Key Takeaways
- Business investment per Canadian worker fell steadily from 2015 to 2024, marking the worst decade‑long slump since the Great Depression.
- Canada’s GDP per capita grew only 0.5 % annually over the same period, the poorest performance in nearly a century.
- An RBC analysis shows a net outflow of more than $1 trillion in capital, with Canada exporting twice as much foreign direct investment as it attracted.
- The decline is especially sharp in oil and gas, but opportunities exist in LNG, electricity, mining, agriculture, space and defence if policy enables ambitious projects.
- Prime Minister Mark Carney’s rhetoric targets the right issue—boosting investment—but turning talk into concrete capital inflows remains the central challenge.
Prime Minister Carney’s Focus on Investment
Prime Minister Mark Carney repeatedly emphasizes the need to revive Canada’s investment climate, recalling the eras when plentiful capital built infrastructure, factories and technological capacity. He paints a picture of a future where Canada renews that historic momentum, arguing that stronger investment will raise productivity and living standards. His speeches often cite the Canada Strong Fund as a vehicle to attract billions of foreign dollars, positioning it as a centrepiece of his economic agenda. Yet, despite the lofty language, the underlying data reveal a decade‑long deterioration in the very metric he seeks to reverse.
Declining Business Investment Per Worker (2015‑2024)
From the start of 2015 through the end of 2024, the amount of business investment allocated per Canadian worker fell consistently. This decline represents the first time since the 1930s that Canada has experienced a sustained, ten‑year drop in capital intensity. The trend is not a brief fluctuation but a structural shift that has lowered the ratio of machinery, equipment and intellectual property available to each worker. Such a pattern directly undermines the economy’s ability to generate more output per hour worked.
Link Between Investment and Economic Growth
Economic theory and empirical evidence tie business investment to growth: newer machines, better technology and expanded capacity enable workers to produce more, lifting GDP and wages. Conversely, when investment wanes, productivity stagnates and living‑standard gains evaporate. Canada’s recent experience illustrates this mechanism—weak capital formation has coincided with tepid economic expansion, confirming that the investment slowdown is not merely a statistical artifact but a driver of subdued performance.
Historical Context: Great Depression and Post‑War Boom
The last period comparable to today’s investment slump occurred during the Great Depression, when capital fled and output collapsed. By contrast, the post‑World War II era launched a virtuous cycle: a massive surge in investment fueled three decades of strong GDP growth, nearly doubling output per Canadian between 1955 and 1974. That historical benchmark underscores how pivotal investment is to long‑run prosperity and highlights the severity of the current decade‑long downturn relative to both past crises and past successes.
RBC Report Findings: A Ten‑Year Capital Recession
An RBC study examining a century of Canadian business investment labels the 2015‑2024 span “a ten‑year capital recession.” The report quantifies the extent of the retreat, noting that net capital outflow exceeded $1 trillion—more than any other period in modern Canadian history. For every dollar of foreign direct investment that entered Canada, roughly two dollars left the country, making Canada a net exporter of capital on a scale surpassed only by the United States and China.
Magnitude of Capital Outflow: $1 Trillion Net Outflow
The sheer scale of the capital exodus is staggering: Canada accounted for nearly 10 % of global outward foreign direct investment over the decade, ranking last among G7 nations in both machinery‑equipment and intellectual‑property investment. This imbalance reflects a broader reluctance of domestic and international investors to commit long‑term capital to Canadian enterprises, eroding the country’s competitive edge in high‑value sectors.
Sector‑Specific Challenges: Oil and Gas Decline
A significant portion of the investment retreat stems from the oil and gas industry, where capital spending plummeted after the 2014 price crash. While the downturn affected many producers globally, Canada’s response was comparatively muted; unlike the United States, which turned the price slump into a catalyst for massive LNG infrastructure, Canadian firms largely curtailed expansion. Consequently, the sector’s investment gap has become a prominent drag on overall capital formation.
Comparative Success: U.S. LNG Expansion
The United States offers a contrasting case study. A decade ago, U.S. liquid natural gas (LNG) exports were negligible. Targeted private investment in pipelines, liquefaction plants and export terminals transformed the U.S. into the world’s leading LNG exporter, with additional projects continually under way. This turnaround illustrates how decisive policy support, market incentives and private‑sector initiative can revive a struggling energy segment and generate substantial capital inflows.
Potential Oil and Gas Investment Scenarios
RBC projects that, even without aggressive growth targets, Canadian oil and gas will attract roughly $430 billion of investment over the next decade. If Canada adopts a more ambitious stance—boosting oil output by one‑third, constructing two new pipelines, building three LNG terminals and expanding carbon‑capture capacity—the sector could draw up to $705 billion. These figures demonstrate that the opportunity set remains large, contingent on creating a regulatory and fiscal environment that encourages long‑term commitments.
Opportunities in Electricity, Mining, Space, Defence
Beyond hydrocarbons, RBC identifies further avenues for capital attraction. Electricity generation, mining and emerging high‑tech fields such as space and defence present viable prospects, though the latter two are comparatively modest in scale. With heightened defence spending, total investment in the sector could reach $19 billion, while space might garner $12 billion. Realizing these potentials will require streamlined permitting, targeted incentives and clear strategic roadmaps to give investors confidence.
Agriculture and Food Processing Potential
Agriculture and food processing emerge as especially promising, capital‑intensive and high‑tech areas. The Netherlands—despite its small size—ranks among the world’s top agricultural exporters, showing what focused investment can achieve. Under a status‑quo trajectory, RBC estimates $155 billion will flow into Canadian agriculture over ten years; an ambitious push that embraces advanced farming techniques, processing innovation and value‑added exports could lift that figure to $205 billion. Capturing this upside would diversify Canada’s investment base and reduce reliance on volatile commodity markets.
Carney’s Aim and the Challenge of Implementation
Prime Minister Carney’s verbal commitment to boosting investment targets the correct lever for reviving growth. However, translating rhetoric into tangible capital inflows demands concrete action: reforming approval processes, offering competitive tax incentives, ensuring policy stability and actively courting foreign capital in the sectors outlined above. Without bridging the gap between speech and execution, the Canada Strong Fund and related initiatives risk remaining aspirational rather than transformative, leaving Canada to contend with another decade of sub‑par investment and sluggish living‑standard gains.