Canada’s super sectors

PPF thanks its Mission Canada partner organizations, the Canadian Association of Petroleum Producers, Export Development Canada and Deloitte, for their support of this project.

Canada faces a generational challenge: we must strengthen our economic growth and reaffirm our sovereignty amid a shifting geopolitical order. To rise to this challenge, the Public Policy Forum (PPF) developed a dual-lens framework to transparently identify the sectors of the economy that are best placed to supercharge economic growth.

The quantitative lens asks how a one percent increase in sectoral productivity would translate into economy-wide GDP gains, based on each sector’s interconnectedness within Canada’s production network. The qualitative lens brings together five transparent key criteria to assess a sector’s strategic significance to Canada’s national security, alliance co-operation and global influence.

When layered, these lenses put a spotlight on the four mission-critical sectors where economic and strategic centrality converge:

1. Energy and natural resources (mining, oil and gas, utilities)
2. Manufacturing and advanced industrial production
3. Transportation, warehousing and communications infrastructure
4. Professional, scientific and technical services (including information and communication technology; research and development)

This provides a concrete, strategic guide for where governments should invest scarce resources for maximum return on investment.

Over the last year, the Government of Canada has placed a significant focus on the highest-impact sector — energy and natural resources — as demonstrated through its list of nation-building projects and the Canada-Alberta Memorandum of Understanding. The same can be said for PPF, as evident in Build Big Things: A playbook to turbocharge investment in major energy, critical minerals and infrastructure projects.

It is time for Canada to apply the same degree of focus and urgency to the other three high-impact sectors of the economy, the next critical frontiers in accelerating economic growth and safeguarding our national sovereignty.

Introduction

Canada’s economic prospects are increasingly constrained. Over the past two decades, the country’s growth slowed, productivity stagnated, and business investment fell. The consequences are now familiar: weaker income gains, flat or declining living standards, and growing anxiety about Canada’s long-term competitiveness. These macroeconomic challenges are manifesting themselves in intergenerational tensions, concerns about social cohesion and growing pessimism about the future.

At the same time, the global environment is shifting in ways that compound these pressures. The new era of geoeconomics — in which states use economic instruments for geopolitical ends — is transforming the logic of globalization. Great-power competition, multipolarity, realigned supply chains and the weaponization of trade, finance and technology: all are collapsing the old boundary between economic policy and national security.

Governments around the world are responding with industrial strategies, strategic subsidies and interventions in key sectors, driven by national security.

Canadian policymakers therefore confront twin pressures. The first is economic: how to boost output and reverse a long-standing productivity slump. The second is geopolitical: how to navigate a world in which economic policy is increasingly a form of statecraft and where strategic vulnerabilities carry economic consequences. Together, these forces are generating calls for Ottawa to adopt a more deliberate and sector-focused economic strategy.

The impulse is understandable. In a slow-growth world, governments are searching for leverage; in a geoeconomic world, they are searching for resilience and strategic advantage. Strategic sectors have become the key terrain of competition. Yet as the appetite for intervention grows abroad, Canada must determine how to engage this new geoeconomic landscape in a manner consistent with its institutional capacity, fiscal limits and political culture.

The goal of this paper is to aid in that work. Specifically, we propose a dual-lens framework built around the principles of economic centrality and strategic centrality.

Economic centrality identifies sectors in which productivity gains generate the largest spillover effects across Canada’s economy and production network. Strategic centrality captures sectors whose capacity and reliability most strengthen domestic resilience, sovereignty, national security and allied leverage — even where near-term GDP effects are modest.

Together, these lenses are designed to help policymakers direct scarce administrative and fiscal capacity to where it can produce the greatest economic and strategic returns.

The purpose is thus one of prioritization and discipline. The goal is to provide Canadian policymakers with a clear and evidence-based method for deciding where targeted policy attention can make a difference — and equally, where it cannot.

Our core deliverable is a structured matrix that ranks sectors on both dimensions and identifies the overlap sectors — those that are simultaneously economically and strategically central. In Canada’s case, four groupings consistently sit at this intersection:

1. Energy and natural resources (including critical minerals and utilities);
2. Manufacturing and advanced industrial production;
3. Transportation, warehousing, and communications infrastructure; and
4. Professional, scientific and technical services (including information and communication technology and R&D).

