Newfoundland and Labrador, Alberta and Saskatchewan are the top performers among all provinces and international peers in terms of key economic indicators, says a report by an Ottawa-based thinktank.
“With an A+ rating, our province was not only ahead of Ontario, Quebec, B.C., Manitoba and the Maritimes for economic performance; we were also ahead of Canada’s national performance and ahead of the U.S., the U.K., Australia, France, Germany and even Norway,” said Charlene Johnson, Newfoundland and Labrador Minister of Finance in a press release.
“Not only are we leading the entire country in foreign direct investment performance, but we are also shining in employment growth.”
The Conference Board of Canada released a report on May 15 which uses several economic indicators to measure the quality of life in Canada, its provinces and among other countries.
According to the Board’s first “How Canada Performs: Economy” report card, the resource-based economies of Alberta, Saskatchewan and Newfoundland and Labrador received A+ grades for overall performance.
“These provinces are endowed with energy and other resources that have experienced strong global demand in recent years,” said the report.
“The benefits of resource exports, particularly energy, have led to rising incomes in these provinces and higher consumer spending. This spending, in turn, has boosted the services sector and real estate activity.”
As a result, these regions ranked highest among the provinces taking the top three spots. In addition, these provinces performed better than the top-ranked international peer country, Australia.
Newfoundland and Labrador ranked first overall (A+) in terms of inward greenfield Foreign Direct Investment.
The province’s mining sector and offshore oil resources have attracted a large amount of FDI relative to its economic size.
Newfoundland and Labrador also ranks first and scores an “A+” in terms of Gross Domestic Product (GDP), with a 7.9 per cent growth rate in 2013.
Ontario is the highest-ranking “B” province with its 10th-place finish. The province’s best performance is for employment growth (A+). In 2013, Saskatchewan, Alberta, P.E.I., and Ontario all had higher employment growth than Ireland, which is the top-ranking peer country.
“Ontario’s middle-of-the-pack performance is a result of subdued export demand due to the double-whammy effect of a strong loonie and a sluggish U.S. economy,” said the report.
“What’s more, chronically high fiscal deficits and rising debt levels have made it difficult for the province to invest in education and innovation, the building blocks for productivity growth and, ultimately, an improved standard of living.”
The report said employment growth in Ontario (1.4 per cent) was, in part, a result of the catch-up following the 2.5 per cent decline at the peak of the recession. This was one of the largest declines in Canada.
Employment was also driven by strength in the services sector, while manufacturing is expected to continue to make up a significant part of the provincial economy.
Ontario scores “B” grades in 2013 for the unemployment rate (7.5 per cent) and GDP growth (1.2 per cent).
Overall, Canada gets a “B” grade on the economy report card, with a fifth place ranking among the peer countries.
While Canada’s overall “B” grade is good, there is definitely room for improvement. Canada earned a “C” grade on three indicators, income per capita, labour productivity growth, and inward greenfield FDI. The country also has a “D” on outward FDI.
The report concludes that is imperative that Canada and its provinces to focus on initiatives that promote labour productivity growth, in order to improve their overall performance and relative ranking.
Some of the factors that boost productivity are investment in machinery and equipment, fostering innovation and attracting more FDI.
However, Canada’s investment in machinery and equipment as a percentage of GDP is among the lowest of its peer countries. Global integration is also essential to sustaining and boosting economic performance.
FDI outflows can promote innovation and help boost productivity by providing access to foreign markets and promoting deeper integration into global value chains. This makes firms more efficient and competitive.
FDI inflows can help boost productivity, by encouraging the diffusion of technology management know-how, as well as more efficient resource allocation.
Follow Richard Gilbert on Twitter @buildingcanada.
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