菲沙研究所-加拿大摇摇欲坠的商业活力和落后的创新（英）-2021.9-54页_992kb

Canada's Faltering Business Dynamism and Lagging Innovation Summary

Core Content

This document discusses the challenges Canada faces in terms of business dynamism and innovation, comparing its economic performance with that of the United States and Europe. It argues that Canada's economic stagnation is not due to structural inevitability, but rather to government policies and societal attitudes that hinder innovation and entrepreneurship.

Main Views

• Canada's economic growth has slowed significantly, with real GDP growth per capita declining to 0.35% between 1970 and 2013, and total-factor productivity growth being among the lowest in the G7.
• Innovation in Canada has lagged, with homegrown innovation growing by only 0.11% from 1970 to 2012, the worst performance among G7 nations.
• The US remains the global leader in innovation, with cumulative gains of over 6% per decade in homegrown innovation, while Canada, along with France, Germany, and Italy, has seen net declines.
• Canadian values are less supportive of innovation compared to the US, with a preference for protectionism and a lack of trust in the free market and entrepreneurial success.
• Rent-seeking is a major obstacle to innovation and business dynamism in Canada. It is supported by government policies that protect entrenched firms and industries from competition, including regulations, tariffs, occupational licensing, and restrictions on foreign investment.
• Creative destruction, the process of replacing old industries with new ones, is essential for innovation and economic growth. However, Canada's regulatory and policy environment has discouraged this process, leading to a lack of business formation and investment.

Key Information

• Global GDP share: Canada's share of global GDP declined from 2.5% in 1978 to 1.9% in 2020, similar to the trend in European nations.
• Business entry and exit: Canada has seen a slowdown in the process of creation and destruction, with fewer new firms entering the market and more existing firms not exiting.
• Policy focus: Canadian innovation policy has mistakenly focused on inputs of knowledge such as education, science, and R&D, rather than fostering the cultural values that support innovation.
• Institutional barriers: Canada's decentralized political structure and weak provincial and local governments have allowed rent-seeking behaviors to flourish, with policies that favor incumbent firms over new entrants.
• Impact of policies: The lack of competition and overprotection of certain industries have led to inefficiency and stagnation in economic growth and productivity.
• Cultural values: The document emphasizes the importance of cultural values such as trust, competition, and independence in driving innovation and economic dynamism. These values are more prevalent in the US than in Canada.
• Examples of Canadian malaise: The Financial Times and Fortune lists show that Canada has fewer companies in the global elite and fastest-growing categories compared to the US and other G7 countries.
• Role of government: The government's role in fostering competition and reducing barriers is crucial for innovation. Canada's current approach is seen as anti-competitive and unfavorable to business growth.
• Alternative models: The Fraser Institute advocates for free-market reforms such as reducing taxes, removing tariffs, and deregulating to create a more level playing field for businesses.

Conclusion

To improve business dynamism and innovation in Canada, the document calls for a reassessment of public policy and a renewed commitment to market principles and capitalism. It argues that government intervention has not only stifled innovation but also undermined public trust in the fairness of income generation. The only viable solution is to promote competition, reduce regulatory controls, and cultivate cultural values that support innovation and entrepreneurship. Canada currently lacks these elements and remains behind the US and other innovative economies in terms of growth and productivity.

References

• The Economist (2021a, 2021b)
• Bojilov, 2020a, 2020b
• Breznitz, 2021
• Drummond, 2011
• Geloso, 2021
• Klenow and Li, 2020
• McCloskey, 2016
• Phelps, 2013, 2020a
• Whatley, 2020
• Zoega, 2020

About the Author

• Philip Cross: Economist and author of the document, associated with the Fraser Institute, which advocates for free-market policies and economic freedom.

Acknowledgments

• The document acknowledges the Fraser Institute and its Editorial Advisory Board for their support and guidance.

Publishing Information

• Published by the Fraser Institute
• Includes sections on supporting the Fraser Institute and its purpose, funding, and independence.

Supporting the Fraser Institute

• The Fraser Institute is a research and educational organization focused on economic freedom, free enterprise, and market-oriented reforms.
• It provides policy analysis and economic research to support free-market principles and competitive markets.

Purpose, Funding, and Independence

• The Fraser Institute is independent and nonpartisan, with funding from private sources and individuals.
• Its purpose is to advocate for free-market policies and economic freedom, providing research and analysis to support these goals.

Editorial Advisory Board

• The Editorial Advisory Board includes economists and policy analysts who provide guidance and oversight for the Fraser Institute's publications.