By: Mary W. Rowe and Zita Cobb
Canada’s productivity — measured as economic output generated per hour of work — continues to decline, dramatically lagging other G7 developed countries. What began as a rant by pundits, has now shifted to a steady lament.
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If we want to improve productivity in Canada, we should be investing in our own businesses and essential community infrastructures to support them.
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The search for foreign direct investment has long been a Canadian preoccupation. Instead of doubling down on creating conditions to ensure any capital generated in Canada continues to be invested in Canada, we have pursued investments from other places. Too often, money that is made here is quickly whisked off to be invested elsewhere.
Nowhere is this more ironic than following the money of our pension funds, which defend their obligation to their members to pursue highest returns outside of Canada. This, even as the infrastructure and services upon which the communities in which they live depend — such as affordable housing, access to capital, transit and mental health services — are starved of investment.
We need to make investing in Canadian businesses — and investing in our communities — a top priority again.
In the last century, Canada invested heavily in major transportation, mass transit, housing, energy generation and distribution, health systems, post-secondary institutions and cultural infrastructure — the underpinnings of an economy able to grow and diversify, and a society able to integrate significant numbers of immigrants each year.
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We built power plants and public libraries, transit systems, hospitals and concert halls. This enabled millions of Canadians to work productively in many places, many sectors; create businesses, provide services and make meaningful lives and vibrant communities.
It’s time our economic policies prioritized buttressing and building vibrant communities so that money stays in Canada and so that we are investing in Canadian ideas, services and industries.
One of our greatest strengths is our small and medium enterprise (SME) sector which employs close to 90 per cent of Canada’s labour force working in the private sector.
SMEs absorb newcomers, providing a path to economic inclusion, skills development and social integration. Yet getting investment into smaller enterprises — where most Canadians work to support their ‘productivity’ — can be quite challenging, where the transaction costs, and more modest returns, deter investors.
Canada is a country rich in natural assets and a myriad of environmental, civic and cultural assets. Investing in them with our own resources — private and public investment funds, corporate returns, philanthropy and good old-fashioned taxation — may render a slower growth rate and a smaller rate of return in the short term, but over the longer term, will generate returns for investors.
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It would also support the necessary conditions for a resilient economy, better equipped to adapt to rapidly changing conditions.
Fogo Island Inn is an example of where the beneficial owner is the local community, upon which its continued success entirely depends. Fogo Island Inn was created by Shorefast (a registered charity) as a part of a process to invest in the development of the natural and cultural assets that exist in the place. The Shorefast model reinvests in the assets of the place along with Canadian investors from the private, public and philanthropic sectors.
Further, strategic, modest government investment can strengthen local economies from the ground up. My Main Street is an application-based program to invest in independent businesses and place-making activities along main streets in Canada. It is administered by the Canadian Urban Institute with support from the Federal Economic Development Agency for Southern Ontario and offers streamlined, direct-to-business and community placemaking support to help attract visitors and locals to main streets.
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Canada’s economy is distributed across many communities — cities and towns of different sizes and across many regions in the country. Despite differences in scale between urban and rural communities, we must invest our resources in creating the enabling conditions to support businesses, and the people and places that support them.
Canada is made up of thousands of places, rich with assets that are ripe for investments to strengthen their capacity to self-fuel.
Mary W. Rowe is CEO of the Canadian Urban Institute and a Community Economies Fellow at Shorefast. Zita Cobb is founder and CEO of Shorefast and Innkeeper at Fogo Island Inn.
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TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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