Business Category - Business in Canada

Why Business in Canada
Canada maintains one of the world’s highest per capita GDP’s, about US $ 22,000 per person. The World Bank has also ranked Canadians as the 2nd wealthiest people in the world in terms of the country's natural, financial, human and social resources. Based on Canada’s total wealth, each Canadian is worth nearly $750,000. Canada has the lowest inflation rate among the Group of Seven (G-7) countries, and one of the highest rates of economic growth. Besides this, Canada’s unemployment rate has been steadily declining for the past few years, reflecting the increased demand for skilled individuals. In fact, it has dropped to a mere 7% nationally in 1999. In some provinces, it is as low as 5.5%.

Canada ranks first among G-7 countries in its development of knowledge workers.
Canada has the highest level of computer literacy among G7 workers and more computers per capita than any other G7 country except the US.
Canada's R&D tax incentives program is the most generous among the G-7 -- immediate and full write-off for most costs, plus 20% to 48% tax credits.
Of the 53 most developed countries in the world, Canada has the most educated labour force.
In 2000, the Gross Domestic Product (GDP) in Canada grew by 4.1%, compared to a growth of 1.1%, in Japan.
Canada together with the U.S. and the U.K. are the only G7 countries that have successfully reduced their budget deficits and recorded a surplus in the last years.
Canada's consistently low inflation rate reflects the government's commitment to fiscal responsibility and overall economic stability.

Number 1!
For the 6th consecutive year, the United Nations ranked Canada number one on its Human Development Index. The country's standard of living, health care system, educational attainment, housing, cultural and recreational facilities, level of public safety and tourist opportunities are all of an exceptionally high quality.

Source: United Nations, Human Development Report, 2000

NAFTA
The North American Free Trade Agreement was signed in 1994 between Canada and the United States and Mexico. By 2009 and all tariffs on goods services between these three countries will be removed.

NAFTA creates a single, North American market of nearly 400 million consumers - larger than the 12 countries of the European community - and a combined GDP of $11 trillion. This market is one of the richest in the world. This means you have access to immense buying power!

Canada is one of the world's great trading nations providing a superb base for exports to the entire North American market as well as a large sophisticated home market.

The Organization for Economic Co-operation and Development (OECD) anticipates continued strong growth for the Canadian economy.

Productivity gains, strong business investment, technological innovation, record-low wage increases and a favorable exchange rate are keeping the economy competitive in world markets.

Foreign Investment
Both the federal and provincial governments welcome foreign investment as an important contribution to the Canadian economy in terms of capital, technology, expertise and innovation.

Since 1990, foreign direct investment in Canada grew by 83% to $240.0 billion at the end of 1999.

Trading
Canada is one of the world's great trading nations providing a superb base for exports to the entire North American market as well as a large sophisticated home market. The combined value of exports and imports is the equivalent of more than two-thirds of the country's GDP. Canada trades with the world but its main trading partner is the US, accounting for roughly three-quarters of trade and the majority of capital moving in and out of Canada.

Canada's Major Trading Partners - 1999

Industry Costs Among the Lowest in the Industrialized World
The costs of establishing and operating a business vary. But, when KPMG compared industry costs across several countries, Canada came out first in every industry surveyed. That's because of Canada's low initial investment costs, which in turn are due to low land, construction and interest rate costs, as well as lower labour, electricity and telecommunications costs. Favourable income tax rates and R&D tax incentives also make it highly competitive.

Cost of Living
Canadian cities offer world class amenities and entertainment. At the same time the cost-of-living index of Canadian cities compares favorably with other international urban

Government Support & Financing
Business Development Bank of Canada (BDBC):
The Business Development Bank of Canada (BDC) is a Crown corporation whose mission is to help create and develop Canadian small and medium-sized businesses. BDC provides specialized financing for commercially-viable business projects as well as a wide range of business counselling, training and mentoring services. With both financial and management services under one roof, BDC seeks to provide entrepreneurs with complete solutions to their business needs.

The BDC provides specialized financing for commercially-viable business projects including Term Loans, Venture Loans, and venture capital. The programmes are provided anywhere in Canada.

The Business Development Bank of Canada (BDC) offers innovative financial services that address the unique needs of today's small and medium-sized businesses.

BDC's wide range of products allows the Bank to provide the right kind of financing -- at the right time -- to support the long-term growth of Canadian businesses in all sectors of the economy, with particular emphasis on knowledge and export-based industries.

