{ "title": "Canada Can Grow Faster by Unlocking Its Own Market", "publication": "IMF News, January 27, 2026", "sourceUrl": "https://www.imf.org/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market", "canonical": "https://www.imf.org/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market", "overlayPath": "/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/index.md", "summary": "Knocking down internal trade barriers could boost output in Canada by 7 perc", "authors": [ "Federico J. Díez", "Yuanchen Yang January" ], "publishDate": "2026-01-27", "sections": [ { "heading": "Key findings", "content": "- Knocking down internal trade barriers could boost output in Canada by 7 percent.\n- Non-geographic, policy-related barriers within Canada average the equivalent of about a 9 percent tariff nationally.\n- Barriers in some sectors, including educational and healthcare services, exceed the equivalent of a 40 percent tariff.\n- Fully eliminating non-geographic internal trade barriers could raise Canada’s real GDP by nearly 7 percent over the long run—roughly C$210 billion in today’s terms.\n- Roughly four-fifths of the total GDP gains would come from liberalizing services sectors." }, { "heading": "Canada’s internal market: diagnosis and evidence", "content": "- Canada is globally open but domestically fragmented: goods, services, and workers face significant barriers across provincial and territorial lines.\n- Fragmentation stems from provincial constitutional authority over licensing, standards, procurement, and service regulation, leading to accumulated regulatory differences and administrative frictions.\n- The burden is uneven: large provinces with diversified economies and dense networks face relatively low internal trade costs; smaller provinces and northern territories face costs that are multiples higher.\n- Services account for the majority of interprovincial trade and concentrate the largest measured internal barriers." }, { "heading": "Economic impact and simulations", "content": "- Model-based simulations attribute the long-run GDP uplift mainly to higher productivity: more efficient allocation of capital and labor, stronger competition, and better scale for high-performing firms.\n- Gains are not driven by short-term demand effects but by sustained productivity improvements.\n- Distributional pattern:\n - Smaller and more remote provinces would gain the most in percentage terms.\n - Atlantic Canada and the northern territories could see particularly large productivity gains.\n - Larger provinces also benefit substantially in absolute terms due to their role in national supply chains.\n- Internal integration produces a national productivity dividend rather than a zero-sum reallocation." }, { "heading": "Sector priorities and sequencing", "content": "- Highest-impact reforms are those in sectors with the greatest economic influence—sectors heavily traded across provinces and deeply embedded in input-output networks.\n- Priority sectors identified:\n - Finance\n - Transport\n - Telecommunications\n- Progress in these enabler sectors would amplify returns elsewhere by:\n - Making it easier to start and expand a business\n - Improving labor mobility\n - Supporting investment in high-productivity activities\n - Strengthening capacity to absorb external shocks\n- Even modest reductions in internal trade costs could help offset sizable adverse shifts in external trade conditions." }, { "heading": "Policy recommendations and implementation", "content": "- Make mutual recognition the default, with narrow and transparent exceptions—starting with professional licensing and credential recognition.\n- Use benchmarking and public reporting of internal trade barriers to sharpen accountability and sustain momentum.\n- Federal role:\n - Provide catalytic leadership through incentives, conditional funding, and convening power while fully respecting provincial jurisdiction.\n- Adopt pragmatic, incremental reforms anchored in shared national gains, building on Canada’s history of complex federal-provincial reforms." }, { "heading": "Conclusion", "content": "- Internal barriers remain large, economically costly, and increasingly out of step with a modern, service-intensive economy.\n- Removing them is portrayed as one of the most powerful—and least fiscally costly—levers to raise productivity, strengthen resilience, and support inclusive growth.\n- The authors argue the opportunity is now and frame turning thirteen economies into one as an economic imperative.\n\nSource: \"Canada Can Grow Faster by Unlocking Its Own Market\" — IMF News, January 27, 2026; Federico J. Díez and Yuanchen Yang.\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- CANADA AND THE IMF\n- ARTICLE IV REPORT\n- PRESS CENTER\n- IMF Country Focus\n- New evidence\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market" } ], "bullets": [ "[Markdown version](/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/index.md)", "[Structured JSON version](/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/index.json)", "[Bundle manifest](/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/bundle-manifest.json)", "Authors: Federico J. Díez, Yuanchen Yang January", "Published: January 27, 2026", "Knocking down internal trade barriers could boost output in Canada by 7 percent.", "Non-geographic, policy-related barriers within Canada average the equivalent of about a 9 percent tariff nationally.", "Barriers in some sectors, including educational and healthcare services, exceed the equivalent of a 40 percent tariff.", "Fully eliminating non-geographic internal trade barriers could raise Canada’s real GDP by nearly 7 percent over the long run—roughly C$210 billion in today’s terms.", "Roughly four-fifths of the total GDP gains would come from liberalizing services sectors.", "Canada is globally open but domestically fragmented: goods, services, and workers face significant barriers across provincial and territorial lines.", "Fragmentation stems from provincial constitutional authority over licensing, standards, procurement, and service regulation, leading to accumulated regulatory differences and administrative frictions.", "The burden is uneven: large provinces with diversified economies and dense networks face relatively low internal trade costs; smaller provinces and northern territories face costs that are multiples higher.", "Services account for the majority of interprovincial trade and concentrate the largest measured internal barriers.", "Model-based simulations attribute the long-run GDP uplift mainly to higher productivity: more efficient allocation of capital and labor, stronger competition, and better scale for high-performing firms.", "Gains are not driven by short-term demand effects but by sustained productivity improvements.", "Distributional pattern:", "Internal integration produces a national productivity dividend rather than a zero-sum reallocation.", "Highest-impact reforms are those in sectors with the greatest economic influence—sectors heavily traded across provinces and deeply embedded in input-output networks.", "Priority sectors identified:", "Progress in these enabler sectors would amplify returns elsewhere by:", "Even modest reductions in internal trade costs could help offset sizable adverse shifts in external trade conditions.", "Make mutual recognition the default, with narrow and transparent exceptions—starting with professional licensing and credential recognition.", "Use benchmarking and public reporting of internal trade barriers to sharpen accountability and sustain momentum.", "Federal role:", "Adopt pragmatic, incremental reforms anchored in shared national gains, building on Canada’s history of complex federal-provincial reforms.", "Internal barriers remain large, economically costly, and increasingly out of step with a modern, service-intensive economy.", "Removing them is portrayed as one of the most powerful—and least fiscally costly—levers to raise productivity, strengthen resilience, and support inclusive growth.", "The authors argue the opportunity is now and frame turning thirteen economies into one as an economic imperative.", "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)", "[CANADA AND THE IMF](https://www.imf.org/en/countries/can)", "[ARTICLE IV REPORT](https://www.imf.org/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation)", "[PRESS CENTER](http://presscenter.imf.org/)", "[IMF Country Focus](https://www.imf.org/en/news/country-focus)", "[New evidence](https://www.imf.org/en/publications/cr/issues/2026/01/21/canada-2025-article-iv-consultation-press-release-and-staff-report-573340)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/index.md", "json": "/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/index.json", "bundleManifest": "/en/news/articles/2026/01/27/cf-canada-can-grow-faster-by-unlocking-its-own-market/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:24:10.792Z" }