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THINK CANADA
February 2016
Prepared by:
Investment Strategy and Analysis Division, Office of the Chief Economist
Global Affairs Canada
Table of Contents
Page
I
II
III
IV
V
VI
Excellent Economic Fundamentals
A Highly Competitive Business Environment
A Dynamic Workforce
A Solid Venue for Innovation & Investment
Easy Access to Markets
An Excellent Place to Live
3
16
29
36
47
51
2
I Excellent Economic Fundamentals
3
Despite the Global Slowdown, Canada’s Economic Prospects
are Relatively Strong Based on a Consensus of Forecasts….
According to Consensus Economics, Canada has been a strong performer among the
G-7 in GDP growth over the 2011-14 period and is expected to remain so through
2015-17.
Real GDP Growth and Projections (%)
2011-14
3.0
2.3
2.1
2.0
2.0
2.1
2.2
1.6
1.5
1.3
1.1
0.9
1.0
2015-17
1.7
0.6
0.7
%

0.0
any
e
Source: Consensus Forecasts, February 2016, Consensus Economics Inc.
Japan
Germ
Italy
Franc
U.K.
U.S.
-2.0
-0.7
da
Cana
-1.0
4
Other Forecasts also Highlight Canada’s Relatively Strong
Economy….
Similarly, recent OECD statistics rank Canada as a strong performer among G-7 countries
in terms of GDP growth from 2011-14 and during the 2015-17 forecast period.
Real GDP Growth and Projections (%)
3.0
2011-14
2.4
2.3
2.0
1.8
1.9
2.4
2.1
1.6
1.3
1.2
0.8
1.0
2015-17
1.8
0.7
0.7
%

0.0
any
e
Japan
-1.1
Germ
Italy
Franc
U.K.
U.S.
-2.0
da
Cana
-1.0
Source: OECD Economic Outlook, No. 98, November 2015.
5
… and Canada leads the G-7 in Long-Term GDP Growth
Long-term GDP growth statistics from the OECD place Canada at the top of the G-7 over
the last decade.
2.5
2.0
Real GDP Growth in G-7 Countries, 2005-2014 (%)
1.9
1.5
1.5
%

1.4
1.3
0.9
1.0
0.7
0.6
0.5
0.0
-0.5
Italy
Japan
E.U.
e
any
Franc
U.K.
Germ
U.S.
da
Cana
Source: OECD Economic Outlook, No.98, November 2015.
-0.5
6
Canada also has Strong Employment Growth….
•
•
Canada has recovered both more than all of the output and all of the jobs lost during the 20082009 recession.
Almost 1,331,100 more Canadians are working today than when this recession ended in June
2009 and employment is about 904,600 above its pre-recession peak in October 2008. Over
80% of the positions created since June 2009 have been in full-time positions and high-wage
industries, with over 80% in the private sector.
Employment Growth (%)
2005-2014
Germany
1.16
Canada
1.12
U.K
0.75
U.S.
0.51
France
0.41
Japan
Italy
0.04
-0.04
Source: OECD Economic Outlook, No.98, November 2015.
7
…a Track Record of Fiscal Responsibility…

Canada’s small federal deficit, as a percentage of GDP, is projected to improve to surpluses by
2019-20.

In comparison, as a percentage of GDP, the budget deficit of the United States is projected to
increase from -2.9% to -4.0%.
Federal Government Budgetary Balance
2020-21*
2019-20*
2018-19*
2017-18*
2016-17*
2015-16*
(% of GDP)
2.0
0.3
0.1
0.0
-0.2
-0.1
-0.2
-0.1
-2.0
-2.9
-4.0
-2.9
Canada
-2.8
U.S.
-3.5
-3.7
-4.0
-6.0
* Forecasts for both countries
Source Canada: Finance Canada: Update of Economic and Fiscal Projections, November 20, 2015
Source United States: United States Congressional Budget Office, January 25, 2016.
8
…Leading Most Other G-7 Countries…
Despite posting a deficit of 1.6% of its GDP in 2014, Canada’s fiscal position will still be better than most
G-7 countries during the two-year 2015-2016 forecast period with an overall deficit of 1.7% of GDP.
Total Government Budget Balance* 2014-16
2.0
(% of GDP) (National Accounts Basis)
0.8
0.3
-1.6 -1.7
Jap
an
U.S
.
Fra
nce
Ge
rm
any
-2.0
U.K
.
Ital
y
a
0.0
Ca
nad
•
-2.4
-3.0
-3.3
-4.0
-3.9
-3.6
-4.4
-6.0
-5.7
2015+2016
-5.1
-6.2
-8.0
2014
-7.7
* Total government budget includes federal, provincial/state and municipal budgets.
Source: OECD Economic Outlook, No.98, November 2015.
9
…a Declining Federal Debt…

Since its peak of 68.4% of GDP in 1995-96, Canada’s federal debt to GDP ratio has decreased
to 31.0% in 2014-15 and is expected to fall further to 25.2% in 2020-21.