From a regular term loan to a venture capital investment of up to five million dollars, BDC's line of "Just-in-Time Development Capital" offers a financing alternative to match every need.

And that's not all...
To increase a business' prospects for success, BDC does everything possible to structure repayments according to a client's ability to pay. The Bank offers a variety of flexible terms and conditions, such as stepped principal payments, seasonal payments, and in some cases deferred principal repayment.

Economic Ranking of Provinces

Alberta: 54.5 points (78 per cent of the 70-point maximum)
Often, a spell of weakness can be a springboard for a strong rebound, and that seems to be Alberta's story for 2000. Even when resource prices were low, Alberta had plenty going for it.

Canadians from other provinces poured into Alberta, hoping to share in its prosperity and low taxes. New office buildings sprouted in Calgary, and long-term investments in petrochemical facilities kept Alberta growing and its unemployment rate low.

When oil prices began to climb in early 1999, the outlook for the energy industry improved with every increase. Scotiabank forecasters figure drilling activity will increase 45 per cent this year.

Such prospects have already boosted the confidence of consumers. Retail sales in the latest six-month period were up 6.7 per cent from the previous six months, the fastest growth in the country.

Capital spending, according to the latest Statscan survey of investment intentions, is set to grow 3.6 per cent this year from 1999, the second-fastest pace in Canada.

Among forecasters, the consensus is that Alberta's GDP will grow 4.8 per cent in 2000, up smartly from its 2.9-per-cent growth in 1999, but still a shade behind Ontario and Newfoundland.

Prince Edward Island: 53 points (76 per cent)
Tiny PEI seems to be reaping the benefits of the Confederation Bridge that connects the island to the mainland.

Now that truckers can be sure of crossing the Northumberland Strait without the vagaries of the old ferry service, PEI has become a more attractive spot for manufacturers.

In the latest six-month period, factory shipments climbed 12.6 per cent, about double the national pace.

The bridge has also brought in more tourists, and the province's marketing efforts have persuaded them to stay longer and spend more money while there. Investment is under way to give the visitors more places to stay and more things to do -- such as golf -- which is one reason PEI leads the country in planned new capital spending this year.

It has also racked up more impressive job gains than any other part of the country in recent months. Total employment increased 4.6 per cent in the latest six-month period, triple the national rate.

As welcome as the latest spurt may be, forecasters believe it is temporary. They expect PEI's overall growth this year to come in at only 3 per cent, down slightly from 3.2 per cent in 1999.

New Brunswick: 48.5 points (69 per cent)

New Brunswick is the sleeper among Canadian provinces, as it is often forgotten by those looking for economic hot spots.

But the province has a number of things going for it. Pulp and metal prices, especially for zinc, have improved and a number of major construction projects are boosting activity. Work continues on the expansion of the Irving Oil refinery in Saint John and on the new highway between Moncton and Fredericton.

In the indicators we track, New Brunswick ranked first for its recent growth in housing starts, a 26-per-cent gain that was triple the national average; second in manufacturing shipments, double the national average; second in wholesale trade; and third in the growth of retail sales.

But, as in the case of PEI, forecasters are looking past this strong short-term performance to see a year of 3.1-per-cent growth in overall GDP, down from 3.7 per cent in 1999.

Ontario: 46.5 points (66 per cent)

Ontario may have taken it easy in the past few months, but forecasters still have it pegged as one of the hot provinces of 2000. It may not match its 5.7-per-cent expansion of 1999, economists believe, but it will still grow by another 4.9 per cent this year -- remarkable growth by any standard.

Its slip in our rankings, from second in October, 1999, probably reflects little more than a recent (and temporary) slowdown in shipments by the province's massive auto industry.

In most of the other indicators, Ontario did much better than the national average, but was edged out for the top spots by other provinces that experienced unusual bursts of activity. That was true for retail sales, wholesale trade and housing starts. Still, job growth slowed in the recent period to merely match the national average, rather than beat it.

The prospects are brighter. Ontario exports almost half of what it produces, and most of that goes to the United States, where the economy is still expected to turn in another stellar performance.

All told, the consensus forecast puts Ontario in a tie with Newfoundland for Canada's fastest growth through 2000.

Quebec: 39 points (56 per cent)

Quebec's middling result in the ROB ranking is typical of its usual economic performance, which normally sees it grow by something less than the national average. Still, Quebec did well last year and should do well again in 2000. As in Ontario, a strong U.S. economy will help, and domestic demand is picking up as well.

