Sparking business investment is key to recovery report says

But there is disparity across the provinces with Quebec and the Maritimes lagging others

Sparking business investment is key to recovery report says
Steve Randall

More needs to be done to attract business investment to fuel Canada’s recovery from the pandemic-driven economic downturn.

A new report from the Fraser Institute has analysed business investment over the past 30 years and shows variation between provinces with some clear outliers.

Alberta and Saskatchewan had above-average annual growth in investment from 1990 to 2014 with an average 4.4% and 3.3% per year, respectively. But since 2014, investment has stagnated with Alberta showing only a 0.1% average growth annually through to 2018.

BC posted 1.5% annual average growth from 2014-2018 but this has been driven by real estate and construction with other sectors showing relatively weak investment.

For Ontario, real estate and financial services sectors helped boost the overall level of business investment to 1.7% average annual growth from 2014 to 2018.

“Business investment is crucial for improving productivity and increasing living standards, so it’s important to understand exactly how the provinces are faring to attract investment,” said Steven Globerman, a Fraser Institute senior fellow and co-author of Capital Investment in Canada's Provinces: A Provincial Report.

Quebec, Nova Scotia, New Brunswick and Prince Edward Island consistently experienced below-average growth for the entire period (1990 to 2018).

“While the investment laggards are still lagging, even the previous bright spots in Canada’s business investment landscape are currently dim,” Globerman said. “Given how important business investment will be post-recession, policymakers should pursue policies, including implementing regulatory reform and competitive tax rates, that are known to attract investment.”