Investments in artificial intelligence are not adding to Canada's economic growth, according to a new analysis from Royal Bank of Canada economists. The report says rising AI spending is not boosting the country's gross domestic product in the same way as it is in the United States. RBC senior economist Claire Fan said Canada is investing more in AI infrastructure, but those investments are being made in computer and peripheral equipment manufactured in other countries. Purchases of that equipment surged 28 per cent in the first half of 2026, according to national accounts data, but imports of the same equipment are up 75 per cent from a year ago. "We are a little bit behind. Canadian businesses are adopting at a slower pace than American businesses," said Joël Blit, an economics professor at the University of Waterloo and co-director of the Canadian AI Adoption Centre. He agreed that investments in AI infrastructure are directly benefiting the economies that produce the equipment, not Canada's. Fan said AI investments over the past year have contributed to Canada's "lackluster" productivity growth, with GDP increasing just over one per cent in the last year.
Blit said the most important question is not about where the equipment is made, but about future productivity gains. "Productivity, I expect, is gonna rise significantly," he said. "But that is going to take a little bit longer because you need to make these investments and then they have to work their way through until you can actually produce in these new ways with this new technology." He studies disruptive technologies like electricity, computers and the internet, and said the first stage involves inserting new technology as a direct replacement in current workflows.
He gave the example of replacing a human computer, a person who did arithmetic for a living, with an electronic computer. That kind of substitution only improves productivity slightly, Blit said. Real gains come when people "reimagine how they do their business." He cited Barnes and Noble using the internet to track inventories versus Amazon reimagining the entire book-selling industry. For that kind of transformation to happen, Blit said complementary investments are needed in retraining people and re-engineering processes.
Public opinion polling shows a majority of Canadians hold a negative view of AI. Data from Angus Reid collected in the first half of the year shows 43 per cent of Canadians view AI negatively and 24 per cent are critical of it. Despite those negative perceptions, the same survey found 41 per cent of Canadians use AI more than once per week, compared to 30 per cent who don't use it at all. Blit said this individual use could help Canada in the long run, as much business adoption is not coming "top down" from management.
"A lot of what’s happening in organizations is not that the head boss is saying, ‘hey, let’s adopt this technology’. It’s that if they provide the guardrail, if they provide access to the technology and the guardrails, people are gonna use them," he said. Blit emphasized the importance of increasing AI literacy and exploration across the country. "It’s so important for us as a country to invest in AI literacy so that we can empower as many Canadians as possible to experiment and find ways to use these tools," he said.