Business investment in Canada grew at an average annual rate of 0.99 per cent between 2018 and 2025, a pace that barely kept up with depreciation of existing capital assets, while Alberta, Saskatchewan, and Newfoundland and Labrador recorded net declines in the value of non-residential business investment, according to a study released by the Fraser Institute.
The report says national business investment in non-residential assets, including plants and factories, machinery and equipment, and computer technology, was also insufficient to keep pace with employment growth over the period, resulting in a decline in business investment per worker across Canada.
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, Montreal, and Halifax and ties to a global network of think-tanks in 87 countries
Study measures investment after depreciation
The study, Capital Investment by Province: An Update, examined residential and non-residential investment across the provinces from 2018 to 2025 after accounting for depreciation. It found Alberta posted an average annual decline of 1.05 per cent in the value of non-residential business investment over the period, while Saskatchewan recorded a decline of 0.44 per cent and Newfoundland and Labrador declined by 0.67 per cent.
According to the report, those results indicate investment in those provinces was not enough to offset the normal depreciation of existing non-residential capital assets.
"Business investment in non-residential assets such as plants and factories, machinery and equipment, and computer technology is crucial for improving worker productivity and ultimately living standards, so it's important to understand the performance of Canada as whole and the provincial economies with regard to such investment," said Steven Globerman, author of Capital Investment by Province: An Update.
Investment per worker declined nationally
The report also assessed business investment relative to employment growth, identifying that measure as an indicator of investment available per worker.
Nationally, the study found business investment excluding residential housing did not keep pace with employment growth between 2018 and 2025, meaning business investment per worker declined during the period.
The report says the trend was more pronounced at the provincial level, with eight of the country's 10 provinces recording business investment that failed to match employment growth.
Among those provinces, Alberta recorded an average annual decline of 2.8 per cent in business investment after accounting for both depreciation and employment growth. Saskatchewan recorded a decline of 1.9 per cent, while Newfoundland and Labrador posted a decline of 1.5 per cent on the same basis.
Productivity concerns highlighted
The report says increasing business investment in assets such as plants, machinery, equipment and technology can improve worker productivity by providing employees with more productive capital.
"The national decline and pronounced declines in several provinces in the value of business investment per worker indicates potential stark productivity problems continuing and potentially worsening in the future," Globerman said.
The Fraser Institute said the study measured changes in both residential and non-residential investment across the provinces after accounting for depreciation over the 2018-to-2025 period.
Call for policy reforms
"Given the importance of business investment to improvements in the Canadian living standard, policymakers must prioritize policy reforms to make the country more attractive to private business investment."