and transfers to households have promoted consumption. Put together, consumption and residential investment have gone over 85% of GDP for an unprecedented seven years.

Authors’ calculations based on data from the OECD Economic Outlook Database No.111.

Robson and Bakale cited a few more potential factors contributing to the low business investment:

  • Restricted access to finance for small and mid-size firms
  • Uncompetitive corporate income taxes 
  • An uncongenial environment for intellectual property investment
  • Regulatory uncertainty
  • Unpredictable fiscal policy

The authors project that there will be $20,400 of new capital per worker for OECD countries this year, compared to only $14,800 in Canada.


Information for this briefing was found via the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

Giant Mining Encounters Native Copper As Hole MHB-34 Hits 563 Metres Depth

Verses Hits Commercialization Stage With Genius AI Platform

Related News

Tax Cuts Take Center Stage in Canadian Election Campaign

Canada’s federal party leaders are competing to offer voters the most attractive tax cuts ahead...

Tuesday, March 25, 2025, 10:04:00 AM

Petition to Get Rid of Prime Minister Justin Trudeau May Be the Largest Online Petition Ever in Canada — But Can It Succeed?

A groundswell of discontent is sweeping across Canada as citizens express their frustration with Prime...

Wednesday, December 13, 2023, 12:10:00 PM

More Flames? Canada’s Unprecedented Wildfire Crisis Reignites During Summer Months

Canada is grappling with its most devastating wildfire season to date, with over 33.4 million...

Monday, August 14, 2023, 01:41:35 PM

Canadian Manufacturing Sales Declined 1.6% In February

Following a significant increase observed at the beginning of the year, Canadian manufacturing sales dropped...

Sunday, April 18, 2021, 11:12:00 AM

Canadian Constitution Foundation Launches Legal Challenge Against Trudeau’s Invocation of Emergencies Act

The Canadian Constitution Foundation (CCF), an independent, non-partisan charity, has revealed it has started a...

Thursday, February 17, 2022, 02:28:26 PM