Canada’s Growing Investment Crisis: A Decade of Decline
A recent report from the Montreal Economic Institute (MEI) has sounded the alarm on what it describes as a deepening investment crisis in Canada. By comparing foreign and domestic investment data from the end of the Stephen Harper era to the end of the Justin Trudeau era, the findings paint a stark picture of a country struggling to attract and retain business investment.
A Widening Investment Gap
According to the MEI, the gap between Canadian investment abroad and foreign investment in Canada was approximately 14% in 2014. In other words, Canadians invested slightly more abroad that year than foreigners invested domestically. By 2025, this gap had more than doubled, with Canadian investment abroad now sitting around 33% higher than foreign investment in Canada.
While Canadian companies and pension funds investing abroad can signal global competitiveness, the trend raises important questions. Why are returns consistently perceived to be higher abroad than in Canada? And why do Canadian companies invest so much more overseas than foreign companies invest here at home?
Domestic Investment Is Falling
The problem isn’t just about money leaving the country — it’s also about money not being spent within it. Canadian companies are investing less domestically, particularly in the machines, equipment, robots, and assembly lines that drive productivity. Investment in these critical assets fell by 3.3% between 2014 and 2024, despite population growth and modest economic expansion.
The numbers tell a troubling story. In 2014, Canadian companies invested approximately $20,900 per worker. By 2024, that figure had dropped to just $17,600. Business investment per worker in Canada stands at just 55 cents for every dollar invested in the United States.
Canada Falls Behind International Peers
When compared to other developed nations, Canada’s performance is even more concerning. Business investment per worker in Canada fell by 16%, adjusted for inflation, between 2014 and 2024. Over the same period, business investment in the United States increased by 26%. Canada now lags behind the United Kingdom, the European Union, and much of the Organization for Economic Co-operation and Development (OECD).
Research and Development: Another Area of Decline
Research and development spending offers another window into the relative health of an economy. In 2000, corporate R&D spending in Canada was 77% of the OECD average. By 2023, that number had plummeted to 57%.
Perhaps the most striking comparison: Amazon alone now spends almost three times more on research and development than Canada’s entire business sector combined.
Policy Changes Needed to Reverse the Trend
Reversing years of underinvestment won’t happen overnight. The report argues that increased government spending alone is not the answer. Instead, it contends that only the private sector can drive a meaningful recovery — but that won’t happen without significant policy changes at both the federal and provincial levels.
Among the recommended measures are cutting corporate taxes, reducing taxes on top earners, eliminating the industrial carbon tax, and dismantling regulations that discourage business growth. Without bold action, the report warns, Canada’s investment crisis will only worsen, productivity will continue to lag, and Canadians will feel the economic consequences.
