Canada - A Strategic Choice

Think Dynamic. Think Competitive. Think Bottom Line.

Think Canada.
April-May 2009

Canada - A Strategic Choice

Excellent Economic Fundamentals

A Sound Forecast for Canada

Canadas federal government has made the right choices when times were good as is evidenced by its eleventh consecutive annual surplus in fiscal 2007-08. However, in light of the current global economic downturn, Canada, in its latest budget, has deliberately chose to run short deficits to stimulate its economy without putting longterm prosperity at risk. Canadas net debt-to-GDP ratio will remain the lowest in the G-7 by a wide margin with a return to a surplus expected by the 2013-14 fiscal year. The U.S. will continue to experience deficits for at least the next ten years.

F d r l G v r m n B d e a y B la ce e ea o en e t u g t r a n
2 0 -0 * 08 9 2 0 -1 * 09 0 2 1 -1 * 00 1 2 1 -1 * 01 2 2 1 -1 * 02 3 2 1 -1 * 03 4 2 0 -0 07 8

2 0 0
C n b a $ illio s n

96 . 07 . -11 . -1 . 30 -3 . 37 -4 5 5 -7 3 0 -2 . 98 -4 8 9 -2 4 6 -73 . -2 7 5 -2 0 5

20 0 0
U $b S illio s n

-2 0 -4 0 -6 0 -8 0 -1 0 0 -1 0 2

-2 0 0 -4 0 0 -6 0 0 -8 0 0

Canada

-1 0 00

-1 0 20 U.S. -1 8 16 * Forecasts for both countries Source Canada: The Federal Budget, Finance Canada, January 27, 2009 Source United States: The Budget and Economic Outlook, United States Congressional Budget Office, January 2009.

Leading Most Other G-7 Countries

Canada and Germany were the only G-7 members to post a surplus in 2007 with Canada in the lead. Despite being in an overall deficit position during the 2008-2010 period, Canada will be in a far better position than most G-7 member countries.

Tot l Gove e Bud e Ba nce2 0 -1 a rnm nt g t la 07 0

(%of GD P) (N tion l Accou ts Ba a a n sis)

2.0 1.0 0.0

1 .4 0 .1

Ca nad a

Ge rm ay n

Fra nce

-1.0 -2.0 -3.0 -4.0 -5.0 -6.0 -7.0

-0 .9

-0 .6

-1 .5 -2 .8 -2 .8

-2 .7 -3 .5

J ap a n
-2 .4 -2 .8 -6 .3

Ita ly

UK ..

2007

-5 .1

2008-10
Source: OECD Economic Outlook, Number 84 , December 2008 4

U.S .
-2 .9

Low Inflation Rates

Canadas targeted inflation rate range between 1% and 3% has been extended until 2011. With low inflation over the past decade, Canada is considered among the low inflation countries.

Over the past five years, Canadas inflation rate averaged 2.1%, compared to 3.2% for the U.S.

Infla ion t
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2002 2003 2004 2005 2006 2007 2008
Canada U.S. Sources: Statistics Canada and the Federal Reserve Bank of St. Louis (FRED II Database), January 2009 2 .3 1 .6 2 .8 2 .3 1 .9 2 .7 2 .2 2 .0 2 .1

(Ye r-O e a %Cha ) a v r-Ye r nge

3 .4 3 .2 2 .9 2 .4

3 .8

Low Interest Rates

Canadas solid fiscal situation and low inflation has led to lower interest rates. The sharp decline in interest rates in both Canada and the U.S. in recent months were a consequence of the global economic downturn. Rates in the U.S. were lowered more than in Canada because of the greater severity of the slump in the U.S. economy.

Long-TermBond Y lds (% ie )
5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5
Ja n05 Ja n08 Ja n04 Ja n06 Ja n07 Ja n09
Cana da U. S.

D ily Y ld (% a ie s )
3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 2.0

Cana da

U. S.

Source Canada: Government of Canada 10-Year Bond: May 22, 2009 Source U.S.: U.S. Treasury, Constant Maturity 10-Year Bond: May 22, 2009

16 -J a 30 n-0 -J 9 13 an-0 -F 9 e 27 b-0 -F 9 e 13 b-0 -M 9 27 ar-0 -M 9 10 ar-0 -A 9 p 24 r-0 -A 9 p 8- r-09 M 22 ay-0 -M 9 ay -0 9

A Stable Domestic Economy

According to Consensus Economics, Canada has been the best performer among the G-7 in GDP growth over the 2005-08 period and is expected to remain so through 2009-10 despite the recent global economic downturn.

Re l GD GrowhProje ions (% - Conse a P t ct ) nsus Econom Inc. ics

3.0
2 .3
Conse nsus Fore s, M 2 0 , Conse cast ay 0 9 nsus Ecom onics Inc.

2 .2

2 .2 1 .8 0 .9

2005-08
1 .9 1 .4

2.0 1.0 0.0

-0 .3 %

-1.0
Can ada

-0 .6

Italy

-2.0 -3.0

-1 .8

Germ any

Fran ce

J apa n

U.S.

U.K.

-1 .1

-2 .0

2009-10
-2 .4

-2 .3

A Stable Domestic Economy

Recent OECD statistics rank Canada as a top performer the among G-7 countries in terms of GDP growth during the 2005-08 period and the best during the 2009-10 forecast period.

