Quebec’s economic growth curbed by its industrial policy over the past 25 years
14th edition of Productivity and Prosperity in Quebec – Overview
March 5, 2024
The Centre for Productivity and Prosperity – Walter J. Somers Foundation (CPP) has just released Productivity and Prosperity in Quebec – 2023 Overview. The main finding of this 14th edition is clear: Quebec’s industrial policy is a failure and hinders the economic growth of the province.
“For 25 years, Quebec’s approach to economic development has remained the same,” explains Robert Gagné, Director of CPP and co-author of the study. “The government actively promotes the development of sectors it deems promising and passively seeks to preserve jobs in businesses that are not conducive to productivity, innovation, and investment. The result is an uninspiring economic environment that tends to limit economic growth instead of accelerating it, with the consequences we observe today.”
Failure of an outdated industrial policy
Despite the investment of billions of dollars in public funds over the past 25 years, all economic indicators related to productivity and economic growth in Quebec remain in the red, and the business sector is reluctant to undertake activities needed to increase the economy’s productivity.
What is particularly concerning for HEC Montréal’s research teams is that, in addition to being inefficient and costly, industrial policy is now worsening the situation by the choices it imposes. “It is no longer just a question of wasting public funds,” states Jonathan Deslauriers, Executive Director of CPP and co-author of the study. “Industrial policy interferes in the process of reallocating resources in the economy, primarily because it responds to the needs of a long-gone era.”
In this context, Robert Gagné emphasizes the urgent need for a comprehensive reform of Quebec’s industrial policy: “The government must urgently conduct a complete and uncompromising diagnosis of its economic development interventions for which there is currently no valid census, let alone any rigorous evaluations of their effectiveness. Otherwise, the only gap the province will manage to close is the one separating it from Ontario, which is an economy losing momentum on the international scale.”
Find out more
Productivity and Prosperity in Quebec – 2023 Overview (PDF) [only in French]