Canadian business investment per worker plummeted by 20 per cent over a 15-year stretch, according to new Statistics Canada research that suggests weaker competition is partly to blame.
The report finds for every worker, businesses invested $628.80 less in their companies in 2021 than they did in 2006.
The decline was more significant in large and medium-sized companies and foreign-controlled businesses, though itB次元官网网址檚 unclear why that was the case.
The report attributes nearly one-third of the drop to declining entry rates, or the number of new companies starting up by industry.
B次元官网网址淓conomists always believe that competition promotes investment. When you look at our data, thereB次元官网网址檚 a decline in the share of new firms,B次元官网网址� said Wulong Gu, the studyB次元官网网址檚 author.
Canada is struggling to increase labour productivity amid low business investment, an issue that has been raised frequently by business groups and economists in recent years.
Capital investment, which refers to spending on everything from real estate to machinery, helps businesses grow and make their employees more productive.
ThatB次元官网网址檚 why economists argue capital investment is critical to growing the economy and improving living standards.
The report says the slowdown in investment coincided with a shift toward intangible assets such as brand equity and patents, which national statistical agencies donB次元官网网址檛 record as investments.
However, that shift doesnB次元官网网址檛 explain why business investment in Canada lags that in other countries, said Wu, because intangible assets are not recorded as investments elsewhere, either.
The study also found no relationship between profitability and business investment, which Wu said was B次元官网网址渟urprising.B次元官网网址�
CanadaB次元官网网址檚 competition watchdog released a report in the fall that found competition weakened over the previous two decades as profits and markups rose.
The Liberal government recently introduced several changes to the Competition Act after pledging to modernize the countryB次元官网网址檚 competition law.
The Competition Bureau welcomed the amendments, which were inspired by its recommendations, but itB次元官网网址檚 hoping for even more ambitious changes.
In a news conference earlier this month, Finance Minister Chrystia Freeland weighed in on the issue of business investment and made a plea directly to CEOs to spend more on their businesses.
B次元官网网址淲e believe in you. We want strong Canadian-headquartered companies in this country,B次元官网网址� Freeland said. B次元官网网址淲e need you to be investing in the productive capacity of this country, whatever sector youB次元官网网址檙e in.B次元官网网址�
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