The Atlantic Canada provinces, especially the three Maritime provinces, have suffered below-average real economic growth for decades. Relatively weak rates of growth of business investment also characterize the region and are a major cause of the region’s relatively slow economic growth compared to other provinces. In addition, Atlantic Canada has a less well-educated and skilled workforce than do other provinces. Since human capital is a critical input to productivity growth, as are investments in plant and equipment and intellectual property products such as software, and since productivity growth underlies improvements in standards of living, stimulating investment in physical and human capital is a prerequisite to improving real economic growth in Atlantic Canada.

Federal and provincial governments have implemented various programs over time to promote investment in Atlantic Canada including generous investment tax credits. However, other income support programs such as Equalization and Employment Insurance that are especially generous to the Maritime provinces have arguably undermined incentives on the part of public and private sector institutions to move those provinces toward greater economic self-sufficiency. In addition, relatively high personal income tax rates discourage the inflow and retention of highly educated workers, while an unwelcoming attitude on the part of provincial governments toward resource-based investments has turned away billions of dollars of private sector investments in recent years.