Canada has experienced a sharp decline in business investment per worker over the past decade, in stark contrast to gains in the United States, highlighting a deepening productivity crisis north of the border, a new study suggests.
Inflation-adjusted business investment per Canadian worker fell 18.8 percent from $20,310 in 2014 to $16,493 in 2024, according to findings from the Fraser Institute’s latest study. The United States’s equivalent surged 31.3 percent from $23,263 to $30,555 over the same decade.
The think tank’s study examined business investment per worker from 2007 onward but focused on the 2014–2024 period, when the gap between Canada and the United States widened most sharply.
Worker Growth Versus Investment
Rapid population growth and expanding employment in Canada over the last several years means there are more workers to equip, but overall capital investment hasn’t kept pace, according to study co-author Tegan Hill, a senior economist with the Fraser Institute.
As a consequence, the investment made by Canadian businesses per worker fell from 87.3 percent of the U.S. level in 2014 to 54 percent by 2024. This means that Canadian companies invested 87 cents for each dollar invested in the United States in 2014. This plummeted to just 54 cents for every American dollar by 2024.
Business investment refers to the total spending by private companies on physical and intangible assets used to produce goods and services. This runs the gamut from machinery and tools to technology and non-residential structures such as warehouses.
“The economic well-being of Canadians depends in large part on the strength of business investment, so poor investment performance is bad news for workers,” Hill said in a press release.
The study found the downturn has not been evenly distributed across the country.
Resource-heavy provinces like Alberta, Saskatchewan, and Newfoundland and Labrador historically boasted higher investment levels than the United States, but have seen significant investment declines since 2014.
The United States recorded a real business investment per worker of $23,263 in 2014 compared to Alberta’s $56,401, Newfoundland & Labrador’s $53,779, and Saskatchewan’s $48,715.
That changed during the 2014–2024 time period, however, when the increase in real business investment per worker in the United States surpassed that of any Canadian province.
Five provinces experienced a downturn in growth: Alberta, Newfoundland and Labrador, Saskatchewan, Manitoba, and Nova Scotia. By 2024, the real business investment per worker in the United States reached $30,555, exceeding that of all Canadian provinces apart from Saskatchewan, which stood at $33,386, despite decreasing by more than $15,000 over the decade.
Impact on Living Standards
The surge in U.S. capital spending suggests a more competitive and attractive environment for businesses to deploy capital, the study says. It also means higher living standards because strong business investment is directly linked to higher incomes and employee earnings, the study said.
“More investment per worker means more productive workers, which in turn means higher living standards,” Hill said.
While the report did not examine the link between business investment and living standards, previous research from the Fraser Institute and a 2025 report by the C.D. Howe Institute suggest that declining business investment per worker can weaken living standards by slowing real wage growth, eroding global competitiveness, and lowering the public funding available for critical social services.
Canadian prosperity depends in large part on the strength of business investment, Hill noted in the most recent report.
“The waning ability to attract business investment in Canada should sound alarm bells and prompt policymakers to enact immediate policy reforms to make Canada a more attractive and hospitable destination for investment,” she said.
The report urges policy makers to recognize current investment challenges, understand the causes, and prioritize policies that support business investment in the future.
