ABB 2006/7 | State Profiles | Canada | Profile

Canada is the second largest country in the world, covering the entire northern part of the North American continent except for Alaska (the provinces of British Columbia and Ontario are each four times as large as Great Britain). Surrounded by the Arctic, Atlantic and Pacific Oceans, Canada has the world’s longest coastline.

Canada shares a common border with the US that stretches across 8,893 km. Of Canada’s 20 largest cities, 17 are within an hour-and-a-half drive of the US border.

In the centre of the country, the climate is continental with warm summers and cold, snowy winters. The maritime climates of the east and west coasts tend to be somewhat milder in winter and cooler in summer. Canada is a constitutional monarchy, with the prime minister the head of government. The legislative branch comprises an elected House of Commons and an appointed Senate. There are 10 provinces and three territories, with the provinces having wide jurisdiction in many areas, such as resources, education, healthcare, direct taxation, and civil law. The two levels of government (federal and provincial) share power in some areas, such as agriculture, immigration and old-age pensions. Municipal governments operate under provincial jurisdiction.

The legal system follows British common law with the exception of Quebec which follows a French-style civil code.

Economy

Canada is a country with a strong economy where, in 2003-04, it reported its seventh consecutive budget surplus and its eighth consecutive balanced budget. The excellent fiscal situation and low inflation has led to lower interest rates.

Canada achieved exceptionally strong employment growth between 1997 and 2004 – by far the best in the G8 and nearly double the pace recorded in the US. In 2003, Canada had the second highest employment rate in the G8. Over the past two decades, Canada has witnessed a substantial growth in inward FDI, with its inward FDI stock reaching C$416bn in 2005, a 6.4-fold increase from C$65bn in 1980. After the US, which accounts for 64% of this total, the UK is the leading holder of FDI stock, at some C$30bn. Increasingly, more foreign investment in Canada goes to knowledgebased industries in high tech manufacturing, such as electronics, communications and chemicals.

Canada has become a magnet for the best and the brightest and, although it is easy just to think of Canada’s beauty and its home to one of the most technologically-advanced economies in the world. While commodities are still important to the Canadian economy, high-tech exports are leading Canada’s export activities. This has enabled Canada to mesh its economy perfectly with the US economy, and win large shares of US technology markets.

Workforce

A major reason for this is that businesses can call upon an exceptionally smart workforce from a country where, as a percentage of its GDP, more money is spent on education than in any other country in the world. More than half of Canadians between the ages of 25 to 35 have a post-secondary education, either at university, college or technical school; it ranks third in the world and first in North America for secondary school enrolment; is one of the world’s top performers in maths, science and literacy and has two universities in the top 25 business schools featuring in the 2006 Financial Times MBA rankings (York University and the University of Western Ontario).

Canada welcomes talent from around the world, resulting in immigrants accounting for more than 70% of all Canadian labour force growth, a proportion that will grow to 100% in the next 10 years. Canada’s recent immigration levels have been double those of the US, with priority given to high-skill workers. It ranks first among the G8 countries in providing equal opportunities for individuals, with immigration laws highly conducive to hiring foreign labour. Canada also has one of the world’s most multilingual societies, with its people identifying over 100 languages as their mother tongues.

Taxation

Canada has the best corporate income tax rates for research and development operations and one of the lowest corporate income tax rates for manufacturing operations. In 2000, Canada introduced a Five-Year, C$100bn Tax Reduction Plan, the largest tax cut in Canadian history. The Plan reduced the general rate of corporate income tax to 21%, down from 28%. Small businesses are taxed at much lower levels: federal tax in 2004 was 13.12% on income up to $250,000 (rising to $300,000 in 2005).

Consumer spending

Rising employment and lower taxes have supported growth in consumer purchases. Real consumer spending grew by an average of 3.1% from 2000 through 2003, faster than average GDP growth of 2.3%. Total retail sales in 2003 amounted to $330,503m, a 3.7% increase over 2002.

Banks

The Bank of Canada is the central bank. According to Moody’s Financial Strength Ratings, Canadian banks stand first among G8 countries in credit worthiness. The financial services sector is dominated by six large domestic banks: Bank of Montreal, National Bank of Canada, Royal Bank, ScotiaBank, TD Bank and CIBC. All of these have offshore branches or affiliates. In addition to domestic banks, 70 foreign banks operate in Canada.

Transportation infrastructure

Canada’s truck, air and rail services are fully integrated with US networks, providing efficient access to consumers and suppliers throughout North America. Approximately 70% of Canada’s trade with the US is moved by truck. Under the Canada-US Smart Border Action Plan, Canada will provide $433m over five years to strengthen the Government’s capacity to deliver secure and efficient border services.

Quality of life

Canadians pride themselves on a quality of life that is one of a kind in the world. Canada is a land of equal opportunity, it has a low cost of living, it has effectively reduced environmental stresses on human health and promoted ecosystem vitality and sound natural resource management and has proved itself to be one of the safest places to live and conduct business, with the most fairly administered judicial system.

For more information, contact:
The Canadian High Commission in the United Kingdom
MacDonald House
1 Grosvenor Square
London W1K 4AB
Tel: 020 7258-6600
Fax: 020 7258-6384
Website: www.international.gc.ca

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