By comparison, the debt to GDP ratio of the United States continues to increase to more than
three times Canada’s debt to GDP ratio by 2020-21.
Federal Debt to GDP Ratio
80
75.6
73.6
75.7
78.8
77.8
76.7
75.7
70
60
50
40
30
31.0
31.1
30.2
29.0
27.8
26.6
25.2
20
10
Canada
2020-21*
2019-20*
2018-19*
2017-18*
2016-17*
2015-16*
2014-15
0
U.S.
* Forecasts for both countries
Source Canada: Finance Canada: Update of Economic and Fiscal Projections, November 20, 2015
Source United States: United States Congressional Budget Office, January 25, 2016.
10
…the Lowest in the G-7…
Canada had the lowest net debt-to-GDP ratio in the G-7 in 2014 and will continue to hold
this standing during the 2015-2016 forecast period.
General Government Net Debt 2014-16
(% of GDP)
160
140
2014 2015-16
80
60
40
36.4 37.9
80.1 80.3
80.9 79.9
U.K
.
100
112.6 113.2
U.S
.
120
126.1 127.1
87.9 89.9
51.4 47.4
20
Jap
an
Ital
y
Fra
nce
Ge
rm
any
a
0
Ca
nad
•
Source: IMF Fiscal Monitor, October 2015.
11
…a Low Inflation Rate Regime…
•
A low inflation environment provides business certainty for investors. Canada’s targeted
inflation rate range between 1% and 3% has been extended until 2016.
 Over the past five years, Canada has enjoyed relatively low inflation – averaging
1.8% compared to 2.0% for the U.S. and 1.7% for the G-7 as a whole.
Inflation
(Year-Over-Year % Change)
3.5
2.9
3.0
3.1
2.6
2.5
2.0
1.5
2.1
1.8
1.6 1.5
2.0
1.9
1.5
1.5
1.6
1.3
1.3
1.0
1.0
0.5
0.0
2010
2011
Canada
2012
U.S.
2013
2014
G-7
Source: OECD Economic Outlook, No. 98, November 2015
12
…Low Interest Rates…
•
Canada’s solid fiscal situation and low inflation has led to lower interest rates.
Long-Term Bond Yields (%)
Daily Yields (%)
4.5
2.6
4.0
2.4
3.5
2.2
U.S.
2.0
3.0
1.8
2.5
1.6
2.0
Canada
1.4
1.2
Canada
1.5
Ja
n16
Ja
n15
Ja
n14
Ja
n13
Ja
n12
2O
16 ct-1
-O 5
30 ct-1
-O 5
13 ct-1
-N 5
27 o v-1
-N 5
11 o v-1
-D 5
25 e c-1
-D 5
ec
8- -15
Ja
22 n-1
-Ja 6
5- n-16
Fe
b16
1.0
1.0
Ja
n11
U.S.
Source Canada: Government of Canada 10-Year Bond: February 5, 2016
Source U.S.: U.S. Treasury, Constant Maturity 10-Year Bond: February 5, 2016
13
…an Overall Environment of Prosperity
According to the Legatum Prosperity Index*, Canada ranks 1st in the G-7 and 6th among 142
countries in terms of overall prosperity based on material wealth and personal wellbeing.
Legatum Prosperity Index* G-7 Ranking
1st
2nd
3rd
4th
5th
Rank
•
6th
7th
Canada
U.S.
Germany
U.K.
Japan
France
Italy
* The Legatum Prosperity Index ranks countries based on 89 variables grouped into 8 sub-indexes which are averaged using
equal weights. The sub-indexes are: economy; entrepreneurship & opportunity; governance; education; health; safety &
freedom: personal freedom and social capital. Source: Legatum Institute, London, November 2015
14
…and a High Degree of Social Progress
Canada ranked first in the G-7 and sixth overall in a 133-country study measuring social progress
– defined as a society’s capacity to meet the basic human needs of its citizens, establish the
foundations that allow citizens and communities to enhance and sustain the quality of their lives,
and create the conditions for all individuals to reach their full potential.
Social Progress Index* G-7 Ranking
90.0
86.89
84.68
85.0
84.04
83.15
82.85
80.82
Index
•
80.0
77.38
75.0
70.0
Canada
U.K.
Germany
Japan
U.S.
France
Italy
Source: The Social Progress Imperative, April 2015. * The Index is the sum of three dimensions: Basic Human Needs, Foundations
of Wellbeing, and Opportunity. Each dimension is made up of four equally weighted individual components scored on an objective
scale from 0–100. This scale is determined by identifying the best and worst global performance on each indicator by any country in
the last 10 years, and using these to set the maximum (100) and minimum (0) bounds.
15
II A Highly Competitive Business
Environment
16
Canada is Acclaimed by the EIU for its Superior
Business Climate…
•
•
Canada understands the importance of its business community and has created an environment to
encourage its success.
Canada is the best place for doing business among the G-7 over the next five years according to
the Economist Intelligence Unit (EIU) and it ranked third overall out of 82 countries in the
