{"id":27318,"date":"2024-09-12T08:04:05","date_gmt":"2024-09-12T15:04:05","guid":{"rendered":"https:\/\/essential.construction\/news\/c-d-howe-institute-releases-report-on-canadas-capital-crisis\/"},"modified":"2024-09-12T08:04:07","modified_gmt":"2024-09-12T15:04:07","slug":"c-d-howe-institute-releases-report-on-canadas-capital-crisis","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/c-d-howe-institute-releases-report-on-canadas-capital-crisis\/","title":{"rendered":"C.D. Howe Institute releases report on Canada’s capital crisis"},"content":{"rendered":"

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Canada\u2019s Capital Crisis: The Growing Threat of Falling Business Investment to Productivity<\/strong><\/p>\n

Persistently weak business investment is driving a significant drop in Canadian productivity and living standards, according to a new C.D. Howe Institute report<\/a>.<\/p>\n

In \u201cUnderequipped: How Weak Capital Investment Hurts Canadian Prosperity and What to Do about It<\/a>,\u201d William B.P. Robson and Mawakina Bafale identify a troubling trend. Capital available per Canadian worker has been shrinking since 2015. Worse, the gap between investment per worker in Canada and other organization for Economic Co-operation and Development (OECD) countries is widening. Strikingly, Canadian workers now receive just 66 cents of new capital for every dollar their OECD counterparts receive, and a mere 55 cents compared to workers in the United States.<\/p>\n

\u201cInvestment is the lifeblood of productivity growth,\u201d says Robson. \u201cWhen businesses invest, they equip workers with better tools, driving productivity and, in turn, higher earnings and improved living standards. The fact that Canadian workers are increasingly under-equipped compared to their peers abroad signals less competitiveness and lower wages \u2013 a threat to our quality of life.\u201d<\/p>\n

The authors find Canada\u2019s investment in machinery and equipment (M&E) and intellectual property (IP) products is alarmingly low. M&E investment per Canadian worker is only 41 cents for every dollar invested in the US, while IPP investment per Canadian worker is just 30 cents compared to US counterparts.<\/p>\n

Among Robson and Bafale\u2019s recommendations, they outline potential responses to reverse the decline in business investment and boost Canada\u2019s productivity, drawing attention to both immediate and structural reforms:<\/p>\n

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  1. Reform corporate taxes<\/strong> to encourage business growth and scaling.<\/li>\n
  2. Offer tax incentives<\/strong>, such as a general investment tax credit, to spur immediate investment.<\/li>\n
  3. Reduce regulatory barriers<\/strong>, particularly in sectors like fossil fuels, to foster a more investment-friendly environment.<\/li>\n
  4. Promote IP investment<\/strong> through targeted tax incentives to encourage the commercialization of IP products.<\/li>\n
  5. Address policy uncertainty and streamline regulatory processes<\/strong> to create a more stable and predictable investment environment.<\/li>\n<\/ol>\n

    Additionally, the report warns that the looming threat of US protectionism, particularly since 2016, has likely discouraged investment in Canada. Ensuring access is critical to Canadian business competitiveness and long-term economic prospects.<\/p>\n

    \u201cGovernments need to prioritize pro-growth policies that encourage business investment,\u201d warns Bafale. \u201cWithout urgent reforms, Canadian workers risk being relegated to lower-value-added activities, falling further behind their international peers.\u201d<\/p>\n<\/p><\/div>\n