Canada's Economic Slump: Lessons from the Past
Canada's economy has been in a slump for over a decade, but it's not impossible to revive. According to Philip Cross, the country can learn from its past experiences and apply well-designed policies to boost business investment and productivity.
The period between 1981 and 1992 saw Canada's GDP and labour productivity growth stagnate, but the country managed to snap out of it by adopting new policies based on economic principles. Between 1992 and 2007, Canada experienced a significant boost in GDP and labour productivity, with real GDP per capita growing at an annual average rate of 2.6%.
The turnaround was driven by several policy initiatives, including the free trade agreement with the US, which improved manufacturing industries and the oil and gas sector. The federal tax system was also overhauled, reducing taxes on investment products and exports. Additionally, debt levels were reduced, and the Bank of Canada adopted an inflation target of 2%.