A new federally supported $6-million research partnership to find solutions to Canada’s declining productivity is a “genuinely national effort” with research questions shaped by real policy needs and a focus on training the next generation, says the economist leading the initiative.

“This brings together researchers from universities across the country, working alongside federal policy partners, with research questions shaped by real policy needs,” Trevor Tombe (photo at right), professor of economics at the University of Calgary, and director of economic and fiscal policy at the School of Public Policy, said in an email to Research Money.

“A major focus is training the next generation,” said Tombe, director of the new research partnership.

Much of the funding supports students – undergraduates, master’s students, PhDs, and postdocs – giving them hands-on experience working with real data and real policy questions, Tombe said. “That’s how you build lasting capacity, not just short-term results.”

“Overall, Canada’s productivity challenge took years to emerge, and it won’t be solved overnight,”  he added. “This initiative is about committing to the long run – building the evidence, tools, and talent needed to raise living standards and strengthen prosperity for decades to come.”

Industry Minister Mélanie Joly announced a federal investment of $6 million over 15 years to support the novel national research partnership aimed at boosting Canada’s productivity over the coming years.

The new multi-stakeholder partnership is led by the University of Calgary and will leverage long-term, high-impact research in the social sciences and humanities to develop and enact “transformative economic policy, the government said.

“It is clear that Canada has a productivity problem, and it’s been building for years,” Tombe noted.

Over the past decade, productivity growth has averaged about 0.2 percent per year, far below the pace we sustained for decades before, he said.

That gap compounds over time and shows up in wages, affordability and pressure on public finances, he added.

“So, simply put, productivity is at the heart of nearly every economic challenge Canada faces today, but it’s also one of the hardest things to fix,” Tombe said.

“It’s shaped by tax policy, trade, skills, innovation, infrastructure and governance – no single lever, no quick fix,” he said.

“That’s why a long-term, coordinated research effort is needed. This partnership is about treating productivity like the structural, national issue that it is.”

Tombe said the goal is straightforward: “Better evidence leading to better policy, and better policy leading to stronger productivity growth over time.”
He noted that the initiative brings together a national network of researchers and policy partners to focus on practical, policy-ready evidence – not just academic papers, but tools, data and analysis that policymakers can actually use.

The Bank of Canada has called Canada’s productivity performance a crisis, with the country ranking 18^th out of 38 Organisation for Economic Co-operation and Development countries in GDP per hour worked.

Among the G7, Canada in 2025 ranked 6^th out of seven countries in productivity, ahead of only Italy.

Over the past two decades, Canada has experienced some of the lowest productivity growth among developed nations.

Canada's productivity gap with the United States is a widening, where Canadian business-sector output per hour is roughly 71 percent to 73 percent of U.S. levels, down from 88 in 1984.

This gap directly translates to roughly $20,000 less in GDP per capita for Canada annually, leading to lower wages and a lower standard of living compared to the U.S. 

Research indicates the productivity gap is driven by lower business investment (especially in machinery, equipment, R&D and intellectual property), a high concentration of small, less-productive firms, anti-competitive government regulation, less competition among certain sectors, slowness in adopting new technologies, and a failure to translate ideas into commercial products.

The new partnership brings together over 30 team members, six federal government partners and several university partners across the country.

Through working groups, embedded researcher programs and joint conferences, it will support a lasting collaboration between researchers and policymakers, producing knowledge and evidence that can be applied to long-term decision-making.

The new federal initiative is supported by a first-of-its-kind grant from the Social Sciences and Humanities Research Council’s (SSHRC) new Policy Innovation Partnership Grants pilot program.

The inaugural competition launched in September 2025 and is designed to support partnerships between postsecondary institutions and at least one federal government department, and establish long-term research programs focusing on areas of importance to Canada’s future.

“The inaugural theme of increasing Canada’s productivity is a pressing issue with far-reaching implications, and one that is ideally suited to the strengths of the social sciences and humanities, said Ted Hewitt (photo at right), president of SSHRC.

“This innovative partnership will demonstrate how researchers, higher education institutions and policymakers can work together to develop actionable solutions to Canada’s most important issues.”

The new partnership includes the Bank of Canada; Finance Canada; Global Affairs Canada; Housing, Infrastructure and Communities Canada; Innovation, Science and Economic Development Canada; and Statistics Canada.

University partners are HEC Montréal; Memorial University, Western University, McMaster University and the Rotman School of Management, University of Toronto.

Non-governmental partners are the Ottawa-based Centre for the Study of Living Standards, the Alberta Centre for Labour Market Research and the Canadian AI Adoption Initiative (CAIAI), a collaborative project by the University of Waterloo, Centre for International Governance Innovation, and Centre for the Study of Living Standards.

The CAIAI focuses on providing recommendations to policymakers to drive nationwide AI integration and provide AI “starter packs” and policy advance to businesses, particularly targeting small and medium-sized enterprises.

The CAIAI’s involvement suggests that deployment of AI will be a key component of the new national research partnership initiative.

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