A $31 Trillion CAD Wake-Up Call: The True Cost of Canada’s Productivity Gap

Canada’s long-standing productivity gap with the United States is more than a macroeconomic trend — it’s a direct challenge to our competitiveness, fiscal capacity and future prosperity. For decades, Canada has trailed the U.S. in output per person. Year after year, that gap has quietly eroded our potential.

From 1980 to 2024, the cumulative shortfall has reached $385,314 USD per person — amounting to more than $14 trillion USD in lost economic output. That’s not theoretical — it’s capital we could have invested in innovation, skills and scaling Canadian businesses.

And it comes at a cost. Based on Canada’s average tax-to-GDP ratio of 33%, that lost output translates into over $4.5 trillion USD in foregone public revenue. This is revenue that could have funded social infrastructure, workforce development, digital transformation and critical trade-enabling assets.

But it’s not the past we need to worry about — it’s the trajectory ahead. The outlook is even more concerning: Between now and 2030, Canada is projected to fall behind by another $224,337 USD per person. That amounts to a staggering $9 trillion USD in lost output and nearly $3 trillion USD in missed public revenue. Over a 50-year horizon, Canada’s lagging productivity performance — had we simply kept pace with the United States — will amount to a staggering $23 trillion USD (approximately $31 trillion CAD) in lost economic output, and $7.5 trillion USD (roughly $10 trillion CAD) in forgone public revenues.

Closing the productivity gap must be a national priority. That means tackling barriers to business investment, strengthening skills and labour mobility, accelerating permitting and infrastructure approvals, and enabling the conditions for technology adoption — including responsible and inclusive AI deployment.

This isn’t just about catching up to the U.S., it’s about choosing a path of sustained, inclusive and innovation-led growth.