CANADA

Economic Freedom Score

50
25 75
Least Most
free 0 100 free
World Rank: 6 Regional Rank: 1 79.1

C1.1 points
anada’s economic freedom score is 79.1, making its econ-
omy the 6th freest in the 2015 Index. Its overall score is
lower than last year, with modest improvements in
Freedom Trend
82
monetary freedom and the control of government spending
outweighed by declines in labor freedom and freedom from
81
corruption. Canada continues to be the freest economy in the
North America region.
Over the past five years, Canada’s economic freedom score has 80
declined by 1.7 points, highlighting a trend that has pushed
the country into the “mostly free” category for the first time
since 2007. Score declines have been spread over five of the 10 79
economic freedoms, with an increase in the level of perceived
corruption contributing the most to the moderate slide in
78
Canada’s score.
2011 2012 2013 2014 2015
Nonetheless, Canada remains one of the world’s most stable
business climates and an attractive investment destination.
With the world’s second-best property rights regime buttress- Country Comparisons
ing openness to global commerce, Canada has a solid founda-
tion of economic freedom. The financial sector is competitive, Country 79.1
and its efficiency is supported by prudent lending practices
and sound oversight. World
Average 60.4
BACKGROUND: Prime Minister Stephen Harper and his Con- Regional
servative Party have governed since 2011 with a strong parlia- Average 74.0
mentary majority of 166 out of 308 seats. With 103 seats, the
social democratic New Democratic Party has become the lead- Free
Economies 84.6
ing opposition party for the first time. The next election must
0 20 40 60 80 100
be held no later than October 19, 2015, when 30 new seats will
be added to the House of Commons to increase representa-
tion of provinces with growing populations. Canada’s diversity
and geographic size are reflected in a democratic system that Quick Facts
provides substantial autonomy to its 13 provinces and terri- Population: 35.1 million
tories. The 20 percent of Canadians for whom French is the GDP (PPP): $1.5 trillion
native language are heavily concentrated in Quebec. Canada is 2.0% growth in 2013
a major exporter of oil, minerals, automobiles, manufactured 5-year compound annual growth 1.4%
goods, and forest products, and its economy is closely linked $43,472 per capita
to the U.S. economy. Unemployment: 7.1%
Inflation (CPI): 1.0%
FDI Inflow: $62.3 billion
Public Debt: 89.1% of GDP
How Do We Measure Economic Freedom?
See page 475 for an explanation of the methodology 2013 data unless otherwise noted.
or visit the Index Web site at heritage.org/index. Data compiled as of September 2014.
155
CANADA (continued)
THE TEN ECONOMIC FREEDOMS
1–Year
Score Country World Average Rank Change

RULE OF Property Rights 90.0 3rd 0

LAW Freedom from Corruption 81.0 9th –6.7
0 20 40 60 80 100
Canada’s robust economic freedom rests on a judicial system with an impeccable record of
independence and transparency. The government prosecutes corruption vigorously. Private
property is well protected. In 2014, the Supreme Court for the first time confirmed an indig-
enous land title. Enforcement of contracts is very secure, and expropriation is highly unusual.
Protection of intellectual property rights is consistent with world standards.

GOVERNMENT Fiscal Freedom 79.9 86th +0.2

SIZE Government Spending 48.3 135th +1.0
0 20 40 60 80 100
Canada’s top federal individual income tax rate is 29 percent, and its top corporate tax rate is
15 percent. Other taxes include a property tax and a value-added tax. The overall tax burden is
equivalent to 30.7 percent of gross domestic product. Government expenditures amount to 41.5
percent of domestic output, and public debt is equal to 89 percent of the domestic economy.

REGULATORY Business Freedom 89.0 14th –0.3

EFFICIENCY Labor Freedom 76.1 39th –7.0
Monetary Freedom 77.9 75th +1.6
0 20 40 60 80 100
With no minimum capital requirement, establishing a business takes only one procedure and
five days, but completing licensing requirements takes over 200 days on average. The labor
market remains relatively flexible, and labor costs are moderate. The government provides
extensive energy and agricultural subsidies and controls virtually all prices for health care
through a mandatory “single-payer” nationalized program.

OPEN Trade Freedom 88.4 9th +0.1

MARKETS Investment Freedom 80.0 23rd 0
Financial Freedom 80.0 3rd 0
0 20 40 60 80 100
Canada’s average tariff rate is a low 0.8 percent. Canada continues to negotiate free trade agree-
ments but restricts dairy imports. Foreign investment in some sectors of the economy, includ-
ing airlines and telecommunications, is regulated. Financial institutions offer a wide range of
services, and credit is readily available on market terms. The banking sector remains stable,
and securities markets are well developed.

Long-Term Score Change (since 1995)

GOVERNMENT REGULATORY
RULE OF LAW SIZE EFFICIENCY OPEN MARKETS

Property Rights 0 Fiscal Freedom +15.7 Business Freedom +4.0 Trade Freedom +13.2
Freedom from –9.0 Government +33.5 Labor Freedom –6.1 Investment Freedom +30.0
Corruption Spending Monetary Freedom –8.0 Financial Freedom +10.0

156 2015 Index of Economic Freedom