POLICY ROADMAP

Canadian GDP growth looked set to slow to just 1.4% in 2023, as higher borrowing costs weighed heavily on business activity. At the same time, inflation has been falling, from 6.8% in 2022 to an expected 3.6% in 2023.

The Canadian government has delayed repayment of funds lent to business during the pandemic. It
has also announced the creation of the Canadian Innovation Corporation to increase business spending on research and development. A new Canadian Growth Fund will invest in businesses developing green technologies.

2023 Framework Conditions Review1

The Canadian entrepreneurial environment, as measured by the National Entrepreneurial Context Index (NECI), has been stable in recent years, hovering just above sufficient with a score of around 5.1. In 2023, the score declined to less than sufficient (4.8).

There were sharp falls in the scores for those Entrepreneurial Framework Conditions (EFCs) most closely associated with government, with Government Policy: Taxes and Bureaucracy reduced from 5.8 in 2022 to 5.0 in 2023, while Government Policy: Support and Relevance fell from 5.2 to 4.5 and Government Entrepreneurial Programs from 5.6 to 4.9. Partly as a result, the number of Canadian EFCs assessed as sufficient (score ≥5.0) had been seven in 2022 but was down to five in 2023. Some of this downturn may be associated with the gradual withdrawal of government support during the pandemic.

Additional questions in the 2023 National Expert Survey (NES) sought expert views of the sufficiency of social support available to women entrepreneurs, as well as how women entrepreneurs’ access to resources compared to that of men. As with many economies, Canada scored fairly poorly on the former (a score
of 4.0), but much better on access to resources (5.9, eighth highest of the 49 economies).

2023 Entrepreneurial Activity Review

Three in 10 Canadian adults reported that their household income had declined in 2023, a significant proportion but one that has been steadily falling from the four in 10 when this question was first introduced in 2020. Despite this, levels of entrepreneurial activity in Canada are not only high but increasing, reaching 19.6% in 2023 (up from 16.5% in 2022). Male entrepreneurial activity (24.2%) was higher than that
of females (15.4%), possibly influenced by the lack of social support for women entrepreneurs noted earlier. A small increase in Established Business Ownership is encouraging, when the long-term trend had been downward, which suggested difficulty in converting Canada’s relatively high rate of startups into established businesses.

Entrepreneurship continues to enjoy a high profile in Canada, with more than half of adults knowing someone who recently started their own business, or seeing themselves as having the skills and experience to do the same. Meanwhile, two out of three adults see good opportunities to start a business, but more than half of these would not do so for fear it might fail, matching the levels of the depth of the pandemic.

The two economic motivations (building great wealth or very high income, and earning a living because jobs are scarce) were agreed by almost seven in 10 new Canadian entrepreneurs. Making a difference to the world was not far behind at six in 10. New Canadian entrepreneurs have no difficulty in managing multiple motivations. One in three new entrepreneurs had customers beyond Canada, while one in two expected to use more digital technologies in the next six months.

The proportion of new entrepreneurs expecting to employ at least another six people over the next five years has been slowly increasing in recent years, approaching one in four in 2023, back above the pre-pandemic level in 2019.

1 A brief description of the GEM approach is given in the footnote on p. 107.