… It is one of the great mysteries of the Canadian economy. Given our exceptionally close business ties with the U.S., including more than three decades of free trade, it’s surprising we haven’t closed the gap. Among the most likely explanations is that Canadian businesses invest less in research and development, new equipment and new technologies – all things that boost output per worker. The Canadian market is also less competitive than in the U.S. or the European Union. This puts less pressure on businesses to invest in raising output per worker.
But Canada has somewhat reduced the output gap with the U.S., and closed most of the gap with Western Europe. How? By working more.
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