Economist Intelligence Unit’s global business rankings for the forecast period (2016-20).
The country also ranks well for its infrastructure, market opportunities, low taxes, and foreign trade
and exchange controls.
Business Environment of the G-7 Countries,
Rank for Forecast Period 2016-2020
1st
2nd
3rd
4th
5th
Rank
•
6th
7th
Canada
U.S.
Germany
U.K.
France
Source: The Economist Intelligence Unit, February 2016
Japan
Italy
17
… and More Recently by Forbes
•
Canada led the G-20 and stood seventh overall in Forbes latest 144-country annual study
on the Best Countries for Business.
•
Canada ranked particularly well on a number of sub-elements, including the degree of
personal freedom (1st overall) and red tape involved in starting a business (2nd overall).
Top 10 Countries in the G-20 for Business in 2015
1st
2nd
3rd
4th
Rank
5th
6th
7th
8th
9th
S.
Af
ric
a
ly
Ita
ea
Ko
r
S.
Fr
an
ce
Ja
pa
n
.
U.
S
an
y
Ge
rm
ali
a
.
Au
st r
U.
K
Ca
na
da
10th
*Standing among G-20 countries. Rankings based on the following eleven categories of quantitative and qualitative indicators: trade freedom, monetary
freedom, property rights, innovation, technology, red tape, investor protection, corruption, personal freedom, tax burden and market performance.
Source: Forbes Publishing, December 2015.
18
… and Bloomberg Rankings
•
Canada led the G-20 and stood second overall in Bloomberg Rankings’ latest 157-country
annual study on the Best Countries for Business.
•
Canada ranked high on all six categories of the study, in particular the readiness of the local
consumer base (1st overall), less tangible costs (1st overall) and the degree of economic
integration (3rd overall).
Top 10 Countries in the G-20 for Business in 2013
1st
2nd
3rd
4th
Rank
5th
6th
7th
8th
9th
Ch
ina
ly
Ita
ea
Ko
r
S.
Ja
pa
n
Fr
an
ce
.
U.
K
an
y
Ge
rm
ali
a
.
Au
st r
U.
S
Ca
na
da
10th
*Standing among G-20 countries. Rankings based on the following six categories of quantitative and qualitative indicators: degree of economic
integration, business startup costs, labour and material costs, transport costs, less tangible costs and readiness of the local consumer base.
Source: Bloomberg Rankings, January 2014.
19
Canada has a High Potential for Investment and
Growth in Infrastructure
Canada ranks 1st in the G-7 and 4th overall in a recent study measuring a country’s potential for
investment and growth in its economic infrastructure.*
Infrastructure Investment Index - G-7 Ranking
1st
2nd
3rd
4th
5th
Rank
•
6th
7th
Canada
U.S.
U.K.
Germany
Japan
France
Italy
Source: Global Infrastructure Investment Index, ARCADIS NV Consulting, September 2014.
* Standing among 41 countries. Economic infrastructure is the core internal facility of a country than makes business activity
possible, such as communication, transportation, distribution, finance and energy supply. These assets are fundamental to
society and economic growth.
20
Establishing a Business in Canada Involves
Relatively Few Steps…
•
•
Regulations pertaining to the creation of new businesses are considerably more flexible in
Canada than those in the rest of the G-7.
Canada ranks first among the G-7 and OECD countries for the lowest number of procedures
required to establish a new business.
Number of Procedures*
10
9
8
7
6
5
4
3
2
1
0
9
8
6
5
5
5
France
Italy
OECD
Average
4
2
Canada
U.K.
U.S.
Japan
Germany
Source: Doing Business in 2016 - The World Bank Group, 2015. *A "procedure" is defined as any interaction of the company founder
with external parties (government agencies, lawyers, auditors, notaries, etc). Interactions between company founders or company
officers and employees are not considered as separate procedures. For example, an inauguration meeting where shareholders elect
the directors and secretary of the company is not considered a procedure, as there are no outside parties involved.
21
…and Takes Relatively Less Time
•
Canada is a G-7 leader for the fewest number of days required for establishing a new
business.
Time Required to Start a Business (days)
12
10.2
10.5
Japan
Germany
10
8.2
8
6
4.0
4
2
5.5
5.6
Italy
U.S.
4.5
1.5
0
Canada
France
U.K.
OECD
Average
Source: Doing Business in 2016 - The World Bank Group, 2015
22
Canada Offers an Overall Tax Advantage for
Firms to Expand..…

