Performance Indicator 9: Business Investment
Where BC Ranks, Provincial Comparison |
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| Performance Indicator Nine measures the expenditure by businesses on durable assets and on building and engineering construction plus residential construction by individuals. |
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| BC ranked second in terms of business investment as a percent of GDP in 1990, behind only Alberta, and was a full percentage point ahead of the national average. Investment in BC declined to trough in 2000, where it was one-and-a-half points below average and ranked sixth. |
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| Above average growth brought the ratio back to average by 2004 and half a percentage point above it by 2006. Double digit growth in 2010 moved BC one-and-a-half points above Canada’s average and into fourth place. |
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Why It's Important
Business investment is perhaps the most important factor contributing to long-term economic growth and higher productivity. Without solid business investment, significant or sustained employment growth is unlikely. Periods of strong business investment are generally followed by faster economic growth and rising incomes. Factors such as input costs, market conditions, expected rates of return, and government fiscal policy determine a jurisdiction’s attractiveness for fixed business investment. |
Provincial Comparison — Non-Residential Business GFCF
| Removing residential construction from the analysis yields Non-Residential Business GFCF. |
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| Non-residential business investment as a percent of GDP in BC was roughly equal to the Canadian average in the early to mid 1990s and was even slightly above it in 1994. A large gap appeared in 1996 and widened in the late 1990s to peak at 2.2 percentage points of GDP in 1998 and 1999. |
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| The gap remained between one and two percentage points throughout the 2000s as non-residential investment grew by 3.6 percentage points in BC and Canada between 2002 and 2008. |
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| BC and Canada suffered similar declines in 2009 but investment rebounded strongly in BC such that BC's ratio was slightly above average in 2010. |
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International Comparison |
| British Columbia is a strong performer in Total Gross Fixed Capital Formation (GFCF) as a percent of GDP when compared to OECD countries. BC’s ratio of 23.9 percent in 2010 earned it a fourth-place rank while Canada’s 22.1 percent earned it a sixth-place rank. Both BC’s and Canada’s 2010 ranks were their best performances since at least 1991. |
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