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Growth rate of capital investment in Canada hits 40-year low: study

Productivity improving machinery, equipment and intellectual property investments are particularly weak.


VANCOUVER —  The growth rate of capital investment in Canada has slowed to a 40-year low, says a study by the Fraser Institute.

The study finds the growth rate of overall investments in Canada between 2015 and 2017 was the lowest since 1970. Overall, gross fixed capital formation grew by only 2.5% from 2015 to 2017, compared to 19.3% from 2010 to 2015, and 25% between 2005 and 2010.

The Canadian public policy think-tank says investment growth in recent years has been especially weak in the business sector, particularly for machinery, equipment and intellectual property, areas of investment that lead directly to improvements in productivity.

Machinery and equipment, as a share of total gross fixed capital formation, fell from 15.7% in 2000 to 8.9% in 2015, the most recent year of available data.

Investments in intellectual property (patents, ideas, innovation) also dropped from a recent high of around 15% in 2000 to 11.5% last year.

“The evidence is clear – the investment climate in Canada is deteriorating, particularly for the corporate sector, which has implications for worker prosperity and living standards,” said Steven Globerman, Fraser Institute senior fellow and co-author of Capital Investment in Canada: Recent Behaviour and Implications.

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