Canada has the second lowest statutory corporate tax rate in the G-7 as of 2015.

In addition, Canada’s overall tax rate* on new business investment is substantially lower than all G-7
countries.
International Comparison of Statutory General Corporate Tax
Rates in 2015
Marginal EffectiveTax Rate* on New Business Investment, 2015
40
45
39.0
%
31.2
34.3
35
34.7
35
32.1
30
30
30.2
27.5
26.3
%
40
37.3
25
20.0
20
28.6
26.5
25
20.2
20
19.0
17.5
15
15
10
U.S.
France
Japan
Germany
Italy
Canada
U.K.
10
Japan
U.S.
France
U.K.
Germany
OECD
Average**
Italy
Canada
*The tax rate on new business investment is the marginal effective tax rate (METR) that takes into account federal, provincial and territorial statutory corporate
income tax rates, deductions and credits available in the corporate tax system and other taxes paid by corporations, including provincial capital taxes and retail sales
taxes on business inputs.
**OECD average excludes Canada.
Source: Finance Canada, April 2015
23
…with the Lowest Business Costs among the G-7…
KPMG’s Competitive Alternatives study finds Canada as having the lowest business costs
among G-7 countries and a 7.2 percentage cost advantage relative to the United States.
Percentage Cost Advantage (Disadvantage) Relative to
the United States
8
7.2
6
5.4
4
2.6
2
1.2
0.8
Source: KPMG Competitive Alternatives 2014
-0.9
Ge
rm
any
Jap
an
Ital
y
Fra
nce
U.K
.
a
-2
U.S
.
0.0
0
Ca
nad
•
24
…especially in the Digital and Research & Development
Sectors
•
•
Canada is the lowest cost G-7 country in the Digital and Research & Development sectors.
Of the 2 industries in the Digital sector, Canada is the lowest-cost G-7 country in both the Digital
Entertainment and Software Design industries.
•
Among the 3 industries comprising the Research & Development sector, Canada is the lowest-cost G-7
country in the Biotechnology and Product Testing industries and second lowest in the Clinical Trials industry.
Percentage Cost Advantage (Disadvantage) Relative to the United States…
Research & Development
Digital
20
17.8
15.8
15
15
10.4
-0.4
Source: KPMG Competitive Alternatives 2014
any
y
Jap
an
any
Ge
rm
U.S
.
y
Ital
Jap
an
nce
Fra
U.K
.
-5
0.0
-5
Ital
-2.0
nad
a
1.1
0
Ge
rm
0.0
nce
0.7
Fra
0
3.9
5
nad
a
1.8
Ca
10.8
U.S
.
4.6
5
Ca
10
11.2
10
U.K
.
20
25
Canada is also highly cost-competitive among the G-7
in the Manufacturing and Corporate Services sectors
•
•
•
Canada is the lowest-cost G-7 country in the Manufacturing sector and second lowest in the Corporate
Services sector.
Of the 12 industries within the Manufacturing sector, Canada is the lowest-cost G-7 country in the Aerospace,
Automotive, Electronics, Green Energy, Medical Devices, Metal Components, Pharmaceuticals, Plastics and
Telecommunications industries. Canada is the second lowest in the Agri-Food, Chemicals and Precision
Manufacturing industries.
Of the 2 industries in the Corporate Services sector, Canada is the lowest-cost G-7 country in the
Professional Services industry.
Percentage Cost Advantage (Disadvantage) Relative to the United States…
Corporate Services
Manufacturing
15
5
3.8
4
12.5
10
3.0
3
12.7
6.7
2
5
1.2
1
0.5
0.4
0
0.0
2.5
1.4
0
0.0
-0.5
Source: KPMG Competitive Alternatives 2014
any
Ge
rm
U.S
.
Jap
an
Fra
nce
y
Ital
any
Ge
rm
U.S
.
Ital
y
Jap
an
nce
Fra
U.K
.
nad
a
Ca
-5
Ca
nad
a
-0.9
-2
U.K
.
-1
26
… and is the most Tax Competitive G-7 Country
Canada leads the G-7 in tax competitiveness as measured by the relative Total Tax Index*
with total taxes 46.4% less than the U.S.
Percentage Advantage (Disadvantage) Relative to the United States…
Tax Competitiveness
60
46.4
33.4
40
20
0.0
0
-20
-16.3
-40
-18.6
-35.8
-60
Ital
y
an
Jap
any
Ge
rm
.
U.S
U.K
nad
a
Fra
nce
-63.3
-80
Ca
•
Source: KPMG Competitive Alternatives 2014: Focus on Tax
* A measure of the total taxes paid by corporations in a particular location expressed as a percentage of total
taxes paid by corporations in the US.
27
…with Sound Financial Institutions
Investors can take comfort in the fact that Canada has the soundest banking system in the G-7.
Six of the world’s 50 safest banks are in Canada, according to a recent study: Toronto Dominion
Bank (10th), Royal Bank of Canada (16th), Scotiabank (27th), Caisse Centrale Desjardins (31st),
Bank of Montreal (35th) and CIBC (38th).**
Soundness of Banks* World Rank
1st
2nd
3rd
4th
5th
Rank
6th
7th
8th
9th
Qa
ta
r
Ch
ile
a
Af
ric
So
ut
h
Ko
ng
ay
Ho
ng
No
rw
Fi
nla
nd
Au
st r
ali
a
Ne
w
Ze
ala
nd
Si
ng
ap
or
e
10th
Ca
na
da
•
•
*Standing among 148 countries. Ranking based on the degree of soundness of financial institutions. Source: Global Competitiveness Report, 2015-2016
** Standing among 500 world banks based on total assets and long-term credit ratings. Source: Global Finance Magazine, September 2015
28
III A Dynamic Workforce
29
Canada has one of the World’s Best Educated
Talent Pools…
60
Percentage of Individuals Aged 25-64 Having Attained PostSecondary Education - Top 10 OECD Countries
54.0
50
49.0
48.0
46.0
45.0
44.0
42.0
42.0
42.0
42.0
41.0
40
30
20
10
Source: OECD, Education at a Glance, November 2015
Ire
lan
d
ay
No
rw
an
d
Fi
nl
Au
str
ali
a
UK
US
Ja
pa
n
Lu
xe
m
bo
ur
g
S.
Ko
re
a
Isr
ae
l
0
Ca
na
da
•
Canada's talent pool is the most highly educated among OECD member countries, with
over half of its population aged 25-64 having attained tertiary level education.
Four Canadian universities are ranked among the top 100 in the world according to the
UK-based Quacquarelli Symonds (QS) World University rankings for 2015-16: McGill
University 24th; University of Toronto 34th; University of British Columbia (UBC) 50th and the
University of Alberta 96th.
%
•
30
….Superior Management Training…

Five Canadian schools of management are ranked among the top 100 in the world according to
the Financial Times (UK) Global MBA rankings for 2016: University of Toronto (Rotman) 60th,
McGill University (Desautels) 85th,Western University (Ivey) 88th, Queen’s University 93rd and
University of British Columbia (Sauder) 96th.

