Canada’s Economic Freedom
In the 2013 Index of Economic Freedom, Canada passed the US for the first time in the history of the Index. Businesses in the US have been stifled by the regulatory uncertainty following the economic crisis caused by financial scandals and the sub-prime mortgage crisis. Government spending and borrowing in the US is also out of control following the economic crisis while Canada has been able to maintain fiscal soundness in their stimulus measures. Canada boasts an efficient and transparent regulatory framework that promotes entrepreneurship and commercial activity. Business freedom in Canada is highlighted by strong policies that encourage entrepreneurship. The rate of start-up companies within the country currently exceeds the rate of business closures. Manufacturing is currently exhibiting high growth rates indicating that the country is developing innovative products and processes. Business start-ups in Canada are currently experiencing high survival rates after both one and five years which means that these firms are able to maintain a competitive advantage within their markets. (Fisher and Reuber, 2010, Pg. 24) Canada experiences high levels of trade freedom and the foundation of the Canadian economy is foreign trade. Approximately 75% of the country’s exports are to the US. Total foreign trade accounts for approximately 45% of Canada’s GDP. The country’s main exports include oil, minerals, manufactured goods, and forest products and are one of only a few developed nations to be a net exporter of energy (TradingEconomics, 2013). Canada has aligned their trade laws to be more in line with the laws of its major trading partners. Canada’s position on the Index of Economic Freedom has been rather stable over the last several years. Unemployment increased from 2008 until now due to the worldwide economic downturn. However, the country was able to weather the crisis fairly well with only a 5% of GDP increase in government spending....
References: Fisher, E. and Reuber, R. (2010, February). The State of Entrepreneurship in Canada. Retrieved June 24, 2013 from http://www.ic.gc.ca/eic/site/sbrp-rppe.nsf/eng/h_rd02468.html.
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Miller, T. and Kim, A. B. (2011) Defining Economic Freedom. Retrieved June 24, 2013 from http://www.heritage.org/Index/PDF/2013/Index2013_Chapter2.pdf.
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TradingEconomics. (2013, June 23). Canada Balance of Trade. Retrieved June 24, 2013 from http://www.tradingeconomics.com/canada/balance-of-trade.
TradingEconomics. (2013). General Government Final Consumption Expenditure (% of GDP) in Canada. Retrieved June 24, 2013 from http://www.tradingeconomics.com/canada/general-government-final-consumption-expenditure-percent-of-gdp-wb-data.html.
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