Its 1999 growth rate of 3.6 per cent, forecasters agree, was its best since 1994, and the province is expected to grow at a slightly faster pace of 3.7 per cent this year.

Quebec ranks second in one indicator, as total employment grew 2.1 per cent in the latest six-month period, and last in another with retail sales advancing only 2.5 per cent. But it fared better than most in housing starts, and its outlook for capital spending and factory shipments this year grew faster than the national average.

British Columbia: 35 points (50 per cent)

B.C. was either at the bottom or close to it in the first three ROB rankings, but it has finally burst from the cellar thanks to rising commodity prices, strengthening Asian markets and persistent expansion in the United States.

B.C.'s bright spot in the indicators we track is capital spending, which is expected to rise 2.6 per cent this year, double the national rate. Its manufacturing sector and wholesale activity have both outpaced the country in recent months. But rising retail sales still show few signs of real vigour. Housing starts have flattened after a long slide.

As far as forecasters are concerned, B.C. will be locked in a four-way tie for the slowest growth in Canada during 2000 -- a mere 2.8 per cent. Still, that's a lot better than its 0.2-per-cent growth in 1998, according to Statscan, and its estimated 1.7-per-cent growth in 1999, according to private economists.

Saskatchewan: 33 points (47 per cent)

After a strong showing in 1997, Saskatchewan has been through a rough couple of years, largely because of low world commodity prices that savaged the province's farm community and its oil patch. Energy is poised to make a stronger comeback than agriculture, which still faces the grim reality that large farm subsidies in Europe and the United States are keeping farm prices low.

The doldrums have extended to the province's housing market, where starts have fallen by a quarter in the latest six-month period. The outlook for new capital spending is also grim -- it's expected to fall 9 per cent this year. But employment has grown in recent months and retail sales have almost matched the national growth rate.

According to forecasters, Saskatchewan will be part of the four-way tie for the slowest growth in Canada this year.

Newfoundland: 31.5 points (45 per cent)

This time around, Newfoundland slipped badly, falling all the way to eighth from first. It's still pumping plenty of oil from Hibernia and there's lots of exploration and development work under way for new offshore oil fields, but in the past six months that activity has not translated into strong activity on solid ground.

Job growth, manufacturing shipments and retail and wholesale trade all grew more slowly in the latest six-month period than in the previous one. Capital spending, meanwhile, is expected to fall this year, rather than expand as it did in 1999. Only in the category of housing starts has Newfoundland gone from weakness to strength, with the third-fastest growth in Canada in recent months.

This year, forecasters say Newfoundland will again lead the country with an expansion of 4.9 per cent, but this time, it will share the lead with Ontario. And it's an open question as to how much of that growth will be reflected in new jobs and spending.

Nova Scotia: 28 points (40 per cent)

Nova Scotia is part of forecasters' four-way tie for slow growth in 2000, after a relatively strong year in 1999.

Its big problem appears to be a sharp drop in planned capital spending, which -- after Sable Island -- is set to drop 21 per cent this year, according to the Statscan survey. But the demise of steel and coal in Cape Breton also weighs on the province's economic outlook.

The bright spots in the recent data are housing starts, up by a massive 22 per cent in the latest six-month period; and factory shipments, which have also grown faster than the national average.

The provincial government's planned spending cuts will not only reduce public sector employment, but probably impair consumer confidence as well.

Manitoba: 16 points (23 per cent)

These are indeed tough times for Manitoba, and it shows both in the indicators of recent growth and in forecasts for 2000. The province is the fourth member of the tie for the bottom in the eyes of forecasters.

Farming and mining both suffered setbacks last year. The fragility of the economy can be seen in the slow growth of jobs in recent months, where Manitoba is tied for last spot with New Brunswick; a decline in wholesale trade; no growth in factory shipments; slow growth in retail sales; and a 24-per-cent drop in housing starts.

Until prosperity returns to the farms, Scotiabank said, an increase in consumer spending is unlikely.

Ranking the Provinces
The fourth semi-annual ranking of provincial economies assigns points based on seven indicators: employment, housing starts, retail sales, wholesale trade, manufacturing shipments, capital spending plans and GDP growth forecasts.

Source: Statistics Canada; Canada Mortgage and Housing Corp. Five Forecasters

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