Summary

• Recent concerns about Canada’s industrial competitiveness compared to that in other developed countries, particularly the US, have focused on declines in private sector capital expenditures, especially in asset categories such as machinery and equipment that are critical to improvements in productivity.
• Those calling for stronger government initiatives to improve the investment environment in Canada’s private sector argue that weak investment performance is widespread across domestic industries. This bulletin asks whether post-2014 declines in aggregate capital expenditures in Canada’s private sector are broadly representative of many (or most) Canadian industries, or whether the decline is limited to only a few, albeit large, domestic industries.
• This study finds that while the majority of Canadian industries reduced their capital expenditures from 2014 to 2017, slightly less than half did so between 2014 and 2019.
• While the mining industry (including oil and gas) experienced the largest decline in investment from 2014 to 2019, 7 of our sample of 15 industries experienced a decline over that period.
• Over the 2014–2019 period, a majority of industries decreased their investments in the specific asset categories of machinery and equipment plus intellectual property products.
• The country’s recent weak investment performance, especially in machinery and equipment plus intellectual property products, which is so critical to improving productivity, augurs poorly for future productivity growth in Canada’s private sector and underscores the urgency of tax and regulatory reforms to strengthen incentives for investment and entrepreneurship in Canada’s business sector.