The modern economy rewards innovation, creativity and the willingness to build something new. This is a critical foundation for sustainable and shared prosperity.
Entrepreneurship activity is an important building block for the economic growth and job creation that are needed for Canada’s future prosperity.
Canada ranked 15th in early-stage entrepreneurial activity out of 43 countries assessed by the Global Entrepreneurship Monitor.
Top 10 countries in the Global Entrepreneurship Monitor’s assessment of total early-stage entrepreneurial activity.
Canada ranked 15th with 15.6% of adults engaged in early-stage entrepreneurial activity in 2020, falling from the top 10 on this indicator between 2019 and 2020. This is likely due to entrepreneurial activity impacted by the pandemic. High-income countries were more likely to experience decline in entrepreneurial activities during the pandemic compared to lower-income countries. Despite modest declines, a robust recovery is expected in future years.
Business spending on research and development is critical to creating an attractive environment for international talent, and for supporting productivity and competitiveness. It is an indicator of the private sector’s support for innovation and whether firms are investing in developing new ideas, products, processes, or services.
Canada ranked 24th out of 34 OECD countries on business spending on research and development in 2019.
Canada’s business spending on research and development was 0.81% of GDP in 2019.
Meet a federal government target to keep pace with the OECD average on business spending on research and development.
Threshold: OECD average for business spending on research and development was 1.76% of GDP in 2019.
Canada remains well below the OECD average on business spending on research and development. It fell in its ranking between 2018 and 2019 from 21st to 24th among OECD countries.
Innovation is directly related to long-term economic growth as it bolsters productivity and supports high-value, high-reward work in Canada. Canada’s ability to innovate drives its competitiveness, standard of living, and preparedness for the future.
Canada ranked 16th of 132 countries in the Global Innovation Index in 2021.
Top 10 countries in the Global Innovation Index.
Canada improved its ranking on the Global Innovation Index between 2020 and 2021. It is positioned with countries that have performed above expectations on innovation for their level of economic development. However, the index notes that Canada is also among countries that struggle to obtain the right balance between levels of investment and innovation results.
As Canada’s population ages, and the share of the population at working age shrinks, enhancing productivity is key to maintaining economic growth. Productivity is an important driver of level of attractiveness for investment, and global competitiveness.
Canada ranked 16th out of 38 OECD countries on productivity in 2020.
Canada’s GDP per hour worked was $56.61 USD in 2020.
Top 10 OECD countries on productivity.
Threshold: France was 10th in the OECD with GDP per hour worked of $67.60 USD in 2020.
While Canada’s labour productivity increased in 2020, this was largely due to impacts related to the pandemic. Canada continues to experience slow growth in labour productivity overall, and remains below the target.
A growing population, with increased international talent and support for local entrepreneurs, can enhance business growth. High-growth firms drive wealth and job creation.
There were 12,970 high-growth firms in Canada in 2019.
Meet a federal government target to double the number of high-growth firms in Canada between 2015 and 2025.
The number of high-growth firms has increased, increasing from 11,140 in 2016 to 12,970 in 2019. However, this rate of increase is not high enough to meet a federal government goal to double the number of high-growth firms in Canada.
As Canada pursues a path of population growth its population will become more diverse, and this diversity must be mirrored in leadership. Diversity contributes to a firm’s productivity and innovation, especially when it comes to diversity in leadership.
Among public companies that disclosed diversity information, women held 17% of board seats in 2020. Additionally, other groups were even more significantly under-represented: racialized individuals held 4% of board seats, persons with disabilities held 0.3% of board seats and Indigenous peoples held 0.3% of board seats.
Meet federal government “50-30 challenge” objective of representation of 50% of women and 30% of other under-represented groups on boards.
Canada has fallen very short of its target for diverse representation on boards, with significant underrepresentation among women, racialized people, Indigenous peoples and people with disabilities. While there has been increased attention on this issue and some progress in recent years, the gap in representation remains large.
The growth and development of the Indigenous owned and controlled business sector and economy is essential to fostering reconciliation with Indigenous peoples and is a key driver of the economic future of Canada, particularly as the Indigenous population continues to grow at a faster rate than Canada overall.
The approximate value of the Indigenous economy was $32 billion in 2016.
Growing the Indigenous economy to $100 billion annually.
There have been positive steps towards growing the Indigenous economy, including higher rates of new business creation among Indigenous peoples compared to the population overall. The launch of a federal 5% Indigenous business procurement target is an important step forward, but barriers remain and more action is needed to meet the annual target of $100 billion.
GDP per capita reflects total economic output per person and is an important measure of Canada’s overall prosperity, living standards, and economic well-being.
Canada ranked 17th out of 38 OECD countries on GDP per capita in 2020.
Canada had a GDP per capita of $46,051.35 USD in 2020.
Top 10 OECD countries on GDP per capita.
Threshold: Sweden was 10th with GDP per capita of $55,148.58 USD in 2020.
Canada's GDP per capita decreased in 2020, similar to most OECD countries, as a result of the impacts of the pandemic. Canada's GDP per capita in 2020 was slightly higher than the OECD average. Fully leveraging the talent and skills of immigrants in the labour market is one important path to improving GDP per capita in Canada.
Addressing high levels of household debt can improve economic growth and reduce barriers to Canadians’ choices on family size. Household debt reflects the economic vulnerability of households and their ability to weather an economic shock, and represents a risk to the overall economy.
Canada ranked 25th out of 33 OECD countries on household debt in 2019.
Canada's level of household debt was 186.2% of net household disposable income in 2019.
OECD average on household debt levels.
Threshold: OECD average level of household debt was 121% of net household disposable income in 2019.
Canada's household debt levels are significantly higher than in most OECD countries. Debt as a percentage of net household disposable income has steadily grown over the past two decades. It is important to note that mortgages – a productive type of debt that builds wealth – make up a significant proportion of household debt in Canada.
Reducing inequality as Canada grows is necessary to building shared prosperity. Income inequality poses a social, economic and political risk to OECD countries, including Canada, and is associated with decreased access to opportunity and poor health and social outcomes.
Canada ranked 16th out of 34 OECD countries on income inequality in 2018.
Canada’s level of income inequality using the Gini coefficient was 0.303 in 2018 (0 represents perfect equality and 1 represents perfect inequality).
Top 10 most equal OECD countries.
Threshold: Austria was 10th in the OECD with a Gini coefficient of 0.28 in 2018.
Canada's level of income inequality remains below the target. Before the pandemic, there had been some slight decreases in income inequality. However, the gap between high-income and low-income individuals in Canada increased due to the pandemic.
Competitiveness is a driver of Canada's economic prosperity and signal of Canada’s attractiveness as a global jurisdiction and immigration destination. It reflects Canada’s ability to attract investment, foster innovation and spur economic growth.
Canada ranked 14th out of 141 countries in the 2019 edition of the World Economic Forum’s Global Competitiveness Index.
Top 10 in the Global Competitiveness Index.
Canada remains a competitive economy, but its ranking has declined in recent years. There is opportunity for improvement.
