Study: Regulatory accumulation, business dynamism and economic growth in Canada

Released: 2025-02-10

Regulations are intended to correct market failures, ensure the well-functioning of markets and protect public interest, such as in terms of safety, health and the environment. Despite their good intent, regulations and their accumulation over time impose real costs to businesses and may impact economic growth and business dynamism.

The new study, "Regulatory Accumulation, Business Dynamism and Economic Growth in Canada," examines the effect of this regulatory accumulation on business dynamism and economic growth in Canada.

The study found that an increased number of regulatory provisions from 2006 to 2021 is associated with a 1.7 percentage point reduction in gross domestic product growth and a 1.3 percentage point reduction in employment growth in the business sector. Small firms were found to be less affected by regulatory accumulation.

The study also found that increased regulations are associated with lowered business investment and fewer firm entries and firm exits.

Understanding economy-wide costs and benefits from regulations is challenging. The results of the study provide a first indication for Canada of the estimated impacts of the changing number of regulations over time on businesses. While the results of the study point to potentially important costs for the economy, it is not meant to reflect a full economic assessment of the benefits of regulations nor economic impacts associated with not introducing regulations.

Products

The study "Regulatory Accumulation, Business Dynamism and Economic Growth in Canada," part of the Analytical Studies Branch Research Paper Series (Catalogue number11F0019M), is now available.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).