The Canadian economy lags behind in terms of productivity due to a lack of investment, concludes a recent study published by the Montreal Economic Institute (MEI)..“Canada’s productivity gap is worrisome and has a direct impact on our standard of living,” said Renaud Brossard, senior director of communications at the MEI and one of the authors. .“The less value that is created by an hour of work, the less that hour can be remunerated.”.At purchasing power parity, each hour worked in Canada in 2022 produced a value of US$53.30, in constant 2015 dollars. That puts Canada in sixth place among G7 countries, only ahead of Japan..In comparison, the G7 average for value produced per hour worked was US$63.90. The United States was in first place, with US$72.10 of value produced per hour worked..Considering the average number of hours worked, this translates to a Canadian standard of living 30% lower than in the United States..“Productivity in Canada is a major source of concern, as it influences the economic growth and competitiveness of the country. Indeed, although Canada has abundant resources and considerable economic potential, its overall productivity remains below that of many other industrialized countries. This situation is a significant obstacle to improving Canadians’ standard of living," the study states..MEI cites a study by the Centre for Productivity and Prosperity found Canada was at the bottom of the pack compared to similar economies as measured by non-residential private investment per job in 2018..“Canada’s regulatory and fiscal framework is not attractive enough for investors,” explains Brossard. “And our governments can try all they want to mitigate this problem with subsidies, but their capacity for investment pales in comparison to that of the market.”.According to the CIA’s World Factbook, GDP per capita was $47,900 in Canada in 2021, versus $63,700 in the United States..This gap concerns MEI..“By adopting a more favourable fiscal and regulatory framework, we could strengthen the attractiveness of Canada as a destination for investment, like the United States.".“An approach that aligns our fiscal environment to the best international practices would stimulate innovation and lead to increased productivity, thus favouring Canada’s economic growth and global competitiveness.”.The MEI is an independent public policy think tank with offices in Montreal and Calgary..Through its publications, media appearances and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.