These “mission-critical” sectors are where a dollar of policy effort is most likely to yield joint economic–strategic returns.

In that sense, the exercise is as much about restraint as it is about ambition. The objective is to bring greater coherence and evidence to Canada’s sectoral debates. A sound framework must respect the limits of state knowledge, minimize political-economy risks and avoid the blending of economic and social objectives that has often diluted previous policy efforts.

The guiding principle is straightforward: economic policy should primarily aim to improve efficiency and productivity, while social policy should address equity and redistribution. Blurring these purposes only heightens the risk of policy failure.

Canada’s challenge, then, is to respond intelligently to the economic and geoeconomic pressures of the moment — to focus scarce policy attention where it can generate the most value, while maintaining the discipline that has long underpinned the country’s economic success.

The Politics of Managing Scarcity

Politics, at its core, is about the management of scarcity. Governments exist not in a world of unlimited possibility, but in one of constrained means: finite resources, finite attention, finite authority. If, as the economist Paul Samuelson once observed, “Economics is the study of how society manages its scarce resources,” then politics is the process through which those choices are made. ^[1] Every policy decision is an implicit statement about what’s more important and what can wait.

In normal times, this truth can be obscured by growth and optimism. Rising revenues and expanding economies allow governments to blur the trade-offs imposed by scarcity. But in periods of economic and geopolitical risk, scarcity reasserts itself as the defining condition of policymaking. Aaron Wildavsky, the great public-administration scholar, captured this when he described budgeting as “the most political of political acts” because it reveals, more clearly than rhetoric ever could, “who gets what, when and how.”^[2]

Today, the problem isn’t just scarcity of money, but scarcity of everything that makes effective government possible. Policymakers face fiscal scarcity born of structural deficits and rising interest costs. They face institutional scarcity as public-service capacity strains under new demands, from climate policy to AI regulation to industrial subsidies. And they face political scarcity in a world of several competing “wicked problems.”

Each form of scarcity necessarily imposes choices on the government. Too often those choices are made without an organizing principle or clear set of evidence. This problem has become particularly acute as the language of industrial policy and strategic sectors has re-entered policy discourse. In theory, identifying “strategic” industries should help discipline choice: it implies some sectors matter more than others.

In practice, however, the concept has become elastic. As political scientist Francis Fukuyama has warned, “When everything is national security, nothing is.”^[3] A similar dynamic now afflicts the idea of the “strategic sector.” If every industry is labelled strategic, the term ceases to constrain. Instead, it licenses state intervention everywhere.

The result is a politics of expansive policy ambition colliding with limited state capacity. Governments chase multiple objectives — growth, equity, resilience, decarbonization,and so forth — without a framework for prioritization or any limiting principles.

Yet managing scarcity requires precisely the opposite: a willingness to say no. As economist Dani Rodrik has argued, the most effective governments are not those that do the most, but those that “establish clear principles for what the state should and should not attempt to do.”^[4] The challenge, therefore, is not simply to decide whether to engage in sectoral policy, but to determine how to do so in a principled and disciplined manner.

Seen through this lens, the case for a sectoral framework becomes clearer. It’s a tool for managing scarcity across multiple dimensions: administrative, fiscal and political. It helps policymakers concentrate attention on the sectors where the marginal payoff — in economic or strategic terms — is highest, and to resist the temptation to spread effort too thinly. It can also strengthen democratic accountability by making explicit the criteria behind those choices.

In practice, such a framework would guide governments to ask a few key questions:

1. Where are the biggest productivity spillovers? Which sectors could, with modest reforms or investments, generate economy-wide benefits through supply-chain linkages, innovation diffusion or export growth?
2. Where are the non-economic imperatives? Which industries or technologies matter not because of their immediate economic returns, but because they underpin national security, resilience or geopolitical leverage?
3. Where do these two considerations overlap? The intersection of economic potential and strategic importance marks the high-value zone for policy focus — the places where scarce fiscal and policymaking resources can achieve the greatest combined return.

These fundamental questions are neither ideological nor partisan. They’re practical instruments for governing in an age of limits.

