The modern economy rewards innovation, creativity and the willingness to build something new. This is a critical foundation for sustainable and shared prosperity.
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 13th out of 29 OECD countries on income inequality in 2019.
Canada’s level of income inequality using the Gini coefficient was 0.300 in 2019 (0 represents perfect equality and 1 represents perfect inequality).
Top 10 most equal OECD countries.
Threshold: Hungary was 10th in the OECD with a Gini coefficient of 0.286 in 2019.
Canada observed reduced income inequality in 2019 and 2020. Pandemic-related supports had a particularly positive impact at the start of the pandemic. However, there are indications that this positive direction has not continued in 2021 and 2022 without similar levels of support available and amid rising inflation and cost of living, particularly in 2022.
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. It also represents a risk to the economy.
Canada ranked 25th out of 33 OECD countries on household debt in 2020.
Canada’s level of household debt was 178.6% of net household disposable income in 2020.
OECD average on household debt levels.
Threshold: OECD average level of household debt was 124.3% of net household disposable income in 2020.
Canada’s level of household debt remains among the highest in the OECD. While Canada had a slight decrease in debt levels in 2020, likely due to pandemic supports provided at the time, debt hit record high levels in 2021 and continued to be high in 2022 amid rising inflation and cost of living.
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, though not its income distribution.
Canada ranked 15th out of 38 OECD countries on GDP per capita in 2021.
Canada had a GDP per capita of $53,074.09 USD in 2021.
Top 10 OECD countries on GDP per capita.
Threshold: Sweden was 10th with GDP per capita of $59,973.97 USD in 2021.
Canada’s GDP per capita increased in 2021 compared to the previous year, with the increase largely due to economic recovery from the pandemic. Nonetheless, GDP per capita remains below the target and overall there is a trend of slow growth.
Growth and development of the Indigenous economy and business sector is essential to fostering reconciliation with Indigenous peoples and is a key driver of the economic future of Canada as the Indigenous population continues to grow at a faster rate compared to Canada’s population overall.
In 2020, GDP attributable to Indigenous peoples was $49 billion.
Growing the Indigenous economy to $100 billion annually.
There have been positive steps in growing the Indigenous economy, including higher rates of new business creation among Indigenous peoples compared to the population overall. While progress has been made in recent years, there is significant potential to grow the Indigenous economy through partnership and Indigenous-led development.
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 firms’ productivity and innovation, especially at the leadership level.
Among public companies that disclosed diversity information, in 2021:
Meet federal government “50-30 challenge” objective of representation of 50% of women and 30% of other under-represented groups on boards.
There were some improvements compared to the previous year in the proportion of women, racialized individuals, persons with disabilities and Indigenous peoples on boards. Transparency appears to be having a positive impact, but there is still significant ground to cover to achieve goals for representative leadership.
A growing population, with increased international talent and support for local entrepreneurs, can enhance business growth. High-growth firms make up a small proportion of firms in Canada but a more significant proportion of new jobs and GDP growth.
There were 10,700 high-growth firms in Canada in 2020.
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 (by revenue) declined in 2020 following years of incremental increases. However, there were positive signs on this indicator in 2022, including recent growth in the number of unicorn companies in Canada.
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 there is opportunity for improvement. Challenges to Canada’s competitiveness identified in 2022 include inflation, supply chain constraints, low housing availability and labour market imbalances.
As Canada’s population ages, enhancing productivity is key to maintaining economic growth. Productivity is an important driver of level of attractiveness for investment and global competitiveness.
Canada ranked 18th out of 38 OECD countries on productivity in 2021.
Canada’s GDP per hour worked was $53.97 USD in 2021.
Top 10 OECD countries on productivity.
Threshold: Germany was 10th in the OECD with GDP per hour worked of $68.30 USD in 2021.
Canada’s productivity declined in 2021, after a jump the previous year related to pandemic restrictions. GDP per hour worked fell at a faster rate compared to the OECD average. The country continues to experience slow growth in labour productivity and remains well below the target.
Innovation is directly related to long-term economic growth as a key way to bolster productivity. Canada’s ability to innovate drives its competitiveness, standard of living and preparedness for the future.
Canada ranked 15th of 132 countries in the Global Innovation Index in 2022.
Top 10 countries in the Global Innovation Index.
Canada slightly improved its innovation ranking in 2022, returning to the top 15 in the Global Innovation Index for the first time since 2016. However, Canada remains below rankings from previous years and still struggles with balancing level of investment in innovation with results.
Business spending on research and development is critical to creating an attractive environment for international talent. 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 20th out of 35 OECD countries on business spending on research and development in 2020.
Canada’s business spending on research and development was 0.95% of GDP in 2020.
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 1.92% of GDP in 2020.
Canada remains well below the OECD average on business spending on research and development (R&D). While Canada has slightly improved its business spending on R&D compared to recent years, significant work is needed to make progress on this indicator.
Entrepreneurship activity is an important building block for the economic growth and job creation that are needed for Canada’s future prosperity.
Canada ranked 8th in total early-stage entrepreneurial activity out of 47 countries assessed by the 2021/22 Global Entrepreneurship Monitor.
Top 10 countries in the Global Entrepreneurship Monitor’s assessment of total early-stage entrepreneurial activity.
Canada’s early-stage entrepreneurial activity improved significantly in 2021, reversing a decline in the previous year when Canada ranked 15th. Canada had the highest level of entrepreneurial activity among high-income countries.
