Why Canada May Be Better Positioned Than We Think
By Paul McCrea
AI is accelerating. Populations are aging. Global trade is fragmenting. Europe is rebuilding its military capacity. Resources and supply-chain security are becoming strategic assets. Individually, these developments are significant. Taken together, they may represent something much larger: a fundamental reordering of the global economy.
For much of the past several decades, the economic logic of globalization was relatively straightforward.
Produce where costs are lowest. Build highly efficient international supply chains. Allow capital, goods and technology to move across borders. Rely heavily on the United States to provide much of the security architecture supporting global trade.
That model produced extraordinary economic growth.
But the assumptions underlying it are changing.
And the implications may be far greater than any individual tariff, election, war or technological breakthrough.
The Forces Are Converging
Consider what is happening simultaneously.
China, Japan, South Korea and much of Europe face aging populations and, in some cases, outright population decline. Working-age populations are shrinking just as governments confront growing pension, healthcare and fiscal obligations.
At the same time, geopolitical competition has returned.
Russia's invasion of Ukraine fundamentally changed European assumptions about security. European countries are rebuilding military capabilities after decades of relatively limited defence spending.
Ukraine has also demonstrated something potentially transformative: relatively inexpensive drones, sensors, software, electronic warfare and distributed intelligence can impose enormous costs on much more expensive conventional military systems.
Modern defence is becoming increasingly technological.
Then there is trade.
Globalization isn't disappearing. But the criteria governing global investment and supply chains are changing.
The question is increasingly shifting from:
Where can we produce this most cheaply?
to:
Where can we produce it securely, reliably and with partners we trust?
Energy security matters again.
Food security matters.
Critical minerals matter.
Domestic manufacturing capacity matters.
Ports, railways, electricity generation and telecommunications infrastructure matter.
And then, into the middle of this extraordinary structural transition, comes artificial intelligence.
AI Is Not a Separate Story
We often discuss AI as though it were an independent technological revolution.
It isn't.
AI is arriving at precisely the moment many advanced economies face shrinking workforce's, rising labour costs, geopolitical competition and enormous requirements for new infrastructure and industrial capacity.
That makes AI and automation much more than productivity tools.
They may become economic necessities.
Countries facing declining working-age populations will need to produce more value with fewer workers. Organizations will need to automate tasks, redesign workflows and dramatically increase productivity.
AI therefore intersects directly with demographics.
It intersects with defence.
It intersects with energy.
It intersects with manufacturing.
And increasingly, it intersects with national competitiveness.
The countries that successfully combine technology, capital, energy, resources and human capability may possess significant advantages in the economy that is emerging.
Which raises an interesting question.
Where does Canada fit?
Canada Has Been Dealt an Unusually Strong Hand
Canada's economic challenges are well documented.
Productivity has been weak. Housing affordability has deteriorated. Major infrastructure and resource projects have historically taken too long to approve. Inter-provincial barriers remain problematic. And Canada's extraordinary dependence upon the United States has become a source of economic vulnerability.
Those problems shouldn't be minimized.
But neither should Canada's assets.
Consider what an increasingly uncertain world is beginning to value.
Energy.
Canada has enormous oil and natural gas reserves, hydroelectric capacity and uranium resources.
Food.
Canada is one of the world's major agricultural producers and exporters.
Fertilizer.
Canada possesses the world's largest potash reserves and is a dominant global producer of an input essential to modern agriculture.
Critical minerals.
Canada possesses significant deposits of many of the minerals required for batteries, electronics, defence systems and advanced manufacturing.
Electricity.
Several Canadian provinces possess substantial low-carbon electricity resources—an increasingly important consideration as AI and data centres dramatically increase electricity demand.
Technology.
Canada possesses internationally recognized capabilities in artificial intelligence, quantum computing, aerospace, advanced manufacturing and research.
Geography.
Canada has Atlantic, Pacific and Arctic access and occupies one of the most strategically secure territories on earth.
And finally, institutions.
In an increasingly unstable world, predictable government, established capital markets, rule of law and political stability have economic value.
Canada doesn't have to be the cheapest place to invest.
