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This country note from Going for Growth 2015 for Canada identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
House prices have increased significantly in Canada over the past decade, driving household debt and residential construction activity to historical highs.
Skills shortages have developed in certain fields and regions in recent years. Earnings premiums for people in some professions, notably health, engineering and skilled trades have increased.
Over the past two decades, Canada has witnessed continued economic stability and progress despite the recent crisis that wreaked havoc in most other advanced economies. In fact, Canada has never had a banking crisis and has one of the highest levels of well-being, but challenges remain, said OECD Secretary-General.
Canada has experienced solid economic growth since the global crisis, allowing it to reverse recession-induced job losses and put federal public finances on a sound footing, says the OECD. Growth is expected to accelerate from 2.5% this year to 2.7% in 2015.
Canada enjoys relatively high GDP per capita but productivity growth has been weak despite comparatively high investment in knowledge-based capital, a fairly competitive business environment and a reasonably well-functioning labour market.
A moderate recovery is underway in the major advanced economies, according to the OECD’s latest Interim Economic Assessment. Growth is proceeding at encouraging rates in North America, Japan and the UK. The euro area as a whole is out of recession, although output remains weak in a number of countries.
This paper discusses how to improve Canada’s business innovation in order to boost labour productivity and output growth. Many general framework conditions are highly favourable to business risk taking and innovation, including macro stability, openness, strong human capital, low corporate tax rates, low barriers to firm entry and flexible labour markets.
The tertiary education system in Canada performs well in fostering a skilled workforce with generally good labour market outcomes and is internationally recognised for its research contributions.
Canada has weathered the global economic crisis comparatively well but will have to become more productive to sustain its high standard of living, according to OECD’s latest Economic Survey of Canada.