Building the strongest economy in the G7 will take more than steel and concrete

The government of Canada has said it wants to build the strongest economy in the G7 and is making a big push to increase capital investment.

That matters. But whether Canada leads the G7 won’t just depend on how much we invest in factories, equipment, and office space. It will also depend on how much we invest in AI.

While the initial hype has faded somewhat, AI has proven it can fuel innovation and increase productivity. Businesses are using it to recommend products, optimize delivery routes, increase factory efficiencies, detect fraud, and even navigate the mess of tariffs. Countries that aren’t at the forefront risk falling behind.

As for who’s winning that race, the U.S. is in a league of its own, and its lead has only grown over time. In 2024, the U.S. attracted eight times more private investment into AI than the rest of the G7 combined. When ranked individually, Canada comes in at a respectable third in the G7, behind the U.K., but the gap with the U.S. is large enough to drive an autonomous truck through.

That said, Canada isn’t entirely uncompetitive. Adjusting for its smaller population and economy, Canada ranks second in the G7 in private AI investment and, though still a far cry from the U.S., is at least in the game—spending $13 per $10,000 of GDP compared to $39 in the U.S..

But there are signs Canada shouldn’t get too comfortable. Broader indicators that assess a country’s overall AI ecosystem—and offer more insight into future potential—suggest Canada may struggle to hold its current investment position.

The Global AI Vibrancy Tool is one example. It ranks countries not just on AI investment but also on other AI development-driving factors such as R&D, education, and infrastructure. Based on the latest data (2023), Canada ranks second-to-last in the G7 and is in the middle of the pack among the 36 countries assessed.

That’s a notable drop for a country that was once a leader. Back in 2017—the first year of reporting—Canada ranked behind only the U.S. among its G7 peers (and third globally). That won’t surprise those who remember Canada as an early mover in AI. In fact, many of today’s breakthroughs in generative AI, like ChatGPT, trace back to Canadian brainpower.

Canada’s slipping ranking seems to stem from a couple of factors. One is legislative inaction: Parliament didn’t pass any new AI laws, and the topic rarely came up in proceedings, despite legislation being widely viewed as essential to a healthy AI ecosystem. Another is infrastructure. Canada’s “compute capacity”—the processing power needed to train and run AI models—remains limited compared to other countries.

Still, there are signs of renewed momentum. Canada has had a national AI strategy for years, but for the first time, it now has a minister of artificial intelligence and digital innovation to help lead the charge. That’s a good step forward. If Canada hopes to build the strongest economy in the G7, its digital strength shouldn’t be overlooked.

A version of this post was originally published by the Business Council of Alberta at businesscouncilab.com.