NCPA - National Center for Policy Analysis

Economic Freedom In Canada

February 5, 1999

A recent study by Canada's Fraser Institute shows that provinces with the freest economies have generated higher levels of income per person.

The study analyzes 11 variables split among four categories: government operations and regulations, property takings and discriminatory taxation, interprovincial trade, and regulation of the labor market. Based on the analysis, the provinces were scored on a zero to 10 scale, with 10 indicating the greatest economic freedom.

  • The provincial scores ranged from Alberta -- by far the economically freest province with an overall score of 7.8 -- to Newfoundland, which scored only 2.9 .
  • Looking at trends over the 1981 to 1998 period, the study found economic freedom declined in most Canadian provinces in the 1980s but recently has been on an upward trend.
  • It also found that a one point increase in a province's score was correlated with an additional C$ 2,433 in provincial per capita gross domestic product (GDP).
  • Thus restrictions on economic freedom in some provinces are costing Canadians up to C$12,500 per year.

The results of this study confirm international evidence from "Economic Freedom of the World," an annual survey sponsored by Fraser and 52 other think tanks, that economic freedom is correlated with economic prosperity.

"Regardless of external market conditions or natural endowment, if a provincial government wishes to increase the living standards of its citizens, allowing them increased economic freedom is essential," concludes co-author Dexter Samida.

Source: Faisal Arman, Dexter Samida and Michael Walker, "Provincial Economic Freedom in Canada 1981-1998," Critical Issues Bulletin, January 1999, Fraser Institute, 4th Floor, 1770 Burrard Street, Vancouver, B.C. V6J 3G7, Canada, (604) 688-0221.

 

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