Canada moves up in economic ranking — but mostly because others slip
Canada’s economy moved up to a ranking of sixth among the 16 countries assessed in The Conference Board of Canada’s 2012 How Canada Performs: Economy report card.
While Canada retains a “B” grade and improved its ranking from 11th in the last pre-recession report card for 2008, it is more a reflection of weakness among its peers than of a stellar Canadian economy.
This is a chart on the How Canada Performs report card.“This “B” grade should be viewed as relative because Canada fares poorly when compared with the top-performing economies. With the exception of inflation and employment growth, Canada ranks far below the best countries on all other economy indicators,” said Glen Hodgson, senior vice-president and chief economist.
“Canada has been a chronic laggard on several important economic indicators—notably, labour productivity growth and competition for global investment. And even in areas where Canada has improved, other countries are still doing better.”
For each indicator, the Conference Board ranks the performance of all country from top to bottom, and divides this range into four equal segments from “A” to “D”.
Along with most of its peers, Canada gets an “A” grade on inflation. Canada gets “B” grades for gross domestic product (GDP) growth, labour productivity growth, employment growth, and the unemployment rate. But Canada’s overall ranking is pulled down by “C” grades on income per capita and outward foreign direct investment (FDI), and a “D” on inward FDI.
Canada’s ranking on income per capita dropped from sixth position among comparator countries in 2000 to eighth in 2008, and remained there through 2012. Canada’s income per capita was US$36,138 in 2012—nearly $12,000 below Norway, the top performer.
Furthermore, income per capita in Canada is 84 per cent of income per capita in the United States. The income gap tripled between 1980 and 2012. The importance of productivity shows up in this measure—lower labour productivity in Canada accounts for the largest component of the income gap.
Canada attracted 2.7 per cent of the world’s foreign direct investment in 2011 and accounted for 2.5 per cent of world GDP. This performance placed Canada sixth out of 16 countries on inward FDI in 2011, which suggests, at first glance, that Canada is a relatively attractive market for investors.
Nevertheless, Canada is one of 13 countries to earn “D” grades on inward FDI. Belgium is the runaway leader on this indicator, with eight times more inward FDI than its share of the global economy. Belgium’s performance effectively lowers the grades of the other 15 countries.
Canada gets a “C” grade on the Outward FDI Performance Index for 2011 and ranks 10th. Since the late 1990s, the stock of Canadian direct investment abroad has been greater than the stock of FDI in Canada. This shift indicates that Canadian firms are using foreign direct investment to build global value chains and serve customers in other countries. That said, Canada still ranks far behind the top performers, particularly the two countries that earn “A” grades—Belgium and Switzerland.
How Canada Performs is a multi-year research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada’s socio-economic performance. The How Canada Performs website presents data and analysis on Canada’s performance compared to 15 peer countries in six performance categories: Economy, Innovation, Environment, Education and Skills, Health, and Society.