Re l GD GrowhProje ions (% - OECD a P t ct )

O ECDEconom O look, N be 8 , D ce be 2 0 ic ut um r 4 e m r 0 8

4.0 3.0
2 .3 2 .3 2 .2 1 .8

2005-08
2 .0 1 .7 0 .9 0 .4 0 .6 0 .2 -0 .1 -0 .1 0 .3

2.0
%

2009-10

1.0 0.0

0 .8

Canada -1.0

U.S.

U.K.

France

Italy

Germ any

J apan

Canada - A Strategic Choice

Easy Access to Markets

Efficient Flow of Goods Across Borders

Canada leads the G-7 and ranks 5th among 118 countries in terms of the enabling trade index, which measures the effectiveness of the combined factors of market access, border administration, transport & communications infrastructure, and business environment towards the efficient flow of goods over borders and to their final destination.

En b gTra eIn e a lin d dx

6 .2 6 .0 5 .8
In e dx 5 1 .7 5 6 5 5 .6 .6 5 2 5 2 5 1 .6 .6 .6 5 8 5 8 .5 .5 6 4 .0

5 .6 5 .4 5 .2 5 .0

5 2 5 1 5 0 .5 .5 .5

5 3 5 2 .4 .4

Ko ng Si ng ap or e Sw ed en No rw ay Ca na d De a nm ar k Fi nl an Ge d rm Sw any itz e Ne rla nd w Ze a Ne lan d th er l Lu and s xe m bo ur g Ja pa n

Global Enabling Trade Report 2008, World Economic Forum.

Ho ng

U. S.

10

Streamlined Trans-Border Flows

The North American market is serviced through a well-integrated transportation system, which is among the worlds best.

Automated permit ports, transponder identification systems and joint processing centres are being tested and deployed for easy movement of goods

Annua Tra l nsborde Crossings r

Tota N m e of Tru s a dCa a a .S. Air Pa n e l u br ck n n d -U sse g rs

25 20 15 10 5 0 1984 1988

(Tw a m m n o-w y ove e ts)

Air

20.8 million

Millions

Truc k

11.5 million

1992

1996

2000

2004

2008*

Source: Statistics Canada and Transport Canada, 2008 air passengers)

(* Preliminary data for 2008

11

Smart Borders

Canada and the United States work closely together to ensure the safety, security, and prosperity of both our countries. Significant steps forward were accomplished to increase overall effectiveness of border programs, such as:

FAST (fast movement of pre-approved eligible goods by truck); NEXUS (special program for frequent travelers); Harmonization of procedures for commercial shipments; Harmonized timeframes for advance electronic cargo reporting; Implemented the "24-Hour Rule" for marine shipments destined to North America; Collaborated in the development of automated risk assessment systems, tools and methods; Improved infrastructure and border processing times.

The border system is one of the most efficient in the world: wait times are usually less than 10 minutes.

12

Direct Access to the NAFTA Market

Since the enactment of the North American Free Trade Agreement (NAFTA) in 1994, Canada provides long-term assured access to the North American market. In addition to eliminating tariffs, NAFTA provides procedures for:

border facilitation movement of personnel investment and intellectual property protection product certification

The signing of the North American Free Trade Agreement (NAFTA) integrated the Canadian, U.S., and Mexican economies for nearly all business purposes. As a result, Canadian-based businesses have access to one market of 447 million consumers with a combined GDP (PPP*) of almost US$17.5 trillion.** Many Canadian production hubs are actually closer to U.S. markets than American production sites of Canadas 20 largest cities, 17 are within an hour and half drive of the U.S. Direct air service between major cities in Canada and the U.S. has nearly doubled in the last six years.

* PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods) ** Source: CIA World Factbook, March 2009

13

500 km

Edmonton Saskatoon Calgary Regina Winnipeg Victoria Vancouver

1000 km
Seattle

St. John's Qubec

Charlottetown Fredericton Halifax Ottawa Montral Toronto Boston Milwaukee Windsor New York
Chicago Cleveland Philadelphia Detroit Baltimore Pittsburgh Washington St. Louis

San Francisco

Denver Atlanta

Los Angeles Houston Miami

Mexico City

14

Canada is the United States Largest Trading Partner by Far

Canada and the U.S. have the worlds largest trade partnership, with two-way trade in goods and services amounting to CAN$740 billion in 2008. This averages to more than CAN$1.4 million dollars a minute in trade.

Ca a a- U Tra inGoods &Se nd .S. de rvice s

800 ($ CANBillions)

600

Canada to U.S.

400

200

U.S. to Canada

0
08 20 07 20 06 20 05 20 04 20 03 20 02 20 01 20 00 20 99 19 98 19 97 19 96 19 95 19 94 19 93 19
Source: Statistics Canada, February 27, 2009 15

Canada is the United States Largest Trading Partner by Far

The U.S. trades more with Canada than with any other countrymore with Canada than with all of the E.U. countries combined!

D rib t n o U Tra e - 2 0 ist u io f .S. d * 0 8

Ca da na 1 .5 7 % All O he t rs 4 .1 9 % China 1 .0 2 %

M xico e 1 .8 0 % Ge a rm ny 4 % .5 Ja n pa 6 % .1

Source: World Trade Atlas * Merchandise trade, February 2009 16

Vital Trade Links with the Americas

Despite the lack of an expanded free trade zone beyond NAFTA for additional countries in the Americas, sizable trade opportunities are still apparent within this region for Canada.

Total Trade in Top Sectors, 2008, CAN$ Billions Transportation

Equipment Oil & Gas Extraction Chemicals Machinery Primary Metals Other Sectors

125.7 109.6 51.2 44.8 43.1 241.9

Total Trade

616. 4

Source: Statistics Canada, February 2009 Note: Merchandise trade * Ranking is based on 2008 data. 17

Strong Historical Trade Ties with Europe

European markets continue to provide tremendous trade opportunities for Canada.

