Resource-rich provinces get top marks in new economic report
Ottawa – The resource-driven economies of Alberta, Saskatchewan, and Newfoundland and Labrador can boast A+ grades for their economic performance, while all other provinces earn ‘B’ grades or lower, according to The Conference...
Ottawa – The resource-driven economies of Alberta, Saskatchewan, and Newfoundland and Labrador can boast A+ grades for their economic performance, while all other provinces earn ‘B’ grades or lower, according to The Conference Board of Canada’s first ‘How Canada Performs: Economy’ report card. It compares the 10 provinces and 16 advanced countries.
Building on previous ‘How Canada Performs’ analyses, the Economy report card is the first of six to be produced over the next year on Canadian and provincial socio-economic performance.
“Alberta, Saskatchewan, and Newfoundland and Labrador are ‘A+’ economies – they rank higher than any advanced country in our analysis,” said Glen Hodgson, senior vice-president and chief economist for the Board. “Rising income in these provinces has led to higher consumer spending, which has boosted the services sector and real estate activity.”
Australia, the top-performing peer country, earns an ‘A’ grade overall. Ireland, the United States, and Norway also get ‘A’ grades. Canada as a whole gets a ‘B’ grade and ranks fifth among the 16 countries.
Among the provinces, Ontario, British Columbia and Prince Edward Island get overall ‘B’ grades on the Economy report card. Manitoba and Quebec get ‘C’ grades, and Nova Scotia and New Brunswick get ‘D’ grades. The three territories outperform most of the provinces on the six economic indicators where territorial data are available. The territories do not receive an overall grade since data are not available for all eight How Canada Performs economic indicators.
“For Canada as a whole and for several provinces, many of these grades are more of a reflection of recent sub-standard performance of its global peers, particularly in the eurozone countries and the United States,” said Hodgson. “However, a common denominator for many provinces is their lagging productivity performance. This presents an enormous challenge for future economic prosperity.”
The Conference Board’s How Canada Performs analysis measures how well Canada and its provinces are achieving their goal of a high and sustainable quality of life for their citizens. Six performance domains are assessed: Economy, Education and Skills, Innovation, Environment, Health, and Society.
The Economy ranking is based on eight indicators:
– income per capita – gross domestic product (GDP) divided by population (2013)
– GDP growth – percentage increase in economic output after accounting for inflation (2013)
– employment growth – percentage increase in employment (2013)
– unemployment rate – share of unemployed in the labour forces (2013)
– inflation – 2013 inflation rate in comparison to the Bank of Canada’s target range of between 1% and 3%
– labour productivity growth – percentage change in output per hour worked (five-year annual average, 2008-2012)
– outward greenfield foreign direct investment (FDI) – investment by domestic firms abroad that expands an existing business or creates a new business, as opposed to a merger or acquisition (five-year annual average, 2008-2012)
– inward greenfield FDI – investment from abroad that expands an existing business or creates a new business, as opposed to a merger or acquisition (five-year annual average, 2008-2012)
Overall, Canada gets ‘A’ grades on GDP growth and employment growth, and ‘B’ grades on inflation and the unemployment rate.
Canada’s ‘C’ grades, particularly on labour productivity growth and inward greenfield FDI, and its ‘D’ on outward greenfield FDI, are worrying, reports the Board. These ‘C’ and ‘D’ grades include measures that affect long-term prosperity. Productivity is an indicator of how efficiently goods and services are produced, which is the single most important determinant of a country’s prosperity over the longer term. Inward and outward FDI are generally considered contributors to productivity growth.
The 16 peer countries assessed and their grades are:
– ‘A’ – Australia, Ireland, United States, Norway
– ‘B’ – Canada, Switzerland, United Kingdom, Sweden, Germany, Austria
– ‘C’ – Japan, Denmark, Netherlands
– ‘D’ – Belgium, Finland, France.
How Canada Performs is an ongoing research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada’s socio-economic performance. This is the first year that provincial and territorial rankings are included in the analysis.