Prime Minister Mark Carney participates in the First Ministers' Meeting closing news conference with premiers on Parliament Hill in Ottawa, on Thursday.Justin Tang/The Canadian Press

Kevin Yin is a contributing columnist for The Globe and Mail and an economics doctoral student at the University of California, Berkeley.

Federalism, the system of governance that divides power between Ottawa and provinces, has always been a cornerstone of how Canada balances regional interests. But in the context of Prime Minister Mark Carney’s meeting with provincial leaders on Thursday, it is worth remembering just how poorly suited that system looks for the 21st century.

The origins of Canadian federalism are illustrative of both its utility and its weaknesses. By giving provinces meaningful autonomy, Confederation united disparate colonies into a workable national state. That compromise helped make Canada possible. However, it also hard-wired a recurring challenge. When the national interest requires co-ordination, we have to negotiate our way there province-by-province.

One way this manifests today is trade. Despite all the federal government’s talk of eliminating interprovincial trade barriers, it actually can’t eliminate all of them by itself. Many of the frictions that affect the free flow of goods, services and labour across provincial borders are still decided by the provinces.

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The International Monetary Fund estimates that eliminating all such barriers could raise Canada’s real........

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