Canadian Economy

Will Ontario Become the Detroit of Canada?

In my column for the National Post, I look at the decline of Ontario's economy and industry:

After years of lagging the rest of the advanced world, investment in Canadian plant and equipment has at last caught up.

That’s the good news in a recent report by the C.D. Howe Institute. Here’s the bad news. One important province has fallen even further behind: the province of Ontario.

The report by Benjamin Dachis and William Robson tracks Canadian performance by province over the course of the past decade. They observe: “In the early 2000s, the [investment] gap with the [rest of the] OECD widened. For every dollar of new business investment per worker across OECD countries from 2001 to 2005, Canadian businesses invested 94 cents, and for every dollar of investment per U.S. worker, Canadian businesses invested 79 cents.

“Since then, Canada’s performance has improved. From 2006 to 2010, our businesses invested 99 cents per worker for every dollar invested across the OECD, and 88 cents for each dollar invested by U.S. businesses. Preliminary 2011 data show Canadian businesses investing more per worker than the OECD average — 102 cents per dollar across the group — and maintaining the late-2000s average of 88 cents per dollar invested in the United States.”

Investment leads to productivity improvement. Productivity improvement leads to rising standards of living. Yay.

Unless you live in what used to be the economic powerhouse of the country. Then suddenly the outcome becomes grimmer: “Ontario … continues a long-term slide. After getting 77 cents of new investment for every dollar invested across the OECD in the early 2000s (65 against the United States) and 72 in the late 2000s (63 against the United States), Ontario workers may get a mere 70 in 2012 (and only 60 against the United States).”

New Brunswick does little better; Nova Scotia even worse. Quebec has avoided going backward only because it started so low in the first place.

Click here to read the full column.

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David Frum

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