cover image: The Weakness of Corporate Investment in Canada, 2001–2021: Identification and Assessment

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The Weakness of Corporate Investment in Canada, 2001–2021: Identification and Assessment

24 Sep 2024

  • From 2000 to 2014, corporate investment as a share of the Canadian economy equaled or exceeded the share in the United States. The opposite was the case from 2015 to 2021.
  • However, corporate investment in two asset categories—Information and Communications Technology (ICT) and Intellectual Property Products (IPP)—as a share of the economy was lower in Canada than in the United States over the entire period from 2000 to 2021, and particularly after 2014.
  • As investments in Information and Communications Technology and Intellectual Property Products are especially important contributors to productivity growth, weak investment in these two asset categories has arguably contributed to Canada’s relatively slow rate of growth in productivity in recent years and raises concerns about productivity growth going forward.
  • Investment in residential dwellings as a share of the economy in Canada has consistently exceeded the comparable share in the United States; the difference became dramatically larger after 2014.
  • The data suggest that increased investment in residential dwellings as a share of the economy in Canada may have crowded out some investment in Information and Communications Technology and Intellectual Property Products. This inference is consistent with data showing a much faster appreciation of residential housing prices in Canada than in the United States over the sample period and particularly after 2014.

Authors

Steven Globerman

Pages
2
Published in
Canada

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