It needs to become one of the safest places to make long-duration strategic investments.
Something Interesting Is Already Happening
There are early indications that international capital and Canadian trade patterns are responding.
Foreign direct investment into Canada reached approximately $93 billion in 2025, its highest level in a decade and well above its ten-year average.
Even more interesting is what happened to Canadian exports.
Exports to the United States declined 3.7% in 2025.
Exports to the rest of the world increased 11.1%.
As a result, non-U.S. markets represented 32.8% of Canadian exports—the highest proportion in more than four decades.
That doesn't mean Canada has suddenly eliminated its dependence on the United States. Far from it.
But it does suggest that diversification is no longer merely a political aspiration.
It has begun to show up in the numbers.
Canada is also deliberately pursuing new markets, infrastructure, defence investment, trade corridors and major resource projects while positioning itself internationally as a reliable supplier and investment destination.
The strategic opportunity is becoming clearer.
But Resources Don't Automatically Create Prosperity
This is the most important qualification.
Canada can become more strategically important without Canadians becoming substantially more prosperous.
Natural resources alone don't guarantee higher living standards.
Nor does foreign investment.
The real measure of success will be whether Canada can convert its advantages into productivity, investment, infrastructure, innovation and higher real incomes.
That means actually building things.
Mines.
Energy projects.
Transmission lines.
Ports.
Housing.
Defence manufacturing.
Data centres.
Transportation infrastructure.
Advanced manufacturing.
And new businesses capable of competing internationally.
It also means adopting AI and automation aggressively enough to overcome Canada's productivity problem.
If investment rises but productivity doesn't, the opportunity will have been squandered.
If GDP rises but housing and other essential costs rise faster than household incomes, Canadians won't feel wealthier.
If Canada exports resources without developing more of the associated technology, processing, intellectual property and advanced industries domestically, much of the opportunity will leave with the commodity.
The objective shouldn't simply be to extract more.
It should be to create more value from what Canada already possesses.
The Next Decade Could Look Very Different
None of this suggests an immediate Canadian economic boom.
The next several years may actually be uncomfortable.
Trade relationships are being renegotiated. Industries are adjusting. Infrastructure takes years to construct. Defence capacity cannot be rebuilt overnight. New mines and energy projects require enormous amounts of capital and time.
But the investment decisions being made during this period could determine economic conditions throughout the 2030s.
And that creates an intriguing possibility.
For years, Canada has often appeared poorly positioned for the economy we had.
Perhaps Canada is unusually well positioned for the economy that is coming.
A world concerned about food needs agriculture and fertilizer.
A world concerned about energy security needs reliable energy suppliers.
A world rebuilding military capacity needs minerals, aerospace, technology and advanced manufacturing.
A world confronting demographic decline needs AI and automation.
A world reorganizing supply chains needs politically stable trading partners.
And international investors looking decades into the future need places where capital can be deployed with reasonable confidence.
Canada possesses advantages in every one of these areas.
The Opportunity Is Not Guaranteed
There is a danger in becoming too optimistic about Canada's position.
Possessing strategic assets and successfully developing them are very different things.
Canada will have to execute.
Governments will have to make difficult choices.
Businesses will have to invest.
Indigenous economic partnerships will be essential to many major projects.
Infrastructure will have to be built faster.
Productivity will have to improve.
Housing supply will have to grow.
And Canadian businesses will have to look beyond the enormous American market and become more ambitious internationally.
But the underlying opportunity is difficult to ignore.
We may be entering a period in which many of the things Canada possesses in abundance become considerably more valuable.
And perhaps that is the larger lesson.
We tend to look at AI, demographics, trade, defence, energy and geopolitics as separate stories.
They aren't.
They are interacting forces reshaping where capital flows, where things are produced, what countries consider strategically important and ultimately where prosperity is created.
The next decade may present Canada with one of the greatest economic opportunities in its modern history.
Whether that opportunity produces a substantially better quality of life for Canadians will depend less on what Canada has than on what Canada chooses to do with it.
The world is changing. Canada's challenge now is to change quickly enough to take advantage of it.
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