In addition, Canada stood first in the G-7 in a study measuring the extent to which management
education meets the needs of the business community. (see chart below)
Management Education Quality Index*
8.5
8.0
8.00
7.5
7.29
6.99
Index
7.0
6.5
6.29
6.0
5.39
5.5
5.02
5.0
4.5
4.19
4.0
Canada
U.S.A.
Germany
U.K.
Italy
France
Source: IMD, * Rank among 61 economies considered in the World Competitiveness Yearbook 2015.
Japan
31
…and a Readily Available Army of Qualified
Engineers
The availability of qualified engineers in the labour force in Canada is the highest in the G-7
according to a survey conducted by the Institute for Management Development (IMD).
Qualified Engineers Availability Index*
8.5
8.26
7.88
8.0
7.5
7.12
Index

7.11
7.0
7.01
6.5
6.18
6.07
6.0
5.5
Canada
France
Italy
U.S.
Japan
U.K.
Germany
Source: IMD, * Rank among 61 economies considered in the World Competitiveness Yearbook 2015.
32
Canada is also a World Leader in Youth
Academic Performance…
•
•
•
Canadian schoolchildren ranked second in the G-7 in each of three subject areas
(Reading, Science and Mathematics) surveyed in the OECD Program for International
Student Assessment (PISA).
Among the 65 countries and economies that participated in PISA 2012, Canadian
schoolchildren ranked 9th in Reading, 10th in Science and 13th in Mathematics.
The PISA survey is conducted annually involving over 500,000 school pupils across
65 countries, and evaluates the capacity of 15-year old schoolchildren to understand
and solve academic problems.
PISA Score (points – Standing Among G-7 Countries)
Reading
Science
Mathematics
Japan
Canada
Germany
France
United Kingdom
United States
538
523
508
505
499
498
Japan
Canada
Germany
United Kingdom
France
United States
547
525
524
514
499
497
Japan
Canada
Germany
France
United Kingdom
Italy
536
518
514
495
494
485
Italy
490
Italy
494
United States
481
Source: OECD 2012
33
…with one of the World’s Best Business Climates
for Entrepreneurs to Thrive…
•
According to the Global Entrepreneurship Index* - a measure of the health of a country’s entrepreneurship
ecosystem, Canada ranks 2nd in the G-7 and 2nd among 132 countries.
Canadian policymakers are thus better equipped than most economies to implement policies leading to a
productive entrepreneurial environment that will have a positive impact on innovation, productivity and job growth.
Global Entrepreneurship Index* G-7 Ranking
90
86.2
79.5
80
67.7
70
Index
•
66.4
64.6
60
50.6
50
41.1
40
30
U.S.
Canada
U.K.
France
Germany
Japan
Italy
*The Global Entrepreneurship Index ranks countries based on 3 sub-indices: entrepreneurial attitudes, entrepreneurial abilities and entrepreneurial
aspirations standing on 14 pillars: opportunity perception, start-up skills, risk acceptance, networking, cultural support, opportunity start-up, technology
absorption, human capital, competition, product innovation, process innovation, high growth, internationalization and risk capital..
Source: Global Entrepreneurship Index 2016 – The Global Entrepreneurship and Development Institute, November 12, 2015
34
…and a leader in PC and Internet Users
Canada has a technology savvy population and workforce. It ranks second in the G-7
with respect to Internet users per capita and is second to the U.S. among the G-7 in
terms of personal computers per capita.
Personal Computers
Per 1,000 Inhabitants
1,150
Internet Users
Per 1,000 Inhabitants
900
1111
1,100
880
1,050
1,000
995
993
966
966
865
850
950
900
877
869
834
886
869
832
820
850
800
U.
K
Fr .
an
ce
Ita
ly
U.
Ca S.
na
da
Ja
p
Ge an
rm
an
y
800
U
Ca .S.
na
Ge da
rm
an
Fr y
an
ce
U.
K.
Ita
l
Ja y
pa
n
•
Source: IMD, * Rank among 61 economies considered in the World Competitiveness Yearbook 2015.
35
IV A Solid Venue for Innovation & Investment
36
Canada Ranks High on Innovation Policies

Canada ranks highest among G-7 countries in terms of the number of upper tier rankings across
seven core innovation policy areas: Science/R&D; Domestic Competition; Intellectual Property;
Information and Communication Technology (ICT); Government Procurement and High-Skill
Migration.
Core Innovation Policy Ranking*
8.0
Number of Upper Tier Rankings
7.0
7.0
6.0
5.0
5.0
5.0
4.0
4.0
3.0
3.0
2.0
2.0
1.0
1.0
0.0
Canada
U.K.
U.S.
France
Germany
Japan
Italy
Source: The Global Innovation Policy Index – Information Technology and Innovation Foundation and the Kauffman Foundation – United States – March 2012.
37
Canada Benefits by Having One of the
Best R&D Tax Treatments in the G-7
•
•
Relative Generosity of R&D Tax
Canada currently offers one of the
most favorable tax treatments for
R&D among the G-7.
 Canada provides a system of
tax credits and accelerated
tax deductions for a widevariety of R&D expenditures.
 Eligible costs include:
salaries, overhead, capital
equipment, and materials.
These tax-based treatments permit
firms to significantly reduce R&D
costs through direct investment or
sub-contracting in Canada.
Treatments*
(Index: Canada = 100.0)
France
126.2
Canada
100.0
Japan
95.0
U.S.
90.5
U.K.
90.1
Germany
81.2
**Italy
81.1
50 60 70 80 90 100 110 120 130
Source: Warda, Jacek, Assessing changes to SR&ED and related policy instruments on Canada’s competitiveness for Foreign Direct Investment: November 22, 2013.
Note: Relative generosity is determined by dividing the after tax cost of performing $1.00 of R&D by 1 less the corporate tax rate.
Results are indexed to the relative generosity of Canada's system of tax-based support for R&D. The higher the ratio the more competitive the tax system.
* Calculations based on large firms, ** Pending new legislation proposal.
38
…and a High Level of R&D Investment in
Higher Education
Canada is a world leader in post-secondary research, outpacing other G-7 countries on
higher education investment.
R&D Investment in the Higher Education Sector, 2014
0.8
0.7
0.65
0.6
per cent of GDP

