Carolyn Wilkins is an advisor to the Coalition for a Better Future and a Senior Research Scholar at Princeton University. ‘Falling GDP per capita, sluggish capital investment, and flatlining business R&D all paint a worrying picture. Without a turnaround, we’ll struggle to compete globally, fund core services, or manage major transitions like climate and housing,’ she says.

Canada’s economic outlook has reached a critical inflection point, and few understand the stakes better than Carolyn Wilkins. A seasoned economist and former senior deputy governor of the Bank of Canada, Wilkins brings clarity to the challenges and the opportunities for Canada's economy. From persistently low business investment and weak R&D spending to the underappreciated importance of adult learning, her insights cut through the noise to focus on what really matters for long-term prosperity.

“Canada’s poor economic performance is not inevitable,” she says. “What we need is a stronger investment environment and the discipline to make tough calls and stay the course.”

In this Q&A with Means & Ways, Wilkins, an advisor to the Coalition for a Better Future and a Senior Research Scholar at Princeton University, shares what surprised her most in the Coalition's recent data, what deserves more attention and where the government’s new agenda shows promise — or falls short.

Her message is both a call to action and a reminder of the work ahead: “This is a moment to be ambitious, but also honest about what it will take. Canada’s economic challenges have built up over time, and they won’t be resolved overnight. Turning things around will mean making deliberate and bold choices, accepting tradeoffs, and focusing on outcomes, not headlines. It’ll also require the federal and provincial governments to work together, not just talk. Governments need to lead, but business, labour, and communities all have a role to play. If we want a better future, we’ll need to build it together.”

M&W: What was the most surprising metric you found in the Coalition’s Scorecard this year? Why?

CW: The low private-sector investment in R&D — still stuck below 1% of GDP — made me shake my head. Business investment in physical capital is at its lowest level since the 1930s. We’ve known for years that this is a problem, so it’s disappointing to see so little progress. No wonder our track record on growth in real incomes is so poor, and we lag our peers in productivity, and growth in real incomes.

If we want higher standards of living for ourselves and our children, we’ll need more private-sector investment in new ideas and technologies across all sectors of the Canadian economy, from long-term and health care to natural resources.

“The low private-sector investment in R&D — still stuck below 1% of GDP — made me shake my head. Business investment in physical capital is at its lowest level since the 1930s. We’ve known for years that this is a problem, so it’s disappointing to see so little progress.”

— Carolyn Wilkins

M&W: Aside from GDP, which metric in the Scorecard do you think has flown under the radar but deserves more attention?

CW: The adult learning participation rate. Less than half of working-age adults are engaged in any kind of formal upskilling or reskilling. It’s not a stat that typically makes the headlines, but such low numbers are not good enough in a world where technology and demographics are reshaping the labour market.

If we’re serious about productivity, we need to focus on human capital. That includes education for young people, and systems that help mid-career workers learn new skills. It's about helping people adapt and contribute in a changing economy. We’ve learned from the decline in manufacturing that transitions can be difficult. But this is one investment that serves workers, employers, and the broader economy.

M&W: Now that Parliament is back, do you think we’ll see a serious focus on productivity?

CW: This is our third Scorecard since 2020, and it feels like the issue has finally met its moment. Falling GDP per capita and concern over U.S. policy have brought productivity to the forefront. Both major parties campaigned on improving the investment environment, and the new government is clearly signalling that growth and innovation are core priorities.

I expect we’ll be seeing more concrete information about what these intentions mean in practice. The Scorecard’s investment data shows how far we have to go. Now it’s about execution.

M&W: Do you think PM Carney’s current priorities align with building a more productive, inclusive economy?

CW: Prime Minister Carney’s stated priorities suggest a clear intention to tackle some of Canada’s most persistent headwinds to productivity and inclusiveness. The seven priorities he laid out in his remit letter to Cabinet ranged from redefining economic ties with the U.S. to improving housing affordability and streamlining government operations. I was happy to see the focus mainly on structural reform rather than short-term relief.

From a productivity standpoint, several elements stand out. The goal of “building one Canadian economy” by removing internal trade barriers and accelerating major national projects could reduce long-standing friction and unlock investment. Reform of permitting for infrastructure and natural resource projects is overdue and badly needed. And reversing the planned capital gains tax increase sends a more positive signal to investors.

The emphasis on making housing more affordable, stabilizing immigration and building stronger links with global partners also speaks to an ambition to create a more resilient and inclusive economic foundation.

It’s a promising direction. The challenge now is turning that direction into results. Whether these reforms actually shift private investment and lead to broadly shared gains will depend on detailed policy design and follow-through.

M&W: The devil is always in the details. What would you be watching for from the government in terms of policy or regulation?

CW: I expect many people will be watching for progress on all the priorities the government has set out. There are five areas where I am particularly interested in seeing early traction:

The July 1 deadline on removing interprovincial barriers to trade being met;
Concrete, early progress on energy projects and other infrastructure;
Implementation of a “one project-one review” framework, with clearly defined timelines; high service standards and full intergovernmental coordination;
Further thinking on the corporate tax framework to create a better environment for new or early-stage investment; and
Whether the government stays focused on its stated priorities; focus that is needed to deliver.

In the current context of significant uncertainty and social and political tensions at home and abroad, meaningful progress will be very hard won. I’m grateful to those on both sides of the aisle who have stepped up to serve Canada.

M&W: Which economic issue is keeping you up at night?

CW: It's Canada’s economic future. Falling GDP per capita, sluggish capital investment, and flatlining business R&D all paint a worrying picture. Without a turnaround, we’ll struggle to compete globally, fund core services, or manage major transitions like climate and housing.

I also worry about people’s happiness today and hope for the future. Canada’s poor economic performance is not inevitable. We have the talent, the natural resources, and the institutional stability. What we need is a stronger investment environment and the discipline to make tough calls and stay the course.

M&W: What are you seeing on the ground when it comes to trade tensions and other geopolitical shifts?

CW: It’s a tense and uncertain environment. The new U.S. administration is using tariffs, protectionist measures, and bilateral negotiations to reset U.S. trade relationships. That’s creating real uncertainty for firms around the world, including in the U.S., especially for those with integrated supply chains. Workers are already feeling the effects.

When it comes to Canada, it’s good to see that Prime Minister Carney has moved quickly to stabilize the relationship. There’s even talk of a new economic and security agreement. But nothing has been signed yet, and the US-Mexico-Canada Agreement (USMCA) is up for renegotiation next year. The rules of engagement with the U.S. remain unclear.

That makes it even harder for businesses to invest in Canada, and at a time when it is sorely needed. Diplomacy matters, but so does Canada’s competitiveness, regardless of external conditions. We’ll need to make Canada a better place to invest than the U.S.