Canada has spent years talking about productivity as if it were a grand mystery.
Why do the country’s wages lag?
Why does it take longer to scale companies here?
Why does growth feel harder than it should?
At this point, we might as well just use the “old Rose” quote from Titanic, saying “it’s been 84 years…”
OK, it’s only really been 25 years. But in this ‘Elbows Up’ moment, it certainly stings to hear that we’ve lagged behind the United States (and other developed nations) for decades, a gap that’s been widening since 2000, per Bank of Canada external deputy governor Nicolas Vincent.
(I’m no expert, but maybe we should… do something about it? What, like it’s hard?)
We have the talent. We have the technology. And, despite a bit of naysaying, many believe we also have the ambition.
A new independent study commissioned by the Competition Bureau of Canada, conducted by international productivity experts, shows that regulatory barriers in the country still limit how much companies can compete, enter markets, price services, hire talent, or scale across provinces.
Removing unnecessary barriers to competition, the study found, could lift Canada’s economy by as much as 6.5 to 10% over the long term — a conservative estimate, says the government’s press release.
For business leaders, this speaks directly to cost pressures, growth constraints, and why innovation can feel slower or riskier in Canada than elsewhere.
Where competition gets stuck
The study found that current regulations across four major parts of the Canadian economy (energy, transportation, retail distribution, and professional services) are more restrictive than they should be.
When competition is limited in these areas, inefficiencies ripple outward.
The researchers compared Canada’s regulatory environment with that of 14 other OECD countries over a 25-year period.
While Canada was relatively competition-friendly in the 1990s, they explain, it has not kept pace. Today, its regulatory settings rank among the least favourable to competition in the peer group studied.
That shows up in familiar ways for businesses. Higher prices for inputs, fewer suppliers to choose from, and slower adoption of new models or technologies. And in this era of wanting to increase inter-provincial business, more friction when trying to enter a market or expand across provinces.
What Canada could gain by easing regulatory restrictions
By modelling what would happen if Canada aligned its rules with international best practice, the study estimates productivity gains of up to 10% over the long term. Even more modest reforms that bring Canada closer to U.S. regulatory levels could still lift GDP per capita by about 5%.
Translated into everyday terms, the study estimates that stronger competition could, over time, raise living standards by roughly $7,500 per person.
The authors are clear that these figures are conservative. They do not include spillover effects into sectors like agriculture, mining, or the public sector. They also exclude potential gains from easing internal trade barriers, improving labour mobility between provinces, or attracting more foreign investment.
In other words, the ceiling is likely higher than the headline numbers suggest.
What this means for innovation
Competition and innovation tend to travel together.
When markets are open, new entrants have a reason to try different approaches. Incumbents have to improve or lose ground. Productivity rises because systems work better.
The study argues that many Canadian regulations limit competition for reasons that have little to do with protecting health, safety, security, or the environment. In many cases, the rules simply have not been revisited as markets have changed.
Pro-competitive reform, as the authors frame it, is about taking a fresh look at whether regulations still make sense today, or are mainly preserving old structures.
“This study shows just how much Canada could gain from a pro-competitive regulatory reform across all levels of government,” says Jeanne Pratt, acting commissioner of competition for the bureau. “Recent progress on eliminating internal trade barriers shows that this is possible. By working together, we can build a more affordable, productive and resilient economy.”
This matters for innovators because regulation can determine whether new ideas ever get the chance to grow. Rules that protect incumbents or restrict pricing, marketing, or talent mobility can discourage experimentation before a startup even reaches the market.
A systems problem, not a sector one
One of the study’s most important contributions is reframing competition as a systems issue. Sectors like transportation, energy, and professional services sit underneath almost every other industry. When they are inefficient, everyone pays for it.
In a backgrounder to the study, the Bureau lists four common ways regulation can weaken competition:
- Barriers at the entry point
In some markets, complex licensing and permit requirements make it harder for new businesses or professionals to enter. Exclusive rights and provincial monopolies can also limit who is allowed to compete, even where additional competition would not undermine public protections. - Rules that shape how firms compete
Pricing and advertising restrictions can prevent businesses from offering better deals or clearly communicating value. Some regulations also favour existing players over new entrants, tilting markets toward incumbents rather than performance. - Weakened pressure to improve
Suggested fee guides in self-regulated professions, exemptions from competition law in certain sectors, and the use of non-compete agreements can reduce incentives to innovate, hire, or compete for talent. - Friction for customers
When customers cannot easily compare options or switch providers, competition suffers. The study points to clearer pricing, better information, and stronger consumer data rights as ways to force firms to compete to retain business.
These dynamics are familiar to business leaders. Licensing regimes that vary by province. Fee guides in self-regulated professions. Restrictions on data portability that make switching providers harder than it should be. Non-compete agreements that lock talent in place.
None of these issues show up on a balance sheet line item called “regulatory drag.” But together, they shape how fast ideas move through the economy.
The cost of standing still
This research does not prescribe specific policy changes. Its value lies in quantifying the cost of standing still.
For executives and founders, the message is about recognizing how policy conditions affect strategy. Expansion plans, talent decisions, supply chain design, and pricing models all operate inside regulatory systems that can either enable or hold back progress.
At a national level, the study adds weight to a growing conversation about competitiveness, productivity, and Canada’s ability to translate innovation into broad-based prosperity.
Other countries have treated competition reform as an economic growth strategy. Australia’s reforms in the 1990s delivered a permanent GDP boost of about 2.5%, with another round underway today.
The research asks a hard question: are Canada’s rules helping the economy adapt, or holding it in place?
As Carolyn Rogers, senior deputy governor of the Bank of Canada, said in a BDO report from February 2025, “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass.”
Final shots
- Regulatory settings in foundational sectors shape how innovative and competitive the entire economy can be.
- Pro-competitive reforms can be implemented without compromising health, safety, security, or environmental protections.
- For business leaders, understanding how regulation affects competition is becoming part of strategic literacy. The rules of the market influence growth as much as market demand does.
- The study adds empirical weight to Canada’s innovation debate, linking competition policy directly to productivity and growth.
