Introduction
There are significant regional disparities in Canada, and the numbers for real GDP per capita are among them. In Canada, regional differences are more accurately described as urban-rural rather than interprovincial. It is especially vital in the context of the economic comparison reflected in real GDP per capita.
The significance of these interprovincial differences is essential for creating appropriate policies to support business activity. Mainly, rather than being the result of better or worse labor laws, entrepreneurial spirit, or policies, some provinces’ relative levels of urbanity or rurality may explain why they lag behind others in socioeconomic metrics. The computation of real GDP per capita in each province is an essential means of understanding the level of economic prosperity in the region and its connection to economic activity.
Data Source
The information for the report is taken from Statistics Canada’s official website, which provides data on GDP per capita. Data on the discussed issue are collected over several years to examine trends in the distribution of GDP per capita. The Statistics Canada data is divided into categories representing the provinces. However, it does not provide data on the economic performance of regions within each province to evaluate differences in GDP per capita between rural and urban areas.
Summary of Statistics
The division between predominantly urban and predominantly rural provinces is essential for evaluating GDP per capita. Urban areas tend to have higher GDP per capita because of greater financial activity than in rural areas. In addition, these numbers are linked to the unemployment rate in the particular region, which affects economic activity. For instance, in Newfoundland and Labrador, the level of unemployment in 2022 was 10.8%, while in Quebec, the unemployment rate was 4.1% (“Gross domestic product, income-based, provincial and territorial, annual,” 2024).
Most Canadian regions saw a decline in GDP per capita during the initial year of the COVID-19 pandemic (“Gross domestic product, income-based, provincial and territorial, annual,” 2024). Exhibiting a GDP per capita of $50,333 compared to the national average of $43,817 USD PPP, Alberta was the Canadian area with the most significant GDP decline, at almost -17% (“Gross domestic product, income-based, provincial and territorial, annual,” 2024). In Canada, there has been a marginal decline in regional disparities in GDP per capita over the past 9 years (“Gross domestic product, income-based, provincial and territorial, annual,” 2024). This drop has been driven by rising economic inequality and a decline in the affluent areas.
Productivity trends across Canadian provinces also affect GDP per capita. For example, Manitoba and Alberta had the largest and smallest increases in productivity in Canada from 2010 to 2019 (“Gross domestic product, income-based, provincial and territorial, annual,” 2024). Manitoba experienced an annual gain in labor productivity of 1.4%, surpassing the 0.9% average (“Gross domestic product, income-based, provincial and territorial, annual,” 2024). Alberta saw relatively moderate growth in measured labor productivity over the same time, totaling 0.2% annually (“Gross domestic product, income-based, provincial and territorial, annual,” 2024).
The labor productivity of just over fifty percent of Canadian regions decreased in 2019 compared to 2020. In turn, Alberta saw the most significant reduction, falling by 11.5% (“Gross domestic product, income-based, provincial and territorial, annual,” 2024). Therefore, the decrease in productivity is reflected in lower GDP per capita, as economic activity falls.
Table 1 presents population numbers for all Canadian provinces, real GDP, and GDP per capita for the regions, allowing conclusions about disparities. The data reflects the most recent research conducted in 2022.
Table 1 – GDP by Territories, 2024
(Source: “Gross domestic product (GDP) at basic prices, by industry, provinces and territories,” 2024).
The measurements show that GDP per capita increases across all Canadian provinces, indicating positive economic development. It can be illustrated with Image 1.
The comparison of GDP per capita by province is shown in Table 2.
Table 2 – GDP 2018-2022
(“Gross domestic product, income-based, provincial and territorial, annual,” 2024).
The results of the statistical research show that disparities between predominantly rural and urban provinces have remained stable over the years. GDP results are lower in regions with lower population and business activity than in highly urbanized cities.
Discussion
The GDP per capita of Canada’s (“Gross domestic product, income-based, provincial and territorial, annual,” 2024) ten provinces and three territories is high, yet they differ significantly. Ontario, the most populous region in Canada, has strong ties to the northeastern and midwestern United States and is a significant hub for trade and industry. Natural resources play a significant role in the economies of the territories of Newfoundland and Labrador, Alberta, and Saskatchewan, as well as in Newfoundland. However, the nation’s lowest per capita GDP levels are found in the Maritimes, Manitoba, and Quebec (Floerkemeier et al., 2021). The Canadian government funds comparable levels of public services while also redistributing a portion of its earnings to address persistent regional differences.
GDP per capita indicates that Canada’s living standard lags behind those of other members of the Organization for Economic Co-operation and Development (OECD). Canada was ranked sixth out of 20 countries in 1981, but by 2021, it had fallen to a pitiful 12th place, barely above the OECD average. By 2060, Canada will be in 14th place if this trend continues.
The primary cause of this predicament is Canada’s slow rise in production (Floerkemeier et al., 2021). It indicates that robotics, machinery, and computer programs are outdated. According to 2023 research using OECD data, Canada has some of the lowest rates of private investment per employment among OECD nations (Floerkemeier et al., 2021). Therefore, Canada’s major geographic areas, Ontario, Quebec, the North, the West, and Atlantic Canada, have quite different economies.
Several factors, such as industrial location, urbanization, land use, and population density, influence these regions. Canada’s productivity rankings are remarkably close to its standard of living rankings, underscoring the importance of productivity as a critical factor in determining the standard of living (Floerkemeier et al., 2021). Furthermore, the productivity gap between provinces is smaller than the standard-of-living gap, indicating that high-productivity regions typically have a higher employment-population ratio.
The statistics gathered for the analysis of GDP per capita reflect economic tendencies. Given its meager employment-to-population ratio and decline in ranking from sixth place in productivity to tenth place in standard of living, Newfoundland may be the only province defying this overall trend. The provinces with the highest production performance are Alberta and Ontario. The subsequent highest productivity is in Saskatchewan, British Columbia, and Quebec.
With productivity over 10% below the national average, Manitoba has the lowest productivity of any western province. Productivity levels in the Atlantic provinces are lower than the national average; on Prince Edward Island, they are more than 20% below it (Floerkemeier et al., 2021). The examples show that regional peculiarities of economic development, including population size, productivity, and the standard of living, are essential to business activity and, therefore, to GDP per capita.
Conclusion
Regional differences in Canada are more often urban-rural than interprovincial. The significance of these findings lies in the multiple policy implications associated with the distribution of GDP per capita. A province’s degree of urbanization is typically the reason some provinces fall behind others in socioeconomic metrics. The investigation shows that GDP per capita is comparatively stable in the particular province and does not change dramatically over time. Even though GDP per capita has increased, the gains are typically insignificant and reflect only the positive trends in the region’s economic development. The primary distinction is between the highly urbanized provinces and the less populated rural areas.
References
Floerkemeier, H., Spatafora, N., & Venables, A. (2021). Regional disparities, growth, and inclusiveness. International Monetary Fund.
Gross domestic product (GDP) at basic prices, by industry, provinces and territories. (2024). Statistics Canada.
Gross domestic product, income-based, provincial and territorial, annual. (2024). Statistics Canada.
Real gross domestic product growth, Canada, provinces and territories, 2022. (2024). Statistics Canada.