New research from economist and SCP Fellow Gillian Petit, PhD, JD, explains why GDP per capita is a poor measure of economic performance and economic well-being. Using changes in GDP per capita as evidence of either improving or deteriorating economic well-being is poor economics, poor public policy and poor reasoning. Click here to read the full report.
Main messages
- The statistic “GDP per capita” has been used by some Canadian commentators as a summary measure to make sweeping claims about the state of the Canadian economy. However, this is misleading. Canada’s GDP per capita should not be used as if it were the sole indicator of economic well-being.
- Many conclude that low growth in GDP per capita over the past decade suggests that Canada’s economic growth has been low. But that is untrue. Canada’s economic growth has been on par or ahead of peer countries. Growth in GDP per capita, however, has been decreased by a high growth in temporary residents, like temporary foreign workers and international students. This is an arithmetic quirk of GDP per capita.
- This paper estimates what our GDP per capita growth would have been if Canada’s intake of temporary residents was more in line with recent historical norms. It also estimates the impact on GDP per capita growth in the coming years as a result simply of lowering our intake of temporary residents. Under both scenarios, Canada’s GDP per capita growth would have looked—and will look—very much like our peers.
Share with a friend
Related reading
Watch the video: Why do Canadians work so hard and get so little?
Low productivity means lower wages and a lower standard of living. Canada does need to boost productivity—but we keep trying the wrong things. Watch SCP CEO Matthew Mendelsohn explain the productivity conversation Canada actually needs to have.
Market study submission: Competition in financing for Canada’s SMEs
Small- and medium-sized businesses (SMEs) face significant barriers to accessing capital and we believe that the lack of competition in the banking sector is one of several important contributing factors. We provided comment on the Competition Bureau's upcoming market study on SME financing because we believe that unlocking capital for SMEs and entrepreneurs will strengthen the Canadian economy, bolster our sovereignty and provide more Canadians with pathways to building wealth. We look forward to seeing how the evidence collected will help inform policymakers interested in tackling this issue.
Watch the video: Why would a company sell to its employees?
Canada is facing a $2-trillion business handoff. What if employees owned more of it? In this video, our Director of Policy Dan Skilleter explains why a company would sell to its own employees, how it happens and who stands to benefits. Spoiler alert: employee-owned companies are shown to be 8-12% more productive, share more wealth with their workers, keep businesses Canadian-owned and shore up the resilience of local communities and the broader economy.