Such a scarcity-based framework forces trade-offs into the open. It asks policymakers to justify why a given intervention is worth the fiscal cost, the administrative attention and the opportunity cost of not pursuing something else. It clarifies that the relevant resource isn’t just taxpayer dollars, but also the finite time and credibility of ministers, senior officials and the public institutions they lead.

The politics of managing scarcity isn’t, in other words, a case for big or small government per se. It’s an argument for focused government.

The Case for a Dual-Lens Sectoral Strategy

Developing a framework for sectoral policy choices must begin by recognizing that judgment alone isn’t enough. Scarcity demands a systematic method for determining where intervention can have the greatest payoff.

That method must be both quantitative and qualitative. The former is rooted in in the logic of efficiency and output. The latter acknowledges that not all value can be captured by economic metrics alone.

The quantitative lens: Efficiency, output and spillovers

The quantitative perspective reflects the traditional tools of economic analysis. Its core question is straightforward: how can Canada boost output and productivity in an era of weak growth? This lens focuses on efficiency, competitiveness and measurable returns. It seeks to identify the parts of the economy where a marginal improvement — through regulatory reform, infrastructure investment or innovation incentives — would generate the largest spillovers across other sectors and boost broader economic growth.

To answer this, we draw on detailed Statistics Canada input–output data capturing how every sector is connected through supply chains. We use established methods developed in the academic literature, ranging from Hulten’s (1978)^[5] classic decomposition to more recent “influence” and input–output multiplier concepts used by Jones (2013)^[6], Acemoglu et al. (2012)^[7], and others. These measures identify sectors that are economically central: those whose efficiency gains (or losses) transmit unusually strongly to downstream sectors.

Our approach is grounded in recent data and entirely consistent with resource constraints and general-equilibrium behaviour.

It is crucial to emphasize that this is not the sort of multiplier analysis commonly used in advocacy-driven “economic impact studies.” Traditional impact studies often assume idle resources rather than full employment. Among many other shortcomings, they double-count economic activity, ignore general-equilibrium substitution and opportunity costs and assume away price adjustments.

Our method avoids these pitfalls. It measures how productivity improvements — not subsidies or induced spending — affect GDP through the real structure of the economy. And it incorporates the reality that subsidizing highly central sectors can, in an efficient market, lower overall GDP by misallocating labour and capital away from their most valuable uses. Identifying “important” sectors does not imply they should be protected or financially supported; rather, the value lies in understanding where genuine efficiency gains would have the greatest economy-wide effect.

In practice, this means looking for sectors whose productivity gains would propagate widely through the economy because of their interconnectedness. As economists from Alfred Marshall to Paul Romer have emphasized, growth is often cumulative and networked; that is, gains in one industry can raise the efficiency of others through various channels. Mapping these linkages and quantifying their potential is a key first step in any serious analysis of sectoral priorities.

The virtue of this approach lies in its clarity and precision. It provides an empirical basis for relatively objective judgments. It can reveal where underperformance ultimately stems from identifiable policy bottlenecks: fragmented regulation, infrastructure constraints, uncertainty that deters private investment or coordination failures across jurisdictions.

The qualitative lens: Strategy, security, and geopolitics

The second dimension of the framework addresses those aspects of national interest that aren’t reducible to productivity metrics. Some sectors matter because of their strategic or geopolitical significance rather than their direct economic contribution. They may not produce large domestic spillovers, but they play an outsized role in national security, alliance co-operation or global influence.

These include industries with defence or dual-use technologies, critical-mineral supply chains or energy infrastructure that underpins the security of Canada and its allies. They also encompass sectors where Canada occupies a disproportionate position in global supply — including, for instance, as a reliable exporter of food and energy.

In a world of weaponized interdependence, such advantages carry strategic weight even if they’re not fully captured in GDP figures.

Yet this qualitative lens is inherently more complicated. It relies on judgment rather than formula. Assessing the “strategic” value of a sector involves evaluating resilience, vulnerability and geopolitical context — factors that shift over time and are subject to interpretation. Unlike economic analysis, which can be benchmarked against data, strategic analysis depends on perspective. It’s therefore less precise, less straightforward, and more prone to politicization.

