Fraser Institute study shows potential increase in Canadian living standards
Canadian incomes could see strong growth over the next 20 years, if economic growth can be maintained at a level of 2-3%.
The Fraser Institute says that per-person income would be boosted by $45,000 of growth could hit 3% per year and would be more than $19,000 at a 2% annual growth rate.
Its study of GDP data from 2011 to 2018 found that the total value of domestically-produced goods and services, grew at an average annual rate of 2.17% compared to approximately 3% from 2001 to 2010.
The estimations for income growth assume constant population.
“Increased economic growth means improved living standards for Canadians, so economic growth remains an issue worthy of serious attention,” said Steven Globerman, Fraser Institute senior fellow and editor of The Costs of Slow Economic Growth, the first study in a series on economic growth in Canada.
Globerman is calling on governments and policymakers to prioritize faster economic growth, given its importance to growth in household income.
He says that the golden years of the 1960s and 1970s saw strong economic growth for developed countries including Canada but notes that the level of real economic growth has been largely stagnant since the early 1980s.
Stuck in a groove?
While some point to an aging population and unwillingness to invest, Globerman says that the persistence of growth in the 2.0% to 2.5% range since the eighties suggests this is the ‘norm’ rather than the result of ‘secular stagnation.’
But he says that, as there has been growth above 3% in recent memory, this suggests that Canada is not stuck in the groove of low-level growth.
The various suggestions in the book The Costs of Slow Economic Growth: Collected Essays, of which Globerman’s report is one part, show that faster growth is possible.
