2013 Index of Economic Freedom

Canada

overall score79.4
world rank6
Rule of Law

Property Rights90.0

Freedom From Corruption87.0

Limited Government

Government Spending44.8

Fiscal Freedom79.8

Regulatory Efficiency

Business Freedom91.7

Labor Freedom82.3

Monetary Freedom75.2

Open Markets

Trade Freedom88.2

Investment Freedom75.0

Financial Freedom80.0

Embed This Data

Create a Comparison Chart

See how Canada compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 34.4 million
  • GDP (PPP):
    • $1.4 trillion
    • 2.5% growth
    • 1.1% 5-year compound annual growth
    • $40,541 per capita
  • Unemployment:
    • 7.4%
  • Inflation (CPI):
    • 2.9%
  • FDI Inflow:
    • $40.9 billion
Embed This Data

Canada’s economic freedom score is 79.4, making its economy the 6th freest in the 2013 Index. Its overall score is 0.5 point lower than last year, reflecting declines in freedom from corruption and business freedom that are only partially offset by a notable improvement in the management of public spending. Canada continues to be the freest economy in the North America region.

The foundations of economic freedom in Canada remain strong and well-supported by solid protection of property rights and an independent judiciary that enforces anti-corruption measures effectively. While many large advanced economies have been struggling with the heavy burden of government and fiscal constraints that result from years of unrestrained public spending, Canada’s public finance management has been comparatively prudent, with efforts to downsize government made on a continuing basis.

Canada’s economy has been resilient, benefiting from a strong commitment to open-market policies that facilitate global trade and investment flows. Efficient regulations are applied evenly in most cases, encouraging dynamic entrepreneurial activity in the private sector. Steady reduction of the standard corporate tax rate has also contributed to global competitiveness.

Close

Background

Prime Minister Stephen Harper won a second term in the 2011 parliamentary elections, and his Conservative Party secured a solid majority. The opposition New Democratic Party also picked up seats, particularly in the province of Quebec. Canada’s federal democratic system provides substantial autonomy to its 13 provinces and territories. Tensions between Anglo and French Canadians have softened in recent years, but cultural protectionism in international and domestic trade is an ongoing threat. Canada is a party to the North American Free Trade Agreement and a major exporter of oil, minerals, automobiles, manufactured goods, and forest products. The proposed expansion of the TransCanada Keystone pipeline system to increase oil exports from Alberta to the United States has been delayed by the Obama Administration.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 87.0 Create a Graph using this measurement

Canada’s foundations of economic freedom are solid. Private property is well protected, with an independent and transparent judicial system firmly in place. Enforcement of contracts is very secure, and expropriation is highly unusual. Protection of intellectual property rights is consistent with world standards. Effective anti-corruption measures discourage bribery of public officials and uphold the government’s reputation for integrity.

Limited GovernmentView Methodology

The top federal income tax rate remains 29 percent, and the top corporate tax rate has been cut to 15 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden amounts to 31 percent of total domestic income. Government spending is equivalent to 42.9 percent of total domestic output, with deficits recorded in recent years. Public debt has risen gradually to almost 90 percent of GDP.

Regulatory EfficiencyView Methodology

Canada’s highly competitive regulatory framework promotes business formation and operation. With no minimum capital standards, starting a company requires only one procedure. Flexible labor regulations enhance employment and productivity growth. Inflation has been modest, but the government controls virtually all prices for health care services through its mandatory “single-payer” nationalized program.

Open MarketsView Methodology

The trade regime is very competitive, with a low 0.9 percent average tariff and few non-tariff barriers. The country’s openness and flexibility strongly sustain the efficient and dynamic investment environment. The prudent banking sector remains stable, weathering the ongoing global financial turmoil with no need for bailouts or large injections of state funds. The “big six” domestic banks dominate the sector.

Country's Score Over Time

Bar Graph of Canada Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Canada to other economic country groups

Regional Ranking

rank country overall change
1Canada79.4-0.5
2United States76-0.3
3Mexico671.7


View all countries ›

Back to Top