The risks are obvious. Without clear criteria, “strategic” can become an all-purpose label for subsidizing favoured industries or responding to short-term political pressures. What begins as a targeted effort to strengthen resilience can slide into an open-ended rationale for government direction across the economy.

Integrating the dual lenses

That’s why the two lenses must operate together. The quantitative dimension anchors the framework in measurable reality, while the qualitative dimension keeps it responsive to a shifting geopolitical landscape. Each corrects the other: economic analysis constrains the impulse to label everything “strategic,” and strategic judgment reminds policymakers that efficiency alone cannot safeguard national interests.

In practice, policymaking therefore requires both rigour and discretion. Rigour comes from data-driven evaluation of achievable productivity gains. Discretion lies in judging when economic logic must yield to broader security concerns. A credible framework needs clear criteria that distinguish these domains and make the trade-offs between them explicit.

Our approach rests on two premises. First, economic policy should primarily aim at efficiency and productivity. The most powerful contribution government can make is to remove barriers, reduce frictions and enable private enterprise to thrive. Second, there are narrow and well-defined cases where geoeconomic considerations justify a more active role — where market signals alone cannot reflect the value of resilience, alliance coordination or strategic autonomy.

The challenge is to balance these principles: to incorporate geoeconomic awareness without succumbing to “conceptual inflation,” in which everything is treated as strategic and therefore eligible for intervention.

Using this framework doesn’t eliminate the politics of scarcity, but it makes them more legible. Anchoring decisions in evidence — quantitative where possible, qualitative where necessary — allows Canada to direct its scarce administrative and fiscal capacity toward the sectors that matter most for both prosperity and resilience.

Where Productivity Provides the Biggest Bang  

Not all sectors are created equal. Some sit at the centre of the production network, supplying essential goods, services, and know-how to others. Improvements in their performance therefore cascade throughout the economy. Others are more self-contained, meaning their productivity gains tend to remain confined to their own boundaries.

Economists describe this dynamic as economic centrality. It refers to how interconnected a sector is within the wider production system: how much it buys from and sells to other industries and how essential those transactions are to the creation of overall output. In network terms, a modern economy is less a collection of parallel sectors than a dense web of relationships, and some nodes are far more influential than others.

Using input–output tables from Statistics Canada, sectors can be represented as nodes in a production network, with the flows of goods and services between them forming the links. A sector’s degree of centrality captures not just the number of its linkages but the importance of the connecting sectors. This enables economists to identify the “hubs” of the economy whose performance influences many others.

The simplified dataset used here aggregates over 200 detailed industrial categories into roughly 20 broad sectors and asks a straightforward question: What would a one percent increase in sectoral productivity mean for total Canadian output, given each sector’s interconnectedness with others?

The results are illustrative rather than predictive. They don’t assume that a one percent productivity gain is easy, cheap or even desirable in every case. They also aren’t meant to imply that our aspirations should be limited to one percent gains in certain sectors.

Instead, they reveal which sectors have the greatest potential to raise economy-wide output through spillovers. This provides a crucial starting point for policymakers: a map of where scarce attention and resources might have the highest marginal payoff.

The results show that Canada’s economy is far from uniform. A handful of sectors dominate the web of interconnections, meaning that productivity growth in these areas could deliver disproportionately large national benefits.

We display the full distribution of centrality measures in Figure 1. Centrality values range from less than 0.0002 to about 0.066, meaning that a one percent productivity gain in the most influential sector raises national real GDP by roughly 0.07 percent — over 300 times the effect of a similarly sized improvement in the least influential sector.

At the top sit activities related to housing and real estate (such as residential building construction) and a small set of large public services (such as hospitals), reflecting the sheer scale of these sectors in the economy.

Among market sectors where policy-relevant productivity gains stand out include: banking, petroleum refineries, oil and gas extraction, automobile and light-duty vehicle manufacturing, truck transportation, telecommunications, electric power generation and distribution, basic chemicals, crop production and computer systems design.

Each of these has a centrality measure in the 0.02–0.04 range, implying that a one percent productivity improvement in any one of them increases Canada’s real GDP by between 0.02 and 0.04 percent. This is large, equivalent to roughly $1 billion in aggregate economic gains resulting from only marginal improvements in these critical sectors. Overall, three dozen of the 230 detailed sectors account for approximately half of the available economy-wide gains available from marginal increases in productivity.

