Canada’s slow economic growth and poor productivity have many causes. But one of the least discussed—and most consequential—is the case of the missing entrepreneurs.
Entrepreneurs generate new ideas, new firms, new jobs, and new competition. They challenge incumbents, commercialize technologies, create new markets, and help move capital and talent toward more productive uses.
Yet by multiple measures, Canada is becoming less entrepreneurial.
As Charles Lammam recently documented in The Hub, the number of self-employed Canadians as a share of total employment has fallen from 17.3 percent to 12.8 percent over the past quarter-century—a decline of more than one quarter.
The decline is even steeper among the kinds of firms most likely to scale. The Business Development Bank of Canada tracks the number of self-employed Canadians with paid employees per 1,000 working-age adults. Here, Canada’s rate fell from 3.0 to 1.3 between 2000 and 2022—a 57 percent decline.
Statistics Canada’s business dynamism data tells a similar story. The business entry rate in 2023 was 12.3 percent, down from 15.2 percent 15 years earlier and far below the levels seen in the early 1980s.
International comparisons are especially concerning. Between 2015 and 2024, the number of annual business entries in Canada was essentially flat. Over the same period, annual business entries rose by 34 percent in the United States, 40 percent in the United Kingdom, and nearly 86 percent in France.
That’s the backdrop for this year’s Hunter Prize for Public Policy, an annual initiative of the Centre for Civic Engagement. The Hub is proud to serve as the prize’s national media partner.
Thanks to the generosity of the Hunter Family Foundation, this year’s prize will once again award up to $50,000 in total prizes for bold, practical, and fiscally responsible policy ideas aimed at reviving entrepreneurship and business formation in Canada.
The issue deserves that level of attention because this decline matters for the whole economy.
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A country with fewer entrepreneurs has less dynamism. Fewer new businesses means less competition for established firms, weaker incentives to invest and innovate, and ultimately slower productivity growth.
Weak productivity eventually shows up everywhere: in stagnant wages, strained public finances, slower innovation, lower living standards, and diminished national ambition.
A low-entrepreneurship economy is ultimately a low-growth economy. It becomes more comfortable with incumbency than with disruption, more focused on redistribution than on wealth creation, and more inclined to manage decline than to pursue abundance.
The question is what’s driving this decline.
Canada has talent, universities, stable institutions, skilled workers, ambitious people, and access to global markets. The more pressing challenge is whether its policy environment consistently rewards entrepreneurial risk-taking and firm growth.
The barriers are numerous and mutually reinforcing.
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Women walk past the Richmond-Adelaide Centre in the financial district in Toronto, September 29, 2021. Evan Buhler/The Canadian Press.
Regulatory accumulation has made it harder to start, build, and expand businesses. Statistics Canada has found that federal industrial regulatory requirements alone grew by 37 percent between 2006 and 2021, with measurable consequences for dynamism, innovation, and productivity. This doesn’t include the additional burden of provincial and municipal rules, licensing regimes, permitting delays, and overlapping compliance requirements.
Canada’s internal market also remains badly fragmented. Entrepreneurs seeking to build national firms still confront different provincial rules, standards, and regulatory systems. A country of 40 million people too often functions like 13 smaller markets. That’s a serious disadvantage in a world where scale increasingly matters.
The tax system sends mixed signals as well. Preferential treatment for small businesses may help some firms survive while discouraging others from growing beyond key thresholds. Public policy that rewards smallness more than scale will tend to produce too many small firms and too few high-growth companies.
Capital formation is another challenge. Public programs designed to support entrepreneurs can sometimes crowd out private investment, distort incentives, or reward firms that become better at navigating government programs than winning customers.
Talent and market access matter too. Entrepreneurs need workers with the right skills, immigration pathways that support founders and specialized talent, and competition policy that prevents incumbents from using regulatory complexity to keep challengers out.
Canada needs a new entrepreneurship agenda.
It should examine taxes, regulation, competition, procurement, immigration, internal trade, capital formation, and the broader institutional bias against speed, risk-taking, and scale. It should be judged by whether it increases business formation, helps firms grow, attracts private capital, and raises the economy’s long-run growth potential.
That’s the question at the heart of this year’s Hunter Prize. Participants are invited to address the following challenge:
Canada’s entrepreneurs face a mix of financing, regulatory, talent, and market-access constraints that are harming business dynamism and the long-term prospects of the Canadian economy. What policy reforms could support Canadian entrepreneurs by increasing business formation and scale-up over the next decade? Explain the policy, how it would be implemented, and the metrics that would show success, while remaining consistent with fiscal discipline.
This is a broad question, but it is ultimately a practical one. We are looking for concrete policy ideas.
Proposals should identify a real constraint, explain the reform, show how it would be implemented, and specify how success would be measured. The best submissions will be ambitious, practical, and fiscally disciplined. They will recognize that entrepreneurship policy is not about isolated subsidies or boutique programs. It is about the broader economic conditions that determine whether new firms can be born, survive, compete, and scale.
Canada’s economic problems won’t be solved by entrepreneurs alone. But they won’t be solved without them.
If we want higher wages, stronger productivity, more innovation, and a renewed sense of national possibility, then Canada needs more people starting and scaling businesses. It needs more firms challenging incumbents. It needs more capital flowing toward productive risk-taking. It needs a country that once again treats builders, founders, and entrepreneurs as central to the national project.
That’s the challenge before this year’s Hunter Prize participants.
It’s time to take it up.
Sean Speer is The Hub’s editor-at-large. Taylor Jackson is The Hub’s research manager and a PhD student in political science at the…
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There is a significant decline in entrepreneurship in Canada, evidenced by a drop in self-employment and business dynamism. This decline is attributed to factors like regulatory accumulation, internal market fragmentation, and a tax system that may disincentivize growth. Compared to other countries like the U.S., U.K., and France, Canada’s business entry rates are stagnant. This lack of entrepreneurship negatively impacts productivity, innovation, and overall economic growth. The Hunter Prize for Public Policy is seeking policy ideas to revive entrepreneurship by addressing financing, regulatory, talent, and market-access constraints.