B.C. lags behind neighbours on key measure of economic well-being

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Appeared in Business in Vancouver, February 28, 2023
B.C. lags behind neighbours on key measure of economic well-being

By global standards, British Columbia is prosperous. Like residents of all Canadian provinces, British Columbians enjoy living standards and access to economic opportunity that most of the world envies.

Still, there are important reasons not to be sanguine about the state of B.C.’s economy. If we narrow our analysis from the global scale to a regional one, it becomes apparent that B.C. is an economic laggard compared to most of its neighbours.

A recent study published by the Fraser Institute assessed the state of B.C.’s economy compared to Alberta and six nearby U.S. states. Specifically, it compared Gross Domestic Product (GDP) per person—a broad measure of overall production and income and the single indicator that economists most use to compare the prosperity and economic well-being of different jurisdictions. Basically, it measured the prosperity gap between the jurisdictions. The study used 2019 (the last pre-pandemic year) as the year of analysis, as the long-term effects of the pandemic, recession and recovery remain unknown.

Simply put, B.C.’s results were disappointing.

The province’s per-person GDP was higher than Montana and Idaho, but only barely—the gap between B.C. and last-place Idaho was $4,200 (all figures in Canadian dollars) per person. B.C. lagged far behind all five of the other jurisdictions measured in the study. Oregon, which sat just above B.C. in the rankings, had a per-person GDP $11,900 (or 20 per cent) higher than B.C.

Moreover, despite low oil prices during the late-2010s, which led a steep recession and weak subsequent economic recovery, Alberta was a much richer place than B.C. in 2019 with a per-person GDP more than 30 per cent higher than B.C.’s. The prosperity gap with B.C. was even larger for Washington State, California and Alaska.

In addition to B.C.’s disappointing results in 2019, there’s reason to be concerned about the future. The OECD projects that Canada will have the weakest long-term economic growth among all advanced economies in years ahead. And another recent study published by the Fraser Institute showed that Canada has slid out of the top 10 countries in the world in terms of the overall freedom of its citizens. Freedom remains a key driver of prosperity, so this is another development with worrying possible implications for future growth in B.C. and beyond.

Make no mistake, B.C. is a prosperous and free place, and a wonderful place to live and work. These things should not be taken for granted. Nevertheless, a closer look at regional data and other recent developments suggests that within its own economic region, B.C. is a laggard. And there are good reasons to worry about the economic future of the province.

Despite all the province’s advantages and its status as a great place to live, we can and should be doing better.

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