Figure 1: Distribution of Economic Centrality Across Sectors in Canada

For simplicity, we can aggregate the more than 200 individual detailed sectors for which this analysis is possible into more aggregated sectors that correspond to Statistics Canada’s “summary level.”

In this aggregation, manufacturing emerges as the most central industry by a wide margin, with a network-centrality score of about 0.64 — more than three times that of the next-closest sector. Its dense supply-chain links stretch across the economy: it depends on energy inputs, logistics, financial services and professional expertise, while in turn supporting construction, technology and transportation.

A one percent productivity improvement in manufacturing would therefore propagate widely, generating ripple effects across nearly every major industry. These ripple effects add the equivalent of $20 billion in real annual gains (in 2025 dollars) to Canada’s economy for each one percent increase in manufacturing sector productivity.

The next cluster includes finance, insurance, real estate, rental and leasing (centrality ≈ 0.20), which, together, functions as the economy’s circulatory system. Its performance shapes the cost of capital and the allocation of risk for all other sectors. Greater efficiency in financial intermediation — through competition, innovation or regulatory reform — reduces borrowing costs, accelerates investment and supports entrepreneurship across the economy. In the banking sector (excluding insurance, real estate and so on), we find a centrality measure of 0.04. A one percent increase in that detailed-level sector’s productivity alone would therefore increase real GDP in Canada by roughly $1.3 billion.

Mining and oil and gas extraction ranks third (0.12), which underscores the structural importance of resource industries to Canada’s economy. Their upstream role as suppliers to manufacturing, transportation and utilities means that productivity gains here have a knock-on effect throughout the system. The same holds for transportation and warehousing (0.10), the sector that quite literally moves the economy.

Finally, professional, scientific and technical services (0.09) emerges as a distinctive hub. Its contribution lies in enabling innovation and problem-solving across industries, from engineering to software design to R&D. Its high centrality underscores the role of human capital and knowledge-intensive services as the connective tissue of a modern economy.

Beyond these top five, the results taper off gradually. Sectors such as construction, retail, and accommodation and food services remain important for employment and regional vitality, but their supply-chain interdependencies are narrower. Productivity improvements in these areas, though valuable in their own right, have smaller macroeconomic spillovers.

This centrality mapping has five main implications for how policymakers ought to think about sectoral policy.

First, it reframes the notion of leverage. The size of a sector isn’t necessarily the measure of its influence. Manufacturing may account for less than 10 percent of GDP, but because of its extensive linkages, gains there can boost output in many other sectors. This suggests that a dollar of reform effort, regulatory modernization or infrastructure improvement in a highly central sector may deliver a much larger return to the national economy than an equivalent effort elsewhere.

Second, it reveals complementarities. Manufacturing’s productivity depends on efficient energy and transport networks; professional services rely on demand from advanced industries; and finance underwrites them all. These linkages argue for a portfolio view of productivity policy — one that reinforces interdependencies rather than treating sectors as isolated silos.

Third, centrality helps discipline industrial strategy. It replaces politically driven prioritization with empirical evidence about where intervention could most plausibly raise overall prosperity. Instead of spreading limited administrative or fiscal capacity across dozens of initiatives, policymakers can focus on the handful of sectors that are empirically proven to be most central to Canada’s production network.

Finally, it clarifies the limits of quantitative analysis. Centrality maps tell us where productivity gains would be most consequential, not how to achieve them. The ease or difficulty of realizing a one percent improvement will vary widely. In some cases, modest regulatory streamlining could suffice; in others, structural transformation or new capital investment may be required.

Defining Strategic Centrality: A Criteria for Policymakers

In today’s unsettled geopolitical environment, maximizing economic efficiency isn’t the only concern for policymakers. In turn, a quantitative map of the economy is only half the picture. Governments today must also consider strategic centrality — the degree to which sectors contribute to national security, resilience or geopolitical advantage.

Strategic centrality reflects a sector’s position within networks of dependence and control — where its disruption would weaken national autonomy, or where its strength enhances geopolitical leverage.

A strategically central sector may not be large in GDP terms, but it occupies a pivotal node in the architecture of interdependence: supplying allies with energy, enabling technological leadership or anchoring critical infrastructure.