Chemicals Transportation Equipment Machinery

Total Trade in Top Sectors, 2008, CAN$ Billions

12.7 11.4 11.1 10.8 6.0 35.8

Mining (except oil & gas) Primary Metals Other Sectors

Total Trade

87.8

Source: Statistics Canada, February 2009 Note: Merchandise trade * Ranking is based on 2008 data. 18

Unique Access to Asia-Pacific Markets

With its geographical location, its immigration links and active involvement in APEC to reduce trade barriers, Canada is uniquely positioned to gain from the longterm potential of Asian economies.

Total Trade in Top Sectors, 2008, CAN$ Billions Computer & Electronic
Products Transportation Equipment Machinery Mining (except oil & gas) Primary Metals Other Sectors

Total Trade

134. 6

23.5 12.7 10.6 9.8 7.7 70.3

Source: Statistics Canada, February 2009, Note: Merchandise trade * Ranking is based on 2008 data. ** Includes Oceania and the Middle East

19

Efficient Transport Linkages between North America and Asia

A reliable and efficient transportation system is key to facilitating global supply chains. In October 2006, Canada has launched the Asia-Pacific Gateway and Corridor Initiative, an unprecedented alignment of public and private sector investments to strengthen Canadas position as a fast, efficient and secure gateway between North America and Asia. These investments will improve the flow of people, goods and services across Canadian rail, roads, bridges and through our ports and airports.

20

Canada - A Strategic Choice

Growing Foreign Direct Investment Linkages

A Highly Globalized Infrastructure

Due to its rapidly growing prominence as an outsourcing market of choice, Canada ranked second in the G-7 and eighth among 72 countries profiled in the recent A.T. Kearney/Foreign Policy Magazine Globalization Index* which measures economic integration, personal contact, technological connectivity and political engagement. In technological connectivity, one of the four components of the index, Canadas ranking rose from sixth place in 1999 to second in 2006. It maintained this position in 2007.

Globa t Inde Ra ings, 2 0 * liza ion x nk 07

7 th

8 th 1 th 2 2n 2d

2 th 5

In e dx

2 th 8 3 th 4

U.S.

Canada

U.K.

Germ any

France

J apan

Italy

Source: A.T. Kearney/Foreign Policy Magazine, 2007 * Standing based on 12 characteristics under the headings of trade, FDI, telephone, travel, remittances & personal transfers, internet users, internet hosts, secure servers, international organizations, UN peacekeeping, treaties and government transfers. 22

Driven by a Dynamic Two-Way Investment Process

Over the past two decades, Canada has witnessed a substantial growth in both inward and outward FDI. Canadas inward FDI stock reached C$505 billion in 2008, an almost 8-fold increase from C$65 billion in 1980. As for Canadas outbound FDI, the expansion of Canadian direct investment abroad (CDIA) has been even more spectacular, rising from C$28 billion in 1980 to $637 billion in 2008, a 23-fold increase. Since 1997, Canada has been a net exporter of FDI, with outward FDI stock outstripping inward FDI stock each consecutive year.

CDIA FDI

Source: Statistics Canada, April 8, 2009

23

The United States is Canadas Largest Source of FDI

In 2009, the U.S. share of foreign direct investment (FDI) in Canada stood at 58.2%, down from the 10-year record level of 69.7% in 1999.

Ge ogra phic D ribut of Inw rdFD StockinCa da ist ion a I na 20 08

United States 58.2% United Kingdom 10.8%

Netherlands 6.7% France3.7% Sw itzerland 3.0% J apan 2.6% Others 15.1%

Source: Statistics Canada, April 8, 2009

24

Outnumbering the EU by More than Two to One

From 2000-2008, the US share of FDI stock in Canada declined from 61% to 58%, while that of the EU, the second largest contributor to FDI in Canada, declined from 30% to 26%.

Foreign direct investment in Canada by geographic area of origin 1990-2008

600 500 400 300 200 100 0 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08

FDI stock: distribution by geographic region of origin (%)

100% 80% 60%

Billion $Cdn

Others

12%

9%

15%

Others

64%

61%

58%

US

US EU

40% 20% 0% 1990 2000 2008

24%

30%

26%

EU

Source: Statistics Canada, May 4, 2009 25

The United States is the Largest Recipient of CDIA

In 2008, the U.S. share of outward FDI or Canadian direct investment abroad (CDIA) was 48.8%, down from the 10-year record level of 52.2% in 1999.

Geographic Distribution of Outward FDI Stock from Canada 2008 ados United King dom Barb
8 % .5 7 % .1 Berm da u 3 % .5 Ireland 3 % .2 Caym an Islan ds 3 % .0

Un States ited 4 .8 8 %

Others 2 .0 6 %

Source: Statistics Canada, April 8, 2009 26

The EU is Also An Important Destination for CDIA

The United States remains the largest single recipient of Canadian direct investment abroad, the EU has gradually been gaining ground in recent years. From 2000-2008, CDIA stock in the US declined slightly from 50% to 49%, while that of the EU held steady at 21%.

