AI Is Starting to Trend in Canada. Why Isn’t Productivity? 

April 9, 2026 – Capital spending on AI has surged into the hundreds of billions, yet the economic payoff remains elusive. Despite rapid investment and widespread experimentation with generative AI tools, measurable productivity gains have yet to show up clearly in aggregate data across advanced economies – raising an important question: who will be first to turn this momentum into measurable gains? 

In “From Hype to Output: How AI Investment Translates to Real Productivity Gains,” author Rosalie Wyonch finds that while AI offers a path to stronger economic performance and could help address Canada’s long-standing productivity challenges, realizing these gains will require policies that accelerate business adoption and diffusion, which remain uneven across most industries and regions. This includes removing barriers, ensuring access to data resources and encouraging integration across firms and sectors. 

“Data centres and AI infrastructure investment are necessary for Canada to remain competitive, but it has limited direct effects on growth,” says Wyonch, Associate Director of Research at the C.D. Howe Institute. “The bigger gains from AI will come from faster adoption, integration and the reimagining of business models and processes that it enables.” 

The report notes that Canadians are among the most frequent users of generative AI tools worldwide and produce world-leading research relative to its population size. However, only about 12 percent of businesses have adopted AI, and most businesses don’t think it is relevant to their operations. Encouragingly, sectors such as finance, professional services, and healthcare are leading adoption, and provinces like Ontario and British Columbia show stronger momentum. However, overall growth in adoption is slowing and uneven. 

The report argues that policy should shift focus on removing barriers to these technologies. While continued investment in infrastructure and research is important, the greater economic payoff will come from accelerating adoption across firms of all sizes and sectors. Recommended policy actions include improving regulatory clarity, expanding access to high-quality data, strengthening AI knowledge, and supporting firms as they experiment and integrate AI into core operations. Governments can also encourage adoption through demand-side measures without relying heavily on direct spending. 

“AI alone won’t fix Canada’s productivity problem,” Wyonch concludes. “The gains will come from how businesses use it. And right now, we’re not there yet.” 

Read the Full Report 

For more information, contact: Rosalie Wyonch, Associate Director of Research, C.D. Howe Institute; and Raquel Schneider, Communications Officer, C.D. Howe Institute, 647-805-3918, rschneider@cdhowe.org.  

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. 

Want more insights like this? Subscribe to our newsletter for the latest research and expert commentary.