0.49
0.5
0.46
0.45
0.44
0.39
0.4
0.35
0.3
0.2
0.1
0.0
Canada
Germany
France
Japan
U.K.
U.S.
(2013)
Italy
Source: OECD Main Science and Technology Indicators, 2015, Volume 2, February 2016.
39
in an Above Average Investment Environment
Canada is a leading G-7 nation in foreign direct investment performance when measured in
terms of its GDP.
FDI-GDP Ratio 2010-2014
60
52.7
50
40
35.0
30
25.9
25.8
25.7
21.0
20
16.6
10
3.7
Ja
pa
n
Ita
ly
an
y
er
m
G
an
ce
er
a
Av
-7
G
Fr
ge
.
U.
S
Ca
na
da
.
0
U.
K
%

Source: UNCTAD Stat Database, October 2015
40
with Solid Investor Protection
Canada ranks second in the G-7 and seventh in a 142-country study measuring the
ease in investor protection.
Ease of Investor Protection* G-7 Ranking
80
78.3
72.5
70
67.5
66.7
65.8
62.5
Index

59.2
60
50
40
U.K.
Canada
France
Italy
U.S.
Japan
Germany
* Standing based on three dimensions of investor protection: transparency of related party transactions, liability for self dealing, and shareholders’
ability to sue officers and directors for misconduct.
Source: Global Innovation Index 2015, Cornell University, INSEAD Business School, and World Intellectual Property Organization (WIPO)
41
Canada’s Globalized Economy is Driven by a
Dynamic Two-Way Investment Process…

Over the past decade, Canada has witnessed a substantial growth in both inward and outward FDI
reflecting its strong connection to global supply chains.

Canada’s inward FDI stock reached C$732 billion in 2014, an almost 2-fold increase from C$379
billion in 2004.

As for Canada’s outbound FDI, the expansion of Canadian direct investment abroad (CDIA) has been
equally spectacular, rising from C$449 billion in 2004 to C$829 billion in 2014.
Canada's Inward and Outward FDI Stock ($Billion)
CDIA
800
FDI
700
600
500
400
300
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
Source: Statistics Canada, April 24, 2015
42
…with the United States as Canada’s Largest
Source of FDI
•
In 2014, the U.S. share of foreign direct investment (FDI) in Canada stood at 49.4%, demonstrating its
confidence in Canada’s business climate.
Distribution of Canada’s FDI Stock by Major
Regions, 2014 (%)
Share of Top 10 sources of FDI Stock in Canada,
2014, (%)
Others (0.7%)
4.0%
Latin America
11.7%
Asia & Oceania
Luxembourg 7.3%
Netherlands
9.4%
United Kingdom 6.6%
Switzerland 3.8%
34.3%
China 3.4%
Europe
Brazil 2.7%
Japan 2.5%
United States
49.4%
Germany 1.9%
France 1.6%
United States
Others 11.5%
49.4%
Source: Statistics Canada, April 24, 2015
43
…and Overall FDI Geared Toward Industries
with Strong Competitive Advantages
•
Almost 80% of foreign investment is in four main industries: manufacturing, mining and oil and gas
extraction, management of companies and enterprises, and finance and insurance.
Share of Top 6 Industries in Canada’s FDI
Stock, 2014, (%)
Management of companies
&
enterprises
17.2%
Mining, Oil and gas
20.8%
Finance &
insurance
12.4%
Wholesale trade
8.2%
Retail trade
4.6%
Manufacturing
29.5%
All others
7.5%
Source: Statistics Canada, April 24, 2015, * North American Industry Classification System (NAICS)
44
Canada is Also a Leader in FDI Attraction
Since the financial crisis and ensuing global downturn, Canada has outperformed major global economies in
attracting FDI: From 2010-2014, Canada was the largest recipient of per capita inflows among G-7 countries
and the second largest in the G-20 following Australia.
7000
Cumulative FDI Inflows Per Capita in the G-7, 2010-2014
6632
$US
6000
5000
4441
4000
$US
•
2872
3000
2093
2000
1822
1316
1000
25
0
Canada
U.K.
U.S.
Germany
France
Italy
Japan
Source: UNCTAD Stat Database, October 2015
45
…based on its Strong Economic and Institutional
Environment for FDI
The Global Opportunity Index* ranks Canada’s economic and institutional factors for
attracting foreign direct investment (FDI) as first in the G-7, first in the G-20 and sixth
among all 136 countries surveyed.
Economic and Institutional factors for attracting FDI:
G-7 Ranking
1st
2nd
3rd
4th
5th
Rank
•
6th
7th
Canada
U.K.
Japan
Germany
U.S.
France
Italy
*The 2015 index ranks 136 countries on 61 variables aggregated among four categories: Doing Business, Economic Fundamentals,
Quality of Regulations, and the Rule of Law. Each of the 4 categories measures an economic or institutional factor affecting the attraction
of foreign direct investment.
Source: Milken Institute, July 2015
46
V Easy Access to Markets
47
Canada has a Streamlined Trans-Border
Transportation System…
•
The North American market is served by a well-integrated transportation system, which is
among the world’s best.
 Automated permit ports, transponder identification systems and joint processing
centres are being tested and deployed for easy movement of goods.
 Bottom line – the border system is one of the world’s most efficient.
Annual Transborder Crossings
Total Number of Trucks and Canada-U.S. Air Passengers
25.0
Air
20.0
Millions
24.4 million
(Two-way movements)
15.0
10.7 million
10.0
Truck
5.0
0.0
1983
1988
1993
1998
Source: Statistics Canada and Transport Canada, 2013
2003
2008
(* Preliminary data for 2013 )
2013*
48
…with Direct Access to the NAFTA Market
•
500 km
1000 km
Victoria
St. John's
Edmonton
Calgary
Vancouver
Saskatoon
Regina
Winnipeg
Seattle
Milwaukee
Québec
Charlottetown
Fredericton
Montréal
Ottawa
Toronto
Boston
Windsor
New York
Chicago
Cleveland
Philadelphia
Detroit
Baltimore
Pittsburgh
Washington
St. Louis
San Francisco
Denver
Halifax
•
Canadian-based
businesses have
access to one
market of 474 million
consumers with a
combined GDP of
over US$20 trillion.*
Many Canadian
production hubs are
actually closer to U.S.
markets than
American production
sites — of Canada’s
20 largest cities, 16
are within an hour
and a half drive of the
U.S.
Atlanta
Los Angeles
Houston
Miami
Mexico City
* Source: IMF Fiscal Monitor, October 2015
49
… and Efficient Transport Linkages Tying North
America with Asia and Europe