700 600 500 400 300 200 100 0 '90

Billion $Cdn

Canadian direct investment stock abroad by geographic area 1990-2008

CDIA stock: distribution by geographic Area (%)

100%

18%
80%

Others
29% 30%

Others US EU
'92 '94 '96 '98 '00 '02 '04 '06 '08

60%

61%
40% 20% 0% 1990

50%

49%

US

21%

21%
2000

21%
2008

EU

Source: Statistics Canada, May 4, 2009 27

Investment is the Main Mode for Delivering Goods and Services

Exports from Canada to the U.S. far outweigh sales by American affiliates of Canadian multinationals in the U.S. Conversely, sales in Europe by European affiliates of Canadian multinationals are more than twice the level of Canadian exports to the European Union*.

Affiliate Sales and Exports of Goods and Services ($Billion), 2006

399
86

United States

240

European Union

43

Affiliate Sales

Exports

Affiliate Sales

Exports

* Does not include Bulgaria and Romania which joined the EU in January 2007 to form the EU-27 Source: BIA compilations based on data from Statistics Canada,

28

Canada Welcomes Foreign Investment

Increasingly more investment goes toward industries such as manufacturing, mining and oil and gas extraction and the management of companies and enterprises. Since 2000, significant growth in terms of FDI has occurred in the mining and oil and gas extraction industry and the
utilities industry.

Ave geAnnua GrowhRa e of Fore D ct ra l t ts ign ire Inve m ntbyIndust (% 2 0 -2 0 * st e ry ) 0 0 0 8

1 .9 7 1 .0 5 1 .3 3 1 .2 3 1 .8 2 9 .4 8 .8 8 .0 6 .4 5 .5 5 .0 4 .7 4 .1 2 .0 1 .8 -4 .0 -5 .9
1 9.3 0.7 11.6 2.1 4.0 0.7 0.6 0.9 11.5 2.1 100.0 6.6 1.7 0.2 33.3 0.9 3.8

Mining and oil and gas extraction Utilities Managem of com ent panies and enterprises All other industries Retail trade Construction Accom odation and food services m Transportation and warehousing Finance and insurance Professional, scientific and technical services OVERALL W holesale trade Inform ation and cultural industries Agriculture,forestry, fishing and hunting Manufacturing Real estate and rental and leasing Inform ation and com unication technologies m

2008 Distribution (%)

-20

-10

10

20

30

Source: Statistics Canada, * North American Industry Classification May 4, 2009 System (NAICS) 29

Canada Actively Invests Abroad

Canadas outward FDI is focused largely in the finance & insurance, manufacturing and mining and oil and gas extraction industries. The agriculture, forestry, fishing and hunting industry and the utilities industry has seen significant growth since 2000 in terms of CDIA.

Ave geAnnua GrowhRa e of Ca dia D ct ra l t ts na n ire Inve m ntAbroa byIndust (% 2 0 -2 0 * st e d ry ) 0 0 0 8

Agriculture,forestry, fishing and hunting Utilities Retail trade Managem of com ent panies and enterprises Accom odation and food services m Finance and insurance W holesale trade Mining and oil and gas extraction Construction Real estate and rental and leasing Professional, scientific and technical services OVERALL All other industries Transportation and warehousing Manufacturing Inform ation and cultural industries Inform ation and com unication technologies m 4 .3 2 2 .9 8 2 .3 5 2 .7 0 1 .6 6 1 .3 4 1 .0 4 1 .7 0 1 .6 0 1 .2 0 9 .8 6 .5 2 .6 0 .8 0 .7 -2 .5 -1 .6 0
0.8 2.4 1.3 10.4 0.5 39.2 0.8 14.4 0.3 1.7 1.3 100.0 0.5 2.6 17.8 3.2 2.8

2008 Distribution (%)

-20

-10

10

20

30

40

50

60

Source: Statistics Canada, May 4, 2009 * North American Industry Classification System (NAICS)

30

Canada - A Strategic Choice

A Cost-Competitive Business Environment

An Overall Tax Advantage for Firms to Expand in Canada

As a result of corporate income tax reductions introduced by the Government since 2006, Canada will have the lowest statutory tax rate in the G-7 by 2012. Canada will also reach the goal of the lowest overall tax rate on new business investment (marginal effective tax rate (METR*)) in the G-7 by 2010.

In rn tion l Com a te a a p risonof St t t Ge e l Corp t Ta a u ory n ra ora e x Ra e in2 1 ts 02

45 40 35
% 39.5 39.3 34.4 31.4 30.2 28 27.2

30 25 20 15 10
J apan U.S. France Italy

Germ any

U.K.

Canada

Source: The Federal Budget, Finance Canada, January 27, 2009 and the OECD Tax Database. * METR takes into account federal and provincial statutory corporate income tax rates, deductions and credits available in the corporate tax system and other taxes paid by corporations, including provincial capital taxes and retail sales taxes on business inputs. 32

Quality R&D Canadas Big Bargain

Canada offers one of the most favorable tax treatments for R&D among the G-7.

R la ive G n rosit of e t ee y R D Ta Ince t s* & x n ive

(Index: Canada =100.0)

Canada provides a system of tax credits and accelerated tax deductions for a widevariety of R&D expenditures. Eligible costs include: salaries, overhead, capital equipment, and materials.

France Canada J apan U.K. U.S. It aly Germ any

5 0 6 0 7 0

11 0 .2 10 0 .0 9 .1 3 9 .8 0 8 .9 7 8 .3 0 7 .7 9 8 0 9 10 10 0 0 1

These tax-based incentives permit firms to significantly reduce R&D costs through direct investment or sub-contracting in Canada.

