Canada #1 place to do business- Analysts rank it best in world, citing stability, fresh air, low crime

David Baxter says most business people love stability with no sudden rule changes.

Forget SARS, mad cow disease and weakening exports: Canada will be the best country in the world in which to do business over the next five years, according to a group of 500 international economic analysts.

Greg Mercer
Vancouver Sun

The analysts, who work for the publishers of London-based The Economist magazine, ranked Canada first in their most recent measure of the attractiveness to business of the globe’s 60 most prosperous nations.

The top spot is a first for Canada; it was previously fourth in the rankings, which are done every five years.

Growing stability was the biggest contributor to the top ranking, thanks to the defeat of Quebec’s separatist government in the April provincial election and the widespread expectation that Paul Martin will be Canada’s next prime minister.

Also important were the quality of Canada’s infrastructure, the country’s openness to foreign trade and capital and what the analysts described as favourable market opportunities.

"Canada stands to benefit from improvements to its tax regime and its political environment. Despite pressure on public finances, the Canadian government will be able to implement the remaining elements of a tax-cutting package," the analysts, known as the Economist Intelligence Unit, said in a statement.

A B.C.-based economist not connected with the rankings said Vancouver — with its clean and orderly streets, fresh air, low crime and relatively problem-free integration of immigrant communities into the local economy — is a prime example of why foreign business people find Canada such an attractive place for commerce.

"They think this place is paradise. Our cities are clean, they’re pretty. They’ve got some problems, but the perception is that we’re working on them, we don’t have the violence of other places," said David Baxter, executive director and leading economist at the Urban Futures Institute in Vancouver. "Now they’re seeing Vancouver has the Olympics, and they’re thinking this is a pretty good place to do business."

Business-friendly premiers such as Alberta’s Ralph Klein, a wealth of natural resources, a healthy national pension plan and public finances, and a working immigration system are among other factors that score big for Canada internationally, he said.

The respect among the international business community for Martin and the "responsible Liberalism" of his federal budgets is one major reason Canada’s star will rise in the next five years, Baxter said.

"Most business people love stability, they don’t want the rules to change because they’ve invested money for 10, 15 of 20 years. Instability is scary. That’s why they like that there will be a problem-free succession to [Prime Minister Jean] Chretien," Baxter said.

Canada’s successful immigration system also contrasts sharply with the recent ethnic violence in Europe and the race issues in the U.S., he said.

"We’re seen globally as a country with a pretty good handle on immigration. Canada is seen as a place that has figured out how to make immigration work in a labour force context," Baxter said.

While Canada’s fortunes rise, those of our neighbours to the south have sunk.

The U.S., which fell from first to fifth place in the EIU ranking, is not the booming economy it was five years ago, thanks to growing geopolitical uncertainty, major imbalances in its domestic economy, the analysts said. It also has a national debt that will be a half a trillion dollars by the end of 2003.

Excluding the softwood lumber dispute, Canada’s major international trading relationships are working well, including major exports of automobiles, oil and gas, and electricity, to the U.S., Baxter said.

Baxter also said foreign investors eyeing B.C.’s natural resource-based industries such as forestry, mining, oil and gas, view treaty negotiations between the provincial government and First Nations as assurance that issues of land ownership are being dealt with and will be resolved in the coming years.

"In the eyes of the international business community, we’re very small in terms of population, but we have enormous resource endowments in terms of fresh water and energy," he said. "We have a lot of products that the U.S. wants, but we don’t pick up a lot of their problems."

Even Canada’s oil reserves, once thought to have a nine year lifespan, have been recently reassessed as being the third largest in the world, Baxter said.

Canada’s top ranking coincided with a report by the Business Council of B.C. on Wednesday that said the province’s smaller non-resource manufacturing industries have boosted their export sales since the mid-1990s, but trade in larger resource-based industries such as mining and forestry has remained sluggish.

"In a small market like B.C., exports are an essential driver of wealth creation, jobs and higher living standards," said Jock Finlayson, executive vice president of the business council. "The evidence shows that B.C. has done poorly in increasing exports measured against the performance of other provinces."

Between 1993 and 2002, B.C. ranked last in the country in the growth of exports, according to the report.

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