B.C. is trailing resource-rich Alberta, Saskatchewan and Newfoundland and Labrador for its per capita business investment, according to a C.D. Howe Institute report released this morning.
The measure is a key indicator of worker productivity and economic competitiveness, said C.D. Howe senior policy analyst Colin Busby.
“It’s comparing the amount of money we’re investing in equipping our workers with new and better tools vis-ŕ-vis what other countries are doing,” he said.
“A more productive worker tends to be much better for the economy, you tend to have much better rates of output per worker and you tend to have much higher rates of income per worker.”
At $11,200 of business investment per capita, B.C. is investing about half as much as Alberta ($24,500), Saskatchewan ($23,800) and Newfoundland and Labrador ($22,700). The figure includes all domestic and foreign investment.
But Busby noted B.C. has seen gains in the past years, relative to the national average, the United States, and Organization for Economic Co-operation (OECD) and Development countries.
“Over the last decade it’s made up quite a bit of ground, so that’s very encouraging,” he said. “It’s still nowhere near the levels of Alberta or Saskatchewan, but it’s ahead of the Canadian average and it’s trending in the right direction.”
Busby noted, however, that B.C.’s vote to revert to PST may change that positive trend.
“One would certainly be a bit more pessimistic about [B.C.’s] ability to keep rising as it has been vis-ŕ-vis the OECD, the United States and the national average simply because the PST is a highly distortive tax and specifically taxes investment itself.”
Jenny Wagler
@JennyWagler_BIV