In short, if economic centrality measures a sector’s role in generating prosperity, then strategic centrality measures its role in preserving sovereignty and advancing a country’s broader strategic interests.

The OECD has characterized economic security as a “new dimension of national security” that encompasses supply-chain resilience, technological leadership and the capacity to protect critical infrastructure. Similarly, the G7’s Hiroshima Leaders’ Communiqué from 2023 defines “economic resilience and economic security” as essential to sustaining open markets and alliance coordination. In this context, some sectors matter less for the volume of output they generate than for the leverage, resilience or autonomy they confer.

Developing a qualitative lens for Canada therefore means asking: which sectors give the country outsized strategic value — whether through resources, technology, geography or institutional reliability? And how can policymakers weigh such judgments with sufficient transparency and discipline to avoid the “everything is strategic” problem?

This kind of analysis necessarily carries its own risks. By virtue of being less quantitative and more judgment-based, strategic assessments are inherently vulnerable to political and interest-group influence. Once “national security” or “resilience” enter the lexicon of policymaking, nearly any intervention can be rationalized in their name. The result can be rent-seeking masquerading as strategy.

Clear criteria won’t eliminate these pressures, but they can mitigate them by anchoring decisions in shared principles and public evidence. They introduce a degree of procedural discipline, helping policymakers distinguish between genuine strategic imperatives and politically convenient claims. In this sense, the framework’s value lies not just in guiding what to prioritize, but in constraining how those priorities are justified.

Drawing on frameworks from the OECD, the U.S. National Intelligence Council and recent work by the IRPP and the Council on Foreign Relations, five overlapping criteria can be used to assess a sector’s strategic significance to Canada. These are not mathematical weights but disciplined heuristics for structured judgment.

1. Supply-Chain Criticality and Dependence Risk: A sector is strategic if it represents a chokepoint, where domestic shortfalls or foreign dependency could disrupt broader economic or security functions.
2. Dual-Use or Defence Relevance: A sector gains strategic salience when its technologies or outputs serve both civilian and military or security purposes.
3. Export Leverage and Alliance Contribution: Sectors that supply allies or global markets with essential goods can amplify Canada’s diplomatic influence and alliance value.
4. Domestic Resilience and Infrastructure Role: A sector is strategic if its stability underpins the functioning of the broader economy or critical infrastructure.
5. Technological Frontier and Future Competitiveness: Sectors at or adjacent to global technology frontiers may not be critical today but determine future economic sovereignty.

Applying these criteria to the 20 aggregated sectors in the centrality dataset produces a structured qualitative ranking. Each sector can be scored High (H), Medium (M), or Low (L) on each dimension. The exercise is inherently interpretive, but provides a transparent basis for discussion.

At the top of the strategic hierarchy sit energy and critical minerals, two sectors whose global importance has been sharply underscored by the twin shocks of Russia’s invasion of Ukraine and the accelerating transition to clean technologies.

Canada’s resource endowment — oil, gas, uranium and a growing array of battery metals — remains one of its most consequential strategic assets. Energy exports underpin both national revenue and allied resilience, particularly for partners seeking to diversify away from authoritarian suppliers. In this sense, energy is both an economic driver and a tool of diplomacy, conferring a form of geopolitical credibility that few other sectors can match.

A similar logic applies to critical minerals and their refining: while their absolute GDP contribution is modest, their concentration, strategic indispensability and alignment with allied industrial strategies make them a clear case of high strategic centrality. It is notable that the recent federal budget identified them as having a strategic importance for Canada.

A second cluster of strategically significant sectors revolves around advanced manufacturing and technology. This includes aerospace, electronics, and information and communications technology — industries that underpin modern defence systems, artificial intelligence and secure communications. These sectors serve as connective tissue between the civilian economy and national security infrastructure. They also anchor Canada’s participation in trusted supply chains among allies, particularly through the Five Eyes and NATO frameworks. Maintaining competitiveness in these sectors is therefore less about short-term job creation and more about ensuring access to the technologies and partnerships that determine future economic sovereignty.

