Picking Swim Lanes: Canada Needs to Invest Better and Move Faster

Governments today are asked to do many things at once: grow the economy, improve the quality of life, deliver better and faster services, support equity, and remain resilient in a world increasingly defined by volatility. These ambitions may fit well in political science classrooms, but in practice, achieving even one of them is difficult. Fiscal constraints are real and growing, global competition is intensifying, and societal needs are diversifying.

Amid this complexity, one thing is increasingly clear: public trust depends on governments demonstrating value. Put simply, governments must justify their investments and show that economic choices are grounded in evidence rather than politics. Above all, decisions need to deliver real results.

In this environment, supporting “growth” simply cannot mean supporting everything. Governments must make deliberate, defensible choices about where taxpayer dollars go, and where they do not. This requires real and grounded industrial strategies: ones that focus investment on sectors most likely to generate jobs, GDP growth, productivity gains, wage growth, exports, and positive spillover effects. At the same time, governments need the discipline to curtail or sunset investments that are unlikely to scale or compete globally, regardless of intent. These decisions may be difficult ones, but they cannot be politically driven; they must be anchored in economic evidence.

Why Sector-Level Data Matters

Canada’s growth challenge is not due to a lack of ideas or ambition. Investment decisions are often made with good intentions and a noble desire for fairness and inclusivity. While admirable, this approach becomes increasingly challenging in a capacity-constrained environment. Canada must sharpen its focus on strategic advantages and sectors that have already demonstrated measurable results, and are most likely to continue that trajectory.

That requires decision-grade economic intelligence; data that allows governments to compare sectors on a like-for-like basis, assess trade-offs, and prioritize accordingly.

At a practical level, this means being able to answer questions like:

• Where does Canada have a defensible comparative advantage?

• Which sectors have demonstrated resilience to economic shocks?

• Which sectors have sustained growth over time?

• Which have proven to meaningfully scale employment and wages?

• Where are the strongest productivity gains likely to come from?

• What capital is required to fuel growth, and from which sources?

• Which policy, regulatory, and infrastructure conditions actually matter?

Without this clarity, investment strategies become fragmented and decision-makers become vulnerable to the loudest voices in the room. Funding that is spread thinly across too many priorities leaves insufficient capital for high-growth sectors to scale and generate meaningful value. The result? Programs that proliferate, with outcomes that remain modest. Over time, this erodes both economic performance and public confidence.

Measuring Real Economic Impact

Too often, economic impact analysis is treated like a retrospective reporting exercise rather than a strategic input. In reality, sector-level analysis is a prioritization tool. It should inform where money goes, how much is allocated, what is deprioritized, for how long, and why—all of this before investments are made.

Moreover, while GDP growth is often treated as the primary success metric, modern policy decisions demand a broader lens. Effective analysis should also account for:

• Employment impact: direct, indirect, and induced jobs; changes in regional employment; and reductions in skill mismatches.

• Wage effects: impacts on median earnings, wage growth, and wage resilience.

• Productivity: changes in output per worker or per hour, and business investment in productivity-enhancing technologies.

• Investment capacity: shifts in private investment and R&D, and the ability to commercialize innovation.

• Export potential: access to global markets and resilience to external shocks.

• Capital attraction: ability to attract FDI, venture capital, private equity, and other non-government funding.

Opportunity Cost: The Constraint That Can’t be Ignored

Every public investment carries an opportunity cost. Funding one sector means funding another less, or not at all. Delaying investment in high-growth areas also means forfeiting the compounding benefits those investments could generate over time.

These trade-offs are not abstract. They are real and manifest as:

• slower productivity growth.

• weaker wage growth.

• slower employment growth.

• fewer globally competitive firms.

• weaker entrepreneurship and firm retention.

• missed export opportunities.

• reduced resilience to external shocks

  
  

In a global economy where capital and talent are highly mobile, a lack of prioritization is itself a choice, and often an expensive one.

Making Strategic Choices in a Globally Competitive Economy

While “picking winners” is often framed as politically unpalatable, history shows it can be an effective strategy when done well. The U.S. and Israel’s technology sectors, Mexico’s automotive industry, and the Netherlands’ agricultural sector are examples that all reflect deliberate, evidence-based investment decisions. In Canada, similar approaches have supported Nova Scotia’s ocean economy, Ontario’s electric vehicle industry, Alberta’s energy sector, and Quebec’s AI ecosystem.

Sector intelligence enables informed prioritization. Decision-grade data does not require governments to blindly pick winners; it enables clarity around scale, feasibility, expected returns, risk, and payback periods.

Effective sector analysis should answer:

• What is the current baseline (employment, GDP, productivity, wages)?

• What actually drives growth in this sector?

• What types of capital are required, and under what conditions?

• What do conservative, moderate, and high-growth scenarios look like?

• What are the most plausible returns per public dollar, and what alternatives are forgone in the absence of these investments?

Attracting Capital from Sources Other than Taxpayers

Public investment can be a powerful catalyst for growth, but it should not be the primary or default source. Long-term fiscal sustainability depends on private capital, and private investors send powerful market signals; they continuously assess where returns are strongest and risks are clearest.

Governments play a critical role in attracting that capital. When policy, regulation, talent pipelines, and infrastructure align around clear priorities, uncertainty is reduced and private capital flows more freely. When priorities are vague or inconsistent, capital flows are constrained or redirected.

Sector-level analysis helps governments answer critical questions, including:

• What factors most influence private investment decisions across sectors?

• Where should FDI attraction efforts focus, and how should they be positioned?

• Which sectors require patient, long-term capital versus rapid-scale investment?

• Where does public funding unlock private capital; where does it merely replace it?

Not “Winner Take All”…but Everything Can’t be a Winner

Perhaps one of the hardest truths to accept in the modern economy is this: not every sector can—or should—be a winner.

Some sectors matter locally but lack global scale potential. Others are strategically important despite smaller employment footprints. Others generate social value but may no longer justify the level of public investment needed to support them. Acknowledging these realities can be uncomfortable, but the global economy requires it.

Canada does not need to lead in everything, but it must lead in something. That means fewer, clearer priorities; coordinated investment; alignment across policy, regulation, procurement, and talent; and the discipline to adapt as evidence evolves.

Put otherwise, Canada needs to pick its swim lanes, support them properly, and measure returns relentlessly.

Public trust is not built by safe middle-ground choices. It is built when governments make clear—even difficult or unpopular—decisions, explain the economic rationale behind them, and do the work needed to measure success and demonstrate results over time. In a world of unstable economic headwinds and intensifying competition, Canada cannot afford to drift. Understanding where to invest—and where not to—has nothing to do with ideology; it signals mature governance and effective economic stewardship.