Recent Productivity Trends in Canada: Navigating the Twin Transitions of Green and Digitalization

Canada, like other countries, is undergoing an economic transformation as a result of the green and digital transitions. These megatrends create new challenges and opportunities for productivity growth. The green transition could place downward pressure on productivity growth given the current structure of the Canadian economy. That said, the Porter Hypothesis posits that well-formulated environmental regulations can actually spur innovation, which can in turn stimulate productivity. Canada’s ICT and digitally intensive sectors have seen strong productivity growth since 2000, but Canada’s overall performance in digitally- and R&D-intensive sectors trails other G7 countries. Embracing emerging clean and digital technologies and helping small and medium-sized business adopt them remain important issues to help unlock new productivity opportunities in Canada.