What if Canada did an IPO?

Can the private sector be more important than the rest of Canada’s economy? Some people seem to think so. Every time, a star company, usually in the technology sector, reaches a record number, making it comparable to the country’s GDP.

For example, NVIDIA’s market capitalization exceeded Canada’s GDP by 2025. In May 2026, the chip designer was they cost more than the annual GDP of every country except the United States and China.

The reason this comparison doesn’t give us much information beyond emotional reactions is that the two numbers are measured in different units, so they can’t be compared.

Physicists love to discuss units of measurement. You cannot compare the temperature outside on a particular day with the temperature increase between different days. When economists examine the same dynamics, they often focus on the difference between stocks and flows.

Textbooks often talk about faucets and bathtubs to show the difference. A stock is a value that is measured instantaneously, like water that sits in a bathtub. Flow is a quantity measured at a given time, such as water coming out of a tap in liters per minute. The two are linked because flowing water fills and drains the stock, but they carry different units and cannot be directly compared.

In our case, the market capitalization is a stock. NVIDIA is valued at $5 trillionas of mid-June 2026, the present value of every dollar of earnings the company is expected to earn until it ceases to trade.

But GDP is a flow. Canada Nominal GDP is estimated at 3.25 trillion Canadian dollars in 2025 (about 2.4 trillion US dollars) the value of all final goods and services produced by a country in one year. Comparing these two numbers is like comparing an owner’s income to the total value of their home.

So what if we want to get some information from these numbers? The best way to do that is to compare like and like. In our case, this means imagining what would happen if all of Canada’s economic activity was consolidated into a company, Canada Inc., and that company was offered to be sold to investors in a public listing, such as an IPO.

This IPO will include number one in Canada Inc. today by making the profit it is expected to receive in the future. So to find out if a company is worth more than Canada, one has to ask what Canada can rank.

A common tool is the Gordon growth model, which is used to value a company’s stock based on its earnings. A flow growing at a constant rate, discounted at an equal rate, has a present value equal to next year’s flow divided by the gap between the two:

Flotation value = Issue next year / (Discount rate − Growth rate)

The implicit discount rate is the long-term yield of the Government of Canada, in 3.8 percent in June 2026. However, Olivier Blanchard has shown that the safe rate often works below the growth rate of advanced economies, and a lower rate cannot reasonably reduce the entire economy. We will therefore value the economic output as an equity instead, with the value carrying a risk premium over gilts. (This is the extra yield (or return) an investment offers compared to a UK government bond, which compensates investors for taking on more default or market risk). We went 5% to 8% to match the behavior of the Canadian stock market and give us room to test different ratios. The results are summarized in the table below:

.Even at a punitive 8% discount rate, which rates Canadian output as riskier than most corporate equities, Canada would still rank at twenty-three times its annual output, and at a low rate of 6% at forty-one times (159 trillion CAD, or 112 USD). NVIDIA, one of the most valuable companies in history, is worth an estimated $5 trillion. Stock to stock, a company is no bigger than a country.

Another criticism of this back-of-the-napkin calculation is that prices are often based on profits rather than income, and GDP is close to income, the total national product before it pays wages, pays supplier debts, and replaces aging capital.

If accountants and financial experts were involved in the actual IPO of Canada Inc., they would be interested in making money from the surplus that the owner could bank and possibly end up with a smaller number. But that small number will continue to reach at least tens of billions.

In short, no private company in the world is more important than the current total value of the Canadian economy. But the real lesson is to stop comparing stocks and flows.