A third tier involves transportation, logistics and communications infrastructure, which collectively form the arteries of Canada’s strategic resilience. The COVID-19 pandemic and recent port disruptions highlight how vulnerabilities in these systems can quickly translate into national-level fragility. Efficient, secure and redundant transportation and digital networks are not just productivity enablers, they are the physical expression of sovereignty in a continental and global context. Sectors such as rail, marine shipping, telecommunications and broadband infrastructure thus exhibit moderate economic centrality but high strategic centrality. Their reliability determines whether Canada can deliver energy, food and manufactured goods to markets and maintain seamless integration with allied economies.

Agriculture and agri-food represent another area of enduring strategic value. While often overlooked in industrial strategy debates, food security has re-emerged as a geopolitical concern, with allies increasingly recognizing the importance of stable and trustworthy suppliers. Canada’s position as a top exporter of grains, pulses, and protein gives it a role in global stability that extends well beyond its borders. This sector’s strategic centrality lies less in its technological sophistication than in its reliability and scale — qualities that translate directly into diplomatic influence.

At the same time, several sectors that dominate the domestic economy rank lower in strategic centrality. Finance, real estate and insurance, for instance, are indispensable for national prosperity but offer limited leverage in an international or security sense. Their robustness is vital for internal stability, yet their global substitutability and limited role in alliance resilience render their strategic weight modest. Similarly, retail trade, accommodation and food services are major employers, but peripheral from a resilience or security perspective. Their vulnerabilities to shocks in demand or labour shortages may matter domestically but do not alter Canada’s position in the global balance of power.

What stands out most is the asymmetry between Canada’s resource-based strengths and its technological dependencies. Sectors rooted in the country’s geography — energy, mining, agriculture — score high on strategic centrality because they give Canada something the world needs and cannot easily obtain elsewhere.

By contrast, the industries that determine technological sovereignty — semiconductors, advanced manufacturing, digital infrastructure — remain areas where Canada is more dependent than dominant. This dual reality suggests that the country’s long-term strategy must reconcile two imperatives: sustaining its role as a reliable supplier of critical inputs while deepening domestic capacity in emerging technologies that underpin future security.

Two additional takeaways deserve emphasis. First, strategic centrality evolves faster than economic centrality. What’s geopolitically vital today — such as battery metals or quantum computing — might not have registered a decade ago. Policymakers therefore need mechanisms to periodically update their qualitative assessments, informed by global events and allied strategies.

Second, strategic importance doesn’t imply state ownership or subsidy. The purpose of identifying strategically central sectors isn’t to justify intervention everywhere, but to clarify where vigilance, coordination and resilience planning are most necessary. In some cases, that will mean targeted public investment; in others, it will mean de-risking private investment through infrastructure, trade agreements, or security partnerships.

Taken together, the qualitative mapping of strategic centrality reveals the non-economic logic that increasingly shapes prosperity and power. It highlights that Canada’s strategic strengths lie not only in what it produces but in what it enables: energy reliability, food security and alliance trust.

These attributes form the backbone of its geopolitical value. Yet they also expose its vulnerabilities: the need to ensure that resource wealth is matched by technological depth and that strategic autonomy isn’t traded for short-term expediency.

Where Economic and Strategic Centrality Converge

The preceding analyses of economic and strategic centrality each provide a distinct way of seeing Canada’s economy. The first identifies sectors whose productivity gains would generate the greatest economy-wide spillovers. The second highlights those that underpin resilience, sovereignty, and geopolitical leverage. When viewed together, they form a composite map of Canada’s economic and strategic landscape.

This synthesis matters because governments must ultimately allocate finite resources, not just within one framework but between them. Some sectors may be highly productive but geopolitically peripheral; others may be strategically vital but economically narrow. The art of policymaking lies in recognizing where these dimensions overlap — where a dollar of policy effort can deliver both economic and strategic returns — and where trade-offs are unavoidable.

When we compare the two sets of rankings, a small group of sectors stands out as occupying the intersection of economic and strategic centrality. These are the overlap sectors: industries that are both highly interconnected within the domestic production network and integral to Canada’s geopolitical position.