Source: Warda, Jacek, Rating Canada's R&D Tax Treatment: September 20, 2007 Note: Relative generosity is determined by dividing the after tax cost of performing $1.00 of R&D by 1 less the corporate tax rate. Results are indexed to the relative generosity of Canada's system of tax-based support for R&D. The higher the ratio the more competitive the tax system. * Calculations based on large firms

33

Competitive Business Telephone Charges

Canadas business telephone charges are relatively low among G-7 countries.

Ann l Bu ss*Te ph ua sine le oneCha s rge

(U PPP* , Pricepe line S$ * r )
U.S. Germ any Canada France U.K. Italy J apan 0 200 400 600 800 42 4 58 8 65 5 72 9 80 8 96 5 93 6 1000 1200

* Business (small and medium-sized enterprises) basket of telephone charges include fixed access and 84,000 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-year period. **PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods) Source: OECD Communications Outlook 2007 34

The Most Affordable Residential Telephone Charges

Canada has the lowest residential telephone charges among the G7 and OECD countries.

Ann a Re n ia Te ph eCha s u l side t l* le on rge

(U PPP, Pricep r line S$ e )
Canada U.S. Germ any U.K. J apan France Italy 0 200 400 600 800 38 6 58 1 74 9 76 9 92 2 99 8 12 07 1000 1200

* High usage basket of residential telephone charges include fixed access and 84,000 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-year period. ** PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods) Source: OECD Communications Outlook 2007 35

Canada - A Strategic Choice

A Dynamic and Welcoming Infrastructure

Highest Concentration of Entrepreneurs

From a global standpoint, Canada has the highest concentration of entrepreneurs within its working population. Businesses, including start-ups, develop new products and services and get them to market and conceive new types of organization and production and put them into practice. New companies also serve to remind existing firms of the need to adapt and continue innovating.

N b r of Ent p ne a aPe nt g of t um e re re urs s rce a e he W ingPop t ork ula ion

20
1 .9 5

15
1 .5 1 1 .2 1 1 .1 1 1 .1 1

10 5 0
Ire lan d Be lgi um

1 .1 0

9 .7

8 .6

8 .5 6 .9

Ge rm an y Fin lan d

Ne the rla nd s

Source: Statistics Netherlands 2008

Sw ed en De nm ar k

Ca na da

U. K.

U. S.

37

Positive Business Climate

Canada understands the importance of its business community and has created an environment to encourage its success. Canada business climate ranked first in the G-7 and third out of 82 countries in the Economist Intelligence Units global business rankings for the forecast period (2009-13), up from fourth and still first in the G-7 out of the full 82 countries from the historical period (2004-2008). The country ranks well for its infrastructure, market opportunities, taxes, and foreign trade and exchange controls.

Bu e Env m n of TopTe Cou t s, sin ss iron e t n n rie Ra kfor Fore stP riod2 0 -2 1 n ca e 09 03
1 st 2d n 3 rd 4 th Ra k n 5 th 6 th 7 th 8 th 9 th 1 th 0

Sw itz er lan d De nm ar k Au str ali a Sw ed en

Source: The Economist Intelligence Unit, April 2009

Ne th er lan ds

Si ng ap or e

Ho ng

Ca na da

No rw ay

Fi nla nd

Ko ng

38

Ease in Establishing a Business in Terms of Procedures

Regulations pertaining to the creation of new businesses are considerably more flexible in Canada than those in the rest of the G-7. Canada ranks first among the G-7 and OECD countries for the lowest number of procedures required to establish a new business.

N be of Proce um r dure s*
10 9 8 7 6 5 4 3 2 1 0
9 8 5 .8 5 6 6 6

OECD U.S. U.K. Italy J apan Germ any Av in 2009 - The World Bank Group, 2008 * A "procedure" is defined as erage Source: Doing Business
any interaction of the company founder with external parties (government agencies, lawyers, auditors, notaries, etc). Interactions between company founders or company officers and employees are not considered as separate procedures. For example, an inauguration meeting where shareholders elect the directors and secretary of the company is not considered a procedure, as there are no outside parties involved.

Canada France

39

And in Terms of Time

Canada ranks first among the G-7 for the fewest number of days required for establishing a new business.

D t (da ura ion ys)

25 20 15 10 5 0 Canada U.S. France Italy U.K. OECD Germ any J apan Av erage
5 6 1 0 7 1 3 1 .4 3 1 8 2 3

Source: Doing Business in 2009- The World Bank Group, 2008

40

A World Leader in Youth Academic Performance

Canadian schoolchildren ranked second in the world in the OECD Program for International Student Assessment (PISA). The PISA survey is conducted annually among 400,000 school pupils across 57 countries, and evaluates the capacity of 15-year old schoolchildren to understand and solve academic problems. It also provides insights into the reading ability and mathematical knowledge of schoolchildren.

PISA Score(p s) oint

600
53 5

550

59 2

51 2

54 1

50 1

59 0

55 0

54 0

500

52 0

51 0

50 0

450
Fin lan d Ca na da Ne the rla n Sw ds itz er lan d Be lgi um Ire lan d Ge rm an y Sw ed en
Source: OECD 2007 41

U. K. De OE nm CD ark Av er ag e

The Worlds Best-Educated Workforce

The overall skill level of Canadas workforce ranks high among competing countries. Canada has one of the highest percentage of individuals achieving at least college or university education, among OECD member countries.