A reliable and efficient transportation system is key to effective participation in global
supply chains.

Canada’s Gateways offer an integrated and efficient transport network that spans
from coast to coast, reaching deep into North America’s economic heartland. The
Gateways’ strategic locations offer the most direct routes to and from Asia and
Europe.

Sailing times from Canada’s Atlantic and Pacific deep-water ports are up to two days
shorter than other North American ports.
50
VI An Excellent Place to Live
51
Canada’s Overall Quality of Life is One
of the World’s Best…
Canada ranked first in the G-7 and sixth among the 34 OECD countries in terms of overall
living conditions and quality of life.
Better Life Index* G-7 Ranking
8.0
7.75
7.66
7.5
7.35
7.10
7.0
Index
•
6.45
6.5
6.03
6.0
5.81
5.5
5.0
Canada
U.S.
Germany
U.K.
France
Japan
Italy
Source: OECD June 2015 * Index based on weighted average of 11 topics (housing, income, jobs, community,
education, environment, civic engagement, health, life satisfaction, safety and work-life balance) identified as essential
by the OECD in the areas of material living conditions and quality of life.
52
…with a High Standard of Living among the G-7…
•
Canada has the second highest standard of living in the G-7 as measured by the Gross
Domestic Product (GDP) per Capita.
Gross Domestic Product per Capita of G-7 Countries
2014 (US$ Market Exchange Rates)
U.S.
$54,370
Canada
$50,304
Germany
$47,774
U.K.
$45,729
France
Japan
Italy
$44,332
$36,222
$35,335
Source: IMF Fiscal Monitor, October 2015 .
53
25th
24th
22th
22th
21st
19th
19th
16th
16th
16th
15th
14th
13th
12th
11th
9th
9th
8th
7th
6th
5th
4th
3rd
2nd
1st
•
Be
rn
Be
r li
To n
ro
nt
o
Ot
ta
w
Ha a
mb
Me urg
lb
Lu ourn
xe
e
m
bo
St urg
oc
kh
ol
St m
ut
tga
Br rt
us
se
ls
Pe
Mo rth
ntr
e
Nu al
rn
be
rg
Vi
en
na
Zu
r
Au ich
ck
la n
d
Mu
n
Va ich
nc
o
Du uver
ss
e ld
F r o rf
an
k fu
r
Ge t
Co ne
pe va
nh
ag
en
Sy
Am dne
ste y
r
W dam
e ll
in g
to
n
Rank
…Exceptional Quality of Life in Cities…
According to a recent annual quality-of-life ranking of 230 world cities, four Canadian
cities ranked among the top 25.
Overall Quality of Life Ranking (Top 25 Cities)
Source: Mercer Human Resources Consulting: March 2015
54
…and the Best Overall Reputation on
the Global Stage
The Reputation Institute ranks Canada as having the highest reputation ranking among
55 countries based on several indicators, including a good quality of life, a safe place to
live, an advanced economy, an effective government and an appealing environment.
Global Reputation* - Ranking of Top Ten Countries
1st
2nd
3rd
4th
5th
Rank
6th
7th
8th
9th
Be
lgi
um
Fi
nla
nd
Ne
w
Ze
ala
nd
De
nm
ar
k
Ne
th
er
lan
ds
Sw
ed
en
Sw
itz
er
la
nd
Au
st r
ali
a
No
rw
ay
10th
Ca
na
da
•
Ranking based on the Reputation Institute's 2015 Country RepTrak(TM), an annual study measuring the public perceptions of 55 countries around the
world. The study measures the overall Trust, Esteem, Admiration and Good Feelings the public holds towards these countries, as well as their
perceptions across 16 different attributes, including a good quality of life, a safe place to live and a strong attention to their environment.
Source: Reputation Institute, New York, July 2015
55
Canada Ranks High Among Model Nations of
Peace...
According to the Global Peace Index, a recently released measure by the Economist
Intelligence Unit, Canada stood 1st in both the G-7 and the G-20 and ranked seventh
among 162 countries surveyed.
Global Peace Index* G-7 Ranking
1st
2nd
3rd
4th
5th
Rank
•
6th
7th
Canada
Japan
Germany
Italy
U.K.
France
U.S.
*Standing among 162 countries. Index ranking countries based on peacefulness, both domestically and abroad using 22 indicators, including
the number of soldiers killed overseas, the level of violent domestic crimes and relations with neighbouring countries.
Source: Economist Intelligence Unit, June 2015
56
…and Vibrant Democracies
According to the Economist Intelligence Unit’s Democracy Index, Canada stood first in