Four broad groupings emerge:

1. Energy and Natural Resources (mining, quarrying, oil and gas, and utilities)

• • Economic centrality: Ranked among the top three sectors for economy-wide spillovers due to their upstream role in supplying manufacturing, transport, and industrial energy needs.
  • Strategic centrality: Critical to allied energy security, clean-tech transitions, and the resilience of democratic supply chains.
  • Interpretation: These sectors are Canada’s comparative advantage in both economic and strategic terms. They generate revenue, investment and export earnings while anchoring Canada’s credibility as a reliable supplier in a fracturing world. Policy attention here should focus on enabling investment, modernizing infrastructure and aligning regulatory systems with allied demand.

2. Manufacturing and Advanced Industrial Production

• • Economic centrality: The single most interconnected sector in the Canadian economy, with spillovers into nearly every major industry.
  • Strategic centrality: High defence and dual-use relevance, particularly in aerospace, electronics and clean-technology manufacturing.
  • Interpretation: Manufacturing is the quintessential overlap sector: it drives productivity while serving as the backbone of strategic autonomy. Its decline over recent decades has not only weakened output growth but also reduced Canada’s capacity to contribute to allied industrial bases. A revitalized manufacturing strategy — focused on competitiveness, not protectionism — would deliver both economic and strategic dividends.

3. Transportation, Warehousing and Communications Infrastructure

• • Economic centrality: Among the top five sectors for spillover effects, as it links producers, suppliers and consumers across the economy.
  • Strategic centrality: High resilience value; essential for moving energy, food and critical goods to markets and maintaining alliance interoperability.
  • Interpretation: This is a classic “backbone” sector — its performance underpins both prosperity and security. Port capacity, rail efficiency and digital connectivity are not merely domestic issues but strategic assets. Policy priorities here include streamlining approvals for infrastructure, ensuring redundancy in critical corridors and coordinating with allies on logistics resilience.

4. Professional, Scientific and Technical Services (including information and communication technology, and research and development)

• • Economic centrality: A key hub for innovation diffusion, enabling productivity growth across sectors.
  • Strategic centrality: High relevance for national defence, cybersecurity and technology sovereignty.
  • Interpretation: These services form the connective tissue between economic efficiency and national capability. Investments in human capital, digital security and research infrastructure yield returns that are simultaneously economic and strategic. This is the bridge between Canada’s resource wealth and its technological future.

Together, these four clusters form the high-value intersection of Canada’s dual-lens framework: they combine productive leverage with strategic consequence. They are, in essence, the country’s “mission-critical” sectors for a new era of geoeconomic competition.

Pathways for Success

The dual-lens framework puts a spotlight on the four mission-critical sectors where Canada must focus to drive its national ambitions. It provides a concrete, strategic guide for where governments should invest scarce resources, capacity and time for maximum return on investment.

Over the last year, the Government of Canada has placed a significant focus on the highest-impact sector — energy and natural resources — as demonstrated through its list of nation-building projects and the Canada-Alberta Memorandum of Understanding. The same can be said for PPF, through Build Big Things: A playbook to turbocharge investment in major energy, critical minerals and infrastructure projects.

Yet, as a country, we have not applied the same strategic intensity to the other three high-impact sectors of the economy.

To secure the greatest impact for public investments, and to ensure that Canada adequately leverages every comparative advantage at its disposal to emerge as a leader in the shifting world order, we must apply the same degree of focus and sense of urgency to the other three high-impact sectors of the economy. These represent the next critical frontier in accelerating economic growth and safeguarding our national sovereignty.

Conclusion

This paper began with a simple observation: Canada faces twin pressures that are leading to growing calls for a sectoral strategy.

We have proposed a dual-lens framework to bring policy expression to such a strategy. The economic lens outlines where productivity gains can deliver the greatest spillovers across the production network. It tells us which sectors sit at the centre of Canada’s economy — where a marginal improvement can ripple most widely through supply chains, costs and innovation. The strategic lens assesses which sectors matter for resilience, sovereignty and alliance credibility — where capacity and reliability translate into geopolitical leverage even if near-term GDP effects are modest.

Seen together, these lenses identify a small set of overlap sectors where prosperity and power converge.

They’re the backbone of domestic productivity and the scaffolding of national resilience. Prioritizing them does not imply neglecting the rest of the economy; it means recognizing where scarce administrative and fiscal capacity is likely to yield the highest joint returns.

Appendix

Economic Centrality by Sector — Summary Level Results