H he Ed t Achie m nt ig r uca ion ve e

60 55 50 45 40 35 30
%

5 .7 6

5 .0 5

5 .0 4

5 .0 3

5 .2 1

5 .0 0 4 .0 4

4 .0 4 .0 4 .0 2 2 2

4 .0 4 .0 4 .5 1 1 0

Si ng ap or e Ca na da Ja So pan ut hK or ea Ta iw an I Ne srae w l Ze ala nd Be lgi um Ire lan d No rw a De y nm ar k Fr an Ho ce ng Ko ng

Source: IMD, World Competitiveness Yearbook 2009

42

Top-notch Management Training

Canada ranks among the top-ten in a 134-country study of locally available management education in first-class business schools. (see chart below) In addition, five Canadian schools of management are ranked among the top 100 in the world according to the Financial Times (UK) Global MBA rankings for 2009. University of Toronto (Rotman) 47th; University of Western Ontario (Ivey) 47th; York University in Toronto (Schulich) 49th; University of British Columbia (Sauder) 71st ; and University of Alberta 77th.

M n g m n Ed ca io *W r R n a a e e t u t n o ld a k

1 st 2d n 3d r Rn ak 4h t 5h t 6h t 7h t 8h t 9h t 1t 0h

Fr an ce Sw itz er la nd

*Standing among 134 countries. Index based on the quality of Management education in first-class business schools. Source: Global Competitiveness Report, 2008-2009

Fi nl an d N et he rla nd s

Si ng ap or e D en m ar k

Be lg iu m

C an ad a

Sp ai n

U .S .

43

State of the Art Venues for Scientific Research

Canada ranks second behind the U.S. among the G-7 and fourth in a 134-country review of the quality of scientific research undertaken in government and university laboratories.

Q a yo S n if R se r In it t n W r R n u lit f cie t ic e a ch st u io s* o ld a k

1 st 2d n 3 rd Rn ak 4h t 5h t 6h t 7h t 8h t 9h t 1t 0h

Sw itz er la nd

*Standing among 134 countries. Index based on the quality of scientific research in government and university laboratories. Source: Global Competitiveness Report, 2008-2009

Fi nl an d N et he rla nd s

Be lg iu m

G er m an y

Au st ra lia

C an ad a

Is ra el

U .S .

U .K .

44

Among Leaders in IT Industry Competitiveness

Canada ranks third behind the U.S. and the U.K. among the G-7 and sixth in a 66country review of the countries best suited to provide an optimally competitive environment for information technology (IT) firms.

IT Ind ryCom e it ne Ind x*W Ra ust p t ive ss e orld nk

1 st 2d n 3 rd 4 th Ra k n 5 th 6 th 7 th 8 th 9 th 1 th 0

Sw ed em

Ta iw an

De nm ar k Ca na da

*Standing among 66 countries. Index based on the following six categories of quantitative and qualitative indicators: overall business environment; IT infrastructure; human capital; legal environment; R&D environment; and support for IT industry development. Source: Economist Intelligence Unit, September 2008.

Au str ali a So uth Ko re a Si ng ap or e Ne the rla nd s

U. S.

U. K.

45

PC and Internet Users

Canada is second to the U.S. among the G-7 in terms of personal computers and second to Japan among the G-7 with respect to Internet users per capita.

P rsonal Com rs e pute P r 1 0 Inhabitants e ,0 0

900 850 800 750 700 650 600 550 500
U Ge .K. rm an Fr y an ce Ja pa n Ita ly U. Ca S. na da
89 6 89 1 71 7 70 5 71 0 63 7 62 1

Inte t U rs rne se P r 1 0 Inhabitants e ,0 0

800 750 700 650 600 550 500
U. S. U Ge .K. rm an Fr y an ce Ita ly Ja pa Ca n na da
74 7 73 7 71 7 76 3 61 9 63 4 62 4

Source: IMD, World Competitiveness Yearbook 2009 46

And Manufacturing Sector Innovators

Canada ranked 3rd in the G-7 and 14th in a 110-country study measuring innovation performance in the manufacturing sector. Canada stood in the top tier, ranking ahead of traditionally strong innovators such as Britain (15th), Israel (16th), Germany (19th), France nd (20th) and Australia (22t ). l Inn Int rn iona ova ionIn e W Ra k e a t d x* orld n

8h t

9h t 1t 4h 1t 5h 1t 9h 2t 0h

In e dx

3t 8h

*Standing among 110 countries. Index based on government support for innovation - through tax and education policies, and the quality of infrastructure; the performance of innovative companies, measured by factors such as high-tech exports, the amount of intellectual property generated and employment growth. Source: The Innovation Imperative in Manufacturing How the United States Can Restore its Edge, Boston Consulting Group, March 2009

U.S.

J apan

Canada

U.K.

Germ any

France

Italy

47

Sound Financial Institutions

With the world in the midst of the current financial crisis, investors can take comfort in the fact that Canadian banks are generally healthy with solid balance sheets and least likely to require a government bailout in the event of a major economic downturn. In a recent study, five Canadian banks were listed among the worlds 50 safest banks: Royal Bank of Canada (10th), Toronto Dominion Bank (14th), Scotiabank (23rd), Bank of Montreal (33rd) and CIBC (43rd).**

S u d e o B n s*W r R n o n n ss f a k o ld a k

1 st 2d n 3d r Rn ak 4h t 5h t 6h t 7h t 8h t 9h t 1t 0h

B el gi um N ew Ze al an d

S w ed en Lu xe m bo ur g

A us tra lia D en m ar k N et he rla nd s

C an ad a

Ire la nd

*Standing among 134 countries. Ranking based on the degree of soundness of financial institutions. Source: Global Competitiveness Report, 2008-2009 ** Standing among 500 world banks based on total assets and long-term credit ratings. Source: Global Finance Magazine , February 2009 48

M al ta

With Superior Credit Ratings

Canadian banks rank first among the G-7 in terms of their intrinsic credit worthiness. (see chart below) In addition, Moodys Investors Services raised Canadas credit rating to AAA (the highest rating) in May 2002 in response to Canadas improved fiscal balance sheet and excellent long-term growth prospects. Similarly in July 2002, Standard & Poors raised Canadas long-term foreign sovereign credit rating to AAA. These ratings have since been maintained.

