COMPETITIVENESS OF CANADA.doc

COMPETITIVENESS OF CANADA

BY MARIA JUREWICZ, ERIKA KARKUSZEWSKA, JEREMY DE KOE, RORY MACDONALD

Canada is a land of vast distances and rich natural resources, It is located in

Northern North America, bordering the North Atlantic Ocean on the east, North

Pacific Ocean on the west, and the Arctic Ocean on the north, north of the

conterminous US. It’s total area is 9,984,670 sq km. It is the second biggest country after Russia and before the US. The climate varies from temperate in south to subarctic and arctic in north. Population of Canada is 33,487,208 (July 2009 est.). When it comes to the age structure people who are at most 14 years old are 16.1% of the population (male 2,761,711/female 2,626,836)
15-64 years: 68.7% (male 11,633,950/female 11,381,735)
65 years and over: 15.2% (male 2,220,189/female 2,862,787) (data is taken from year 2009). Urban population states 80% of total population (2008), and the
rate of urbanization is 1% annual rate of change (2005-10 est.). Total labor force is 18.18 million (2008 est.), in which agriculture is 2%, manufacturing 13%, construction 6%, services 76%, other 3% (2006 est.). Unemployment rate is at 6.1% (2008 est.). Major Canadian Industries are: transportation equipment, chemicals, processed and unprocessed minerals, food products, wood, fish, petroleum, natural gas. Military Expenditures are 1.1% of GDP (compared to 2% world average).

The economy of Canada is a very fast developing one. We would like to describe the third pillar of competitiveness which is macroeconomy.

The GDP was increases every year: it edged up at a level of $1.307 trillion (2008 est.). Before it was $1.299 trillion (2007) , $1.265 trillion (2006). This year it is GDP- $1.269 trillion, because of the financial crisis. GDP per capita in 2008 was $38,400. Canadian GCI is 10th in the world, 2nd in Americas, and 2nd in Countries with population exceeding 20 millions. Inflation rate (consumer prices) is 1% (Jan 2009), which is relatively low comparing to 4,2% in The US. Unemployment Rate is 8%. Unfortunately it went up from 6.1% in 2008.

Canada is ranked 7 out of 155 countries when it comes to economic freedom .

In tax misery and reform it is 28/61.

Next step in describing Canada’s competitiveness is foreign trade. There is a determinant called  Foreign Direct Investment (FDI). There are many institutions helping to increase it. The Dept. of Foreign Affairs exist mostly to help Canadian companies export, Industry Canada has sub-departments that work on attracting investment in to Canada. Provincial governments and large municipalities also work at attracting foreign investment into their territory because of the belief that the investment will increase job opportunities and increase the corporate tax base. Federal and provincial politics has an influence on rules and regulations effecting foreign direct investment coming in to Canada. People who want to be involved in attracting FDI (due to the opportunities for jobs or other benefits) need to pay close attention to regulations and legislation at the federal and provincial level.  Canadian FDI in to other countries is $523 billion, while FDI received in to Canada $449 billions.

International trade makes up a large part of the Canadian economy. Exports amount to more than 45% of its GDP. The United States is by far its largest trading partner, accounting for about 79% of exports and 54% of imports as of 2008. Other import partners are China (9.4%) and Mexico (4.2%). Other export partners are: United Kingdom (2.5%), Japan (2.2%) and China (2.1%). Canada is one of the few developed nations that are a net exporter of energy. Canada imports mostly machinery and equipment, motor vehicles and parts, electronics, chemicals, electricity and durable consumer goods. Balance of Trade is the difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; a negative balance of trade is known as a trade deficit or, informally, a trade gap.

We have prepared three magic pentagons which describe macroeconomic factors showing international competitiveness of Canada, the US and EU. That are: the GDP growth, unemployment, inflation, share of state budget deficit or surplus in GDP, share of the current-account deficit or a surplus in GDP.

Next part of out report is the one concerning standards of living (including the 4th and the 5th pillars of international competitiveness). Canada is ranked 4th in this criteria. Next determinant is HDI. The Human Development Index (HDI) is an index used to rank countries by level of "human development", which usually also implies whether a country is a developed, developing, or underdeveloped country. Canada is 4th in the world. 

This is a world map indicating Human Development Index (2008)

     0.950 and over      0.900–0.949      0.850–0.899      0.800–0.849      0.750–0.799      0.700–0.749      0.650–0.699      0.600–0.649      0.550–0.599      0.500–0.549      0.450–0.499      0.400–0.449      0.350–0.399      under 0.350      not available.

Social cohesion is a term used in social policy, sociology and political science to describe the bonds or "glue" that bring people together in society, particularly in the context of cultural diversity. Social cohesion is a multi-faceted notion covering many different kinds of social phenomena. It is sometimes used as a euphemism for the state of race relations. Canada has 14th place in a ranking of social cohesion in different countries.

Economic inequality comprises all disparities in the distribution of economic assets and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. Economic Inequality generally refers to equality of outcome, and is related to the idea of equality of opportunity. It is a contested issue whether economic inequality is a positive or negative phenomenon, both on utilitarian and moral grounds. In this ranking Canada is on a 4th place.

Health Expenditure on Canada takes 9.8% of GDP. Every 214 per 100,000 population are doctors. Education Index is 0.991 (US – 0.971, Germany - 0.953, Poland - 0.0.951, Norway – 0.991, France – 0.982). It shows how high the level of education in Canada is.

Future competitiveness is a crucial element of  competitiveness in 21st century. It includes 9th and 12th pillars. They are:  Technological Readiness and Innovation. Technological readiness is composed of seven determinants. Those are:

Ø      Communication- Canada is 15th

Ø      The amount of computers in use. Here Canada is ranked 11th

Ø      Technical infrastructure. These are for example software, hardware, and protocols used by the Network.

Ø      Development and Application of Technology. Canada is ranked 15th

Ø      Funding for Technological Development, which is the amount of money given by the Government to conduct researches, develop new technologies etc.

Ø      E-Readiness- is the ability to use Information and Communication Technologies (ICT) to develop one's economy and to foster one's welfare. When it comes to that factor, Canada is 12 out of 70 ranked countries.

Ø      Technology Exports as % of manufactured exports: Canada’s 14.4% of whole export is technology export.

Innovation  is the ability to create new solutions and to implement them. It is composed of:

Ø      Innovativeness : Canada is 5th

Ø      Entrepreneurship. Here Canada’s place is 15th in the world

Ø      Intensity of Innovations in Canada is:

Ø      Number of publications for 1Mln of population is

Ø      Expenditures on R&D is 1.93% of GDP (while it is 2.68% in US, 2.49% in Germany)

Ø      Volume of patents is 

Ø      Researchers in R&D per million people is 3,597.

As an addition to all we have mentioned before there is also the “Business Competitiveness Index”. It has been developed by Michael Porter, Director of the Harvard Business School’s Institute for Strategy and Competitiveness, draws on economic data and surveys of over 11,000 business leaders in 131 economies around the world to develop indicators that measure the set of institutions, market structures, and economic policies supportive of high national prosperity.  The Index consists of two sub-indices: the quality of the business environment – which includes a country’s financial markets, the impact of competitive pressure and support in the economy as well as public administrative effectiveness - where Canada edged up to 14th from 15th - and the so...