the G-7, first in the G-20 and seventh among 167 countries surveyed.
Democracy Index* G-7 Ranking
1st
2nd
3rd
4th
5th
Rank
•
6th
7th
Canada
Germany
U.K.
U.S.
Japan
France
Italy
*Standing among 167 countries. Index ranking countries based 60 indicators grouped in five different categories: electoral process and
pluralism, civil liberties, functioning of government, political participation and political culture.
Source: Economist Intelligence Unit, April 2015
57
Canada is also a Safe and Just Society…
Canada is a G-7 leader in terms of the safest place to live and to conduct business under a
fairly administered judicial system.
Security* — World Rank
Source: IMD * Confidence that person and property is protected. Rank among 61 economies considered in the 2015 World Competitiveness Yearbook.
**Degree of fairness of the judicial system in Society. Rank among 61 economies considered in the 2015 World Competitiveness Yearbook.
ly
It a
ly
It a
ce
Fr
an
S.
U.
an
Ja
p
K.
U.
y
an
m
Ge
r
Ca
na
da
5.0
3.3
ce
5.2
Fr
an
5.5
S.
6.0
U.
6.5
7.5
6.6
an
7.0
7.8
Ja
p
7.3
Index
Index
7.5
da
8.0
7.9
na
8.1
8.1
K.
8.1
y
8.5
8.3
Ca
8.3
9.0
8.5
8.0
7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
U.
8.6
an
8.8
m
9.0
Justice** — World Rank
Ge
r
•
58
…a Land of Equal Opportunity…
Canada ranks first among the G-7 in providing equal opportunities for individuals.
Equal Opportunity* — World Rank
8.0
7.70
7.5
7.0
6.78
6.54
6.5
Index
•
6.50
6.0
5.79
5.63
5.5
5.06
5.0
4.5
4.0
Canada
U.K.
Japan
U.S.
France
Germany
Italy
Source: IMD * Race, gender, family background does not pose a handicap for competitiveness.
Rank among 61 economies considered in the 2015 World Competitiveness Yearbook.
59
…and a Society Rich in Multiculturalism
•
•
Canada has one of the world’s most multilingual societies with over 200 languages
identified as the mother tongue.
There has been an overall increase in the proportion of the population whose mother
tongue is neither English or French from 18.0% in 2001 to 20.6% in 2011.
Language Distribution in Canada*
(% of Population)
2001 Census
Other
18.0%
French
22.9%
English
59.1%
2011 Census
Other
20.6%
French
21.7%
English
57.8%
Source: Statistics Canada, 2001 and 2011 Census * based on mother tongue.
60
Canada – Solid Reasons to Invest
Canada’s economic fundamentals and relative cost advantages provide a first-rate
business environment. Canada offers:
Excellent Economic Fundamentals
A Solid Venue for Innovation and Investment

Low inflation and low interest rates

Quality R&D Tax Treatments

One of the strongest economies in the G-7

Superior innovation policies

World leader in post-secondary research
A Highly Competitive Business Environment

Ease in establishing and conducting a new
business

Competitive business costs

Competitive tax system

Strong financial and technological environment
A Dynamic Workforce

One of the world’s best-educated internationallyoriented workforces

Quality management training

Technology savvy workers
Easy Access to Markets

Geography and NAFTA provide easy access to the
world’s most prosperous market

Highly efficient transportation linkages with Asia and
Europe
An Excellent Place to Live

Superb overall quality of life

A society rich in multiculturalism
61
Invest in Canada
•
Through Canadian diplomatic missions around the world, and with direct access to
investment contacts at national, provincial and municipal levels within Canada, the
Invest in Canada Bureau of the Department of Foreign Affairs, Trade and
Development is well positioned to assist you with your investment in Canada. We
invite you to start exploring all that Canada has to offer at:
www.investincanada.com
•
For further information, please contact our investment specialists at your local
Canadian Embassy, High Commission or Consulate:
www.tradecommissioner.gc.ca/
or write to us at:
investincanada@international.gc.ca
Think Canada! is prepared by Arif Mahmud,
Investment Strategy and Analysis Division,
Office of the Chief Economist
62