M oody's Ave g Ba Fina l-St ng hRa ing ra e nk ncia re t t

E
Canada U.S. France Italy Germ any J apan U.K.
Source: Moody's Financial Services, May 2009 B= Strong, intrinsic financial strength C = Good D = Adequate E = Very weak 49

E+

D-

D+

C-

C+

B-

Forward-Looking Framework Policies

The economic policies of the Government of Canada are focused on making Canada a world leader in the global knowledge-based economy of the 21st century. Commitments include:

making broadband Internet access available in all communities by 2009. becoming one of the top five countries for research and development by 2010. shaping a National System of Innovation. providing marketplace frameworks/services benchmarked against the best in the world.

50

Forward-Looking Support for Innovation Programs

The Government of Canada has numerous policies/programs aimed at building the knowledge infrastructure. Examples include: Canadian Network for the Advancement of Research, Industry and Education (CANARIE), and Co-operative sectoral research programs (PAPRICAN). Canada leads the G7 in public sector R&D investment as a share of GDP. The public sector currently finances 85% of primary research in Canada. The Government of Canada will spend over $2.7 billion in 2008-2009 in support of research and development conducted in post-secondary institutions. The Government spends more than $2 billion each year on its own research activities. The SR&ED Program provides more than $2.5 billion in support of Canadian private sector innovation and is accompanied by more than $15 billion in investments by claimants each year. Since its creation in 1997, the Canada Foundation for Innovation has invested $4.5 billion in more than 6,000 research projects in 129 Canadian universities, colleges, research hospitals, and research institutions in 64 municipalities. Source: Canada Foundation for Innovation, January 2009.

51

Canada - A Strategic Choice

An Excellent Place to Live

A Champion in Attracting Capital and Talent through Immigration and Investment

Canada ranks first in a 60-country study that measures the potential of a country as an ideal place to live, work, study and invest.

Im igra ion/Inve m n In x* m t st e t de
65 64 63 62 61 60 59 58 57 56 55

Im ig tion ve e t Score m ra /In stm n

6 .3 2 6 .1 1 6 .1 1 6 .0 1 6 .7 0 6 .5 0 5 .6 9 5 .0 9 5 .7 7 5 .1 7

Sw itz er lan d Ge rm an y

Ita ly

Index ranging from 0-100 based on five components of a countrys potential for immigration and investment: (a) Willingness to live and work for a substantial period in the country; (b) Quality of life; (c) Good place to study for educational qualifications; (d) The country has businesses Id like to invest in; (e) Equal opportunity. Source: Red Hot Locations, London U.K. 2009 53

Fr an ce Au str ali a Sw ed en

Ca na da

Ja pa n

U. K.

U. S.

Best Overall Quality of Life

Canada has the best overall quality of life among the G-7.

Qua yof LifeInd x* lit e

10.0 9.5 9.0 8.5
In e dx 9 7 .2 8 9 .8 8 3 .5 8 7 .1

8.0 7.5 7.0 6.5 6.0 Canada Germ any U.S. France U.K. J apan Italy
7 6 .1 6 0 .9 6 6 .8

Source: IMD, * Rank among 55 economies considered in the World Competitiveness Yearbook 2008. 54

Exceptional Quality of Life in Cities

According to a recent annual quality-of-life ranking of 215 world cities, four Canadian cities ranked among the top 25.

Source: Mercer Human Resources Consulting: April 2009

55

With Exceptional Health & Sanitation* Standards

According to a recent annual health and sanitation ranking of 215 world cities, five Canadian cities ranked among the top 25 with Calgary topping the list and Ottawa ranking 4th.

Source: Mercer Human Resources Consulting: April 2007 * Hospital Services; Medical Supplies; Infectious Diseases; Water Portability; Troublesome and destructive animals/insects; Waste Removal; Sewage and Air Pollution 56

A Vast Arable Landscape

Canada ranks highest in the G-7 and second with respect to the area of available land for agricultural usage on a per capita basis.

Ara leLa b nd
(Thousa of Squa m tre pe ca ) nds re e s r pita 20
1 .8 5 6

15

10
5 6 .6

3 7 .1 1 5 .6 1 7 .4 1 1 .0 0 6 .3

0 Canada U.S. France Italy Germ any U.K. J apan

Source: IMD, World Competitiveness Yearbook 2009. 57

Backed by a Strong Environmental Record

As measured by the Environmental Performance Index (EPI), Canadas ranks 2nd in the G-7 and 12th in a 149-country study in terms of effectively reducing environmental stresses on human health and promoting ecosystem vitality and sound natural resource management.

Environm nt l Pe e a rform nceInde 2 0 a x* 0 8

90
8 .8 7 8 .6 6 In e dx 8 .3 6 8 .3 6 8 .5 4

85

8 .2 4

8 .0 1

80 France Canada Germ any U.K. J apan Italy U.S.

* Perfect EPI Score = 100. Country rank based on twenty-five indicators tracked in six established policy categories Environmental Health, Air Pollution, Water Resources, Biodiversity & Habitat, Productive Natural Resources, and Climate Change. Source: Yale Center for Environmental Law and Policy, January 23, 2008 58

A Leader in Human Development*

In the latest United Nations Human Development Report, Canada ranked first among the G-7 countries and third among 179 countries surveyed.

