Something unusual seems to be happening in Canada.

For much of the last decade, conversations about our economy have been fairly predictable: weak productivity, low capital investment, housing unaffordability and regulatory red tape. In hindsight, there was probably another topic that we should have been chatting about: an uncomfortable dependence on the United States.

Lately, things have begun to sound different.

The recent Canadian Investment Summit brought Canadian and International businesses together around an ambitious Canadian government objective: attract $1 trillion of investment in Canada within the next five years.

That is a very large number. And at this point, that is all it is, a number.

Still, it is encouraging that Canada seems to have rediscovered an old-fashioned economic idea: build things. Mines. Energy projects. Power generation. Ports. Transportation infrastructure. And more.

We have seen economic change before…but arguably not in this scale in almost a full generation. As a patriotic Canadian, it feels awful to type that last sentence.

The Mulroney government introduced Free Trade, GST and other key structural reforms. Many were deeply unpopular at the time, but subsequent research suggests that at the very least, the Canada-US Free Trade Agreement spurred meaningful productivity gains. [1]

The Chretien and Martin governments then built on that economic foundation while tackling Canada’s fiscal problems, moving the country from large deficits to balanced budgets and then surpluses (remember them?).

Later governments made their own contributions and mistakes, but history suggests that successful economic periods rarely have a single political parent and both good policy and bad policy can survive an election cycle.

Governments are better judged by what they can influence: taxation, regulation, infrastructure, trade, fiscal policy and whether businesses believe that the country is a good place for investment.

Why Investment Matters

Canada needs more of it. Investment per worker has weakened significantly over time, and our productivity growth has increasingly lagged the Unites States.

“Productivity” may be one of those words that causes you to suddenly want to clean out your garage…but stick with me for just a moment longer.

At its simplest, productivity means producing more value from each hour of work. Over time, that is what allows our wages and living standards to rise without simply raising prices.

Give a worker better machinery, technology, infrastructure and access to larger markets and that worker can generally produce more.

That is why renewed emphasis on capital investment deserves our attention.

The Case for Optimism

Canada possesses remarkable natural advantages, which I don’t need to expand upon in this post. However, for years we have behaved as though merely possessing those advantages was enough.

A mineral deposit that never becomes a mine is just an interesting geological fact. Electricity that can’t reach the customer has little economic value. And a project that takes forever to navigate regulatory approvals has no benefit to businesses or investors.

The recent Investment Summit was clear in understanding that capital has choices. If Canada wants businesses to invest here, projects need to be approved, financed and built on commercially reasonable timelines.

Clearly, there is also an external force that is creating urgency. At present, our relationship with the United States is unpredictable. Canada has long talked about diversification and reducing internal barriers…perhaps this is the motivation we needed to get things done.

The Case for Skepticism

For over 20 years now, Eric, Rob and I have used this question both with our own decision-making and with clients: “If we were sitting here five years from now, what would have to have happened for us to be happy with our progress?”

It seems like a pretty good question to ask in Canada today.

There is an important distinction between announcing investment and creating investment. Governments of every stripe have announced transformative projects before. The test is whether private investors eventually decide that Canada is a good place for their next dollar.

That means that new factories, mines, pipelines, power generation, technology and the creation of other genuinely new businesses is essential. It is not enough for a foreign company to buy an existing Canadian company. The bigger economic prize is capital that creates new productive capacity. The goal is not to sell the existing Canada; it is to sell the world on building the new Canada. [2]

Let’s give it five years and then ask: Are major projects getting built? Is business investment rising? Has productivity improved? Is our standard of living (after inflation) growing? Do we have new markets for Canadian products and resources?

If the answer to those questions is yes, the optimism will have been justified. If not, nobody will care how impressive the original announcements sounded.

What does it mean for us?

It is far too early to conclude that Canada has suddenly become the world’s most compelling investment market. Nor should we be forgetting about the benefits of global diversification.

But something may be changing.

For the first time in a long time, there is a plausible case that Canada could enter a period of higher productivity, stronger businesses and rising household incomes. [3]

For now, I think there is a reason for both rational optimism and patience.

As investors, we don’t need to predict the ending. We simply need to recognize that the plot may be changing and pay attention to what happens next.

-CHRIS

 

[1] Bank of Canada, February 2026. Free Trade Agreement produced productivity gains of 5% to 14% in Canadian manufacturing between 1988 and 1996.

[2]Economists generally distinguish between foreign investment used to acquire existing businesses and “greenfield” investment used to create new facilities or productive capacity. Both can have benefits, but greenfield investment more directly adds new capital, employment and productive capacity to the domestic economy.

[3] Morgan Stanley, Thoughts on the Market: “Canada’s Next Growth Phase”; October 5, 2026.