The gross domestic product (GDP) per capita of Ontario has dropped from 5 percent higher than the rest of Canada to 3.2 percent lower over about 20 years, according to a recent analysis.
The analysis report “Ontario’s Economy Is Broken” (PDF) was published by the think tank Fraser Institute and released on May 8. It looks at how the growth in per capita GDP for the province has changed from 1981 to 2023.
Report co-author Ben Eisen, senior fellow at the Fraser Institute, said Ontario’s economy has performed “worse than other provinces” over the past two decades.
“The result is that Ontarians are now experiencing lower standards of living—on average—than their fellow Canadians,” he said.
Eisen and co-author Joel Emes said that real per-capita GDP growth annually in Ontario was 0.55 percent on average from 2000 to 2023, compared with 0.91 percent in the rest of the country.
In 2000, GDP per capita in Ontario was $63,146 (in 2023 dollars) or 4.9 percent higher than in the rest of Canada, according to the report.
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In 2023, GDP per capita was $71,659 or 3.2 percent below the rest of the country, the authors said.
Between 1981 and 2000, Ontario’s economy grew at an inflation-adjusted, per-person basis at a compounded annual average rate of 1.74 percent, the authors said in the analysis. But that growth rate slowed to 0.55 percent between 2000 and 2023.
“The impact of this growth slowdown on living standards has been enormous,” Eisen and Emes wrote.
Eisen and Emes attribute the drop in growth to a lack of business investment in the province.
Business investment per worker in Ontario grew 4.5 percent annually between 1981 and 2000, according to the analysis. Other regions of Canada saw a 1.8 percent annual rate.
However, between 2000 and 2023, that rate “collapsed” to 0.71 percent a year, while the rest of Canada saw a 0.67 percent annual growth rate.
Between 2000 and 2006, growth outside of Ontario allowed the rest of Canada to catch up, narrowing the gap that Ontario had gained since 1981, the authors said. They also said that Ontario was more substantially impacted by the 2008/09 recession.
By 2009, GDP per capita was 3.7 percent lower in Ontario than in the rest of Canada, the analysis said.
The report looked at two alternative outcomes for Ontario, including what the economy would look like in 2023 if the province had maintained the growth trajectory from 1981–2000. They concluded in that scenario GDP per capita would have been 31.1 percent higher than the actual number, or $93,957.
The authors also considered what Ontario’s economy would have looked like if it matched the growth level from the rest of Canada. They concluded the GDP per capita in Ontario would have been 8.5 percent higher than it currently is, or $77,725.