H a D ve m ntInd x*W Ra um n e lop e e orld nk

3 rd 8h t 1t 1h 1t 5h 1t 9h
In e dx

2t 1h

2 rd 3

Canada

J apan

France

U.S.

Italy

U.K.

Germ any

*Standing among 179 countries. Index based on achievements in terms of life expectancy, educational attainment, and adjusted real income. Source: United Nations Human Development Report 2008-2009, December 18, 2008 59

Among Model Nations of Peace

According to the Global Peace Index, a recently released measure by the Economist Intelligence Unit, Canada ranked second in the G-7 and eleventh among 140 countries surveyed.

Globa Pe ceInde W Ra l a x* orld nk

5h t 1t 1h 1t 4h 2t 8h 3t 6h 4t 9h
In e dx

9t 7h

J apan

Canada

Germ any

Italy

France

U.K.

U.S.

*Standing among 140 countries. Index ranking countries based on peacefulness, both domestically and abroad using 24 indicators, including the number of soldiers killed overseas, the level of violent domestic crimes and relations with neighbouring countries. Source: Economist Intelligence Unit, May 2008 60

A Safe and Just Society

Canada is among G-7 leaders in terms of the safest place to live and conduct business with the most fairly administered judicial system.

S cu it * W r R n e r y o ld a k
9 .0
8 .5

J u ice * W r R n st * o ld a k
9 .0
83 .

8 .5 8 .0 7 .5
Index

8 .3 8 .1 7 .8 7 .7

8 .1 7 .5 7 .2 7 .1

8 .0 7 .0
Index

6 .9

7 .0 6 .5 6 .0 5 .5
G er m an y C an ad a
6 .1 5 .7

6 .0 5 .0 4 .0 3 .0

3 .5

G er m an y C an ad a

5 .0

Ja pa n

Fr an ce

Ja pa n

U .S . Fr an ce

U .K .

Source: IMD * Confidence that person and property is protected. Rank among 55 economies considered in the 2008 World Competitiveness Yearbook. **Degree of fairness of the judicial system in Society. Rank among 55 economies considered in the 2008 World Competitiveness Yearbook. 61

U .S .

U .K .

Ita ly

Ita ly

A Land of Equal Opportunity

Canada ranks first among the G-7 in providing equal opportunities for individuals.

Eq a O port n y*W Ra k u l p u it orld n

8.0 7.5 7.0 6.5
In e dx 7 .5 6 .8 6 .4 6 .1 6 .0 5 .6 5 .2

6.0 5.5 5.0 4.5 4.0 Canada U.S. J apan France

Germ any

U.K.

Italy

Source: IMD * Race, gender, family background does not pose a handicap for competitiveness. Rank among 55 economies considered in the 2008 World Competitiveness Yearbook. 62

And a Society Rich in Multiculturalism

Canada has one of the worlds most multilingual societies with over 200 languages identified as the mother tongue. While there has been a decline in the proportion of the Canadian population whose mother tongue is one of the two official languages, there has been an overall increase in the proportion of the population whose mother tongue is neither English or French from 18.0% in 2001 to 20.1% in 2006.

TopTe S ok nLa g a e inCa a a n p e nugs nd*

( of Pop la ion % u t )
59.1 57.8

6 0 5 0 4 0

2006 Census
22.9 22.1

2001 Census

%3 0

2 0 1 0 0
ish gl En

2.9

3.3

1.7

1.5

1.5

1.5

1.2

0.9

1.2

0.9

0.7

0.7

0.9

1.0

0.8

Source: Statistics Canada, 2001 and 2006 Census * based on mother tongue. ** includes Cantonese and Mandarin

0.7

ic ab Ar

n lia Ita * e* es in Ch

bi nja Pu

ish an Sp

g lo ga Ta

se ge rtu Po

ch en Fr

an rm Ge

63

Canada A Strategic Choice

Canadas economic fundamentals and relative cost advantages provide a first-rate business environment. Canada offers:
Solid Economic Fundamentals

Low inflation and low interest rates

An Energetic and Welcoming Infrastructure

Ease in establishing a new business The worlds best-educated workforce Strong technological environment Forward-looking framework policies

Easy Access to Markets

Geography and NAFTA provide easy access to the worlds most prosperous market

A Cost-Competitive Business Environment

An Excellent Place to Live

Superb overall quality of life A strong environmental record A society rich in multiculturalism

Competitive tax system (particularly for R&D)

Think Dynamic. Think Competitive. Think Bottom Line.

Think Canada.

64

Invest in Canada

Through Canadian diplomatic missions around the world, and with direct access to investment contacts at national, provincial and municipal levels within Canada, the Invest in Canada Bureau of the Department of Foreign Affairs and International Trade Canada is well positioned to assist in attracting and expanding your investment. We invite you to explore all that Canada has to offer. Please contact your local Canadian Embassy, High Commission or Consulate, or write to us at: Foreign Affairs and International Trade Canada Invest in Canada Bureau, 111 Sussex Drive, 3rd Floor Ottawa, Ontario, Canada K1A 0G2 E-mail: investincanada@international.gc.ca www.investincanada.gc.ca Think Canada! is prepared by Arif Mahmud, Invest in Canada Bureau.

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