2015 Index of Economic Freedom

Canada

overall score79.1
world rank6
Rule of Law

Property Rights90.0

Freedom From Corruption81.0

Limited Government

Government Spending48.3

Fiscal Freedom79.9

Regulatory Efficiency

Business Freedom89.0

Labor Freedom76.1

Monetary Freedom77.9

Open Markets

Trade Freedom88.4

Investment Freedom80.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 35.1 million
  • GDP (PPP):
    • $1.5 trillion
    • 2.0% growth
    • 1.4% 5-year compound annual growth
    • $43,472 per capita
  • Unemployment:
    • 7.1%
  • Inflation (CPI):
    • 1.0%
  • FDI Inflow:
    • $62.3 billion
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Canada’s economic freedom score is 79.1, making its economy the 6th freest in the 2015 Index. Its overall score is 1.1 points lower than last year, with modest improvements in monetary freedom and the control of government spending outweighed by declines in labor freedom and freedom from corruption. Canada continues to be the freest economy in the North America region.

Over the past five years, Canada’s economic freedom score has 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 economic freedoms, with an increase in the level of perceived corruption contributing the most to the moderate slide in Canada’s score.

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 buttressing openness to global commerce, Canada has a solid foundation of economic freedom. The financial sector is competitive, and its efficiency is supported by prudent lending practices and sound oversight.

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Background

Prime Minister Stephen Harper and his Conservative Party have governed since 2011 with a strong parliamentary majority of 166 out of 308 seats. With 103 seats, the social democratic New Democratic Party has become the leading opposition party for the first time. The next election must be held no later than October 19, 2015, when 30 new seats will be added to the House of Commons to increase representation of provinces with growing populations. Canada’s diversity and geographic size are reflected in a democratic system that provides substantial autonomy to its 13 provinces and territories. The 20 percent of Canadians for whom French is the native language are heavily concentrated in Quebec. Canada is a major exporter of oil, minerals, automobiles, manufactured goods, and forest products, and its economy is closely linked to the U.S. economy.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 81.0 Create a Graph using this measurement

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 indigenous land title. Enforcement of contracts is very secure, and expropriation is highly unusual. Protection of intellectual property rights is consistent with world standards.

Limited GovernmentView Methodology

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 EfficiencyView Methodology

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 MarketsView Methodology

Canada’s average tariff rate is a low 0.8 percent. Canada continues to negotiate free trade agreements but restricts dairy imports. Foreign investment in some sectors of the economy, including 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.

Country's Score Over Time

Bar Graph of Canada Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Canada79.1-1.1
2United States76.20.7
3Mexico66.4-0.4


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