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THINK CANADA February 2012

THINK CANADA February 2012. Table of Contents. Page

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THINK CANADA February 2012

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  1. THINKCANADA February2012

  2. Table of Contents Page IExcellent Economic Fundamentals 3IIA Cost-Competitive Business Environment 12IIIA Dynamic Workforce 27IVA Solid Infrastructure 35VEasy Access to Markets 41 VI An Excellent Place to Live 46

  3. I Excellent Economic Fundamentals

  4. Canada has a Relatively Strong Economy Despite the Global SlowdownConsensus EconomicsConsensus Economics • According to Consensus Economics, Canada has been a top performer among the G-7 in GDP growth over the 2008-11 period and is expected to remain so through 2012-13. 2012-13 2008-11 Source: Consensus Forecasts, February 2012, Consensus Economics Inc.

  5. 2008-11 Other Forecasts also Highlight Canada’s Relatively Strong EconomyOECDConsensus Economics • Similarly, recent OECD statistics rank Canada as a top performer among G-7 countries in terms of GDP growth from 2008-11 and during the 2012-13 forecast period. 2012-13 Source: OECD Economic Outlook, No. 90, November 2011.

  6. Canada also has Superior Employment Growth…. • Strong economic growth and rising demand for Canadian commodities over the last decade, combined with provincial and federal policies to improve the flexibility and adaptability to the changing workplace, have helped generate healthy gains in employment. 6 Source: U.S. Bureau of Labour Statistics, OECD Economic Outlook, No.90, November 2011

  7. …a Sound Fiscal Advantage… • Canada has enjoyed eleven consecutive annual federal budget surpluses ending in 2007-08; it has undertaken one of the largest stimulus packages among developed economies in the current global economic downturn. • Starting with Budget 2010, Canada chose to run short deficits to stimulate its economy without putting long-term prosperity at risk. • As a percentage of GDP, the budgetary deficit is projected to decline from 2.1% in 2010-11 to 0.2% in 2015-16. The savings targeted by the deficit reduction plan, which aims to produce at least $4 billion in ongoing annual budgetary savings by 2014-15 will allow the government to return to budgetary balance by 2015-16. * Forecasts for both countries Source Canada: Update of Economic and Fiscal Projections Finance Canada, November 8, 2011 Source United States: United States Congressional Budget Office, January 31, 2012.

  8. 2010 2011-13 …Leading Most Other G-7 Countries… • Despite posting a deficit of 5.6% of its GDP in 2010, Canada will still be in a better position than most G-7 countries during the 2011-2013 forecast period with an overall deficit of 4.0% of GDP. 8 Source: OECD Economic Outlook, No.90, November 2011

  9. …a Low Inflation Rate Regime… • A low inflation environment provides business certainty for investors. Canada’s targeted inflation rate range between 1% and 3% has been extended until 2011. • Over the past five years, Canada has enjoyed relatively low inflation – averaging 1.7% compared to 2.2% for the U.S. and 1.7% for the G-7. Source: OECD Economic Outlook, No. 90, November 2011

  10. …Low Interest Rates… • Canada’s 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 early 2009 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. U.S. Canada Canada U.S. 10 Source Canada: Government of Canada 10-Year Bond: February 10, 2012 Source U.S.: U.S. Treasury, Constant Maturity 10-Year Bond: February 10, 2012

  11. …and Great Potential for Future Economic Prosperity • According the Prosperity Potential Index*, Canada ranks 1st in the G-7 and 6th among 30 developed countries in terms of the likelihood for economic prosperity in the year 2020. * The Prosperity Potential Index measures the likelihood of economic prosperity in the year 2020 for 30 developed countries. The ranking is based on data from the OECD on areas that spark future economic development: demographics, trade, energy, technology and education. Source: Canadian Business Magazine, October 26, 2009

  12. II A Cost-Competitive Business Environment

  13. Canada is Acclaimed for its Superior Business Climate by the EIU… • Canada understands the importance of its business community and has created an environment to encourage its success. • Canada is the best place for doing business among the G-7 over the next five years according to the Economist Intelligence Unit and it ranked fifth overall out of 82 countries in the Economist Intelligence Unit’s global business rankings for the forecast period (2012-16), down from fourth from the historical period (2007-2011). • The country also ranks well for its infrastructure, market opportunities, low taxes, and foreign trade and exchange controls. Source: The Economist Intelligence Unit, February2012

  14. … and More Recently by Forbes • Canada was ranked # 1in Forbes latest annual study on the Best Countries for Business, up from 4th place last year • Canada ranked in the top ten in 7 of the 11 criteria used in the study, most notably personal freedom (1st); degree of red tape involved in starting a business (3rd); investor protection (5th) and low corruption (6th). *Standing among 134 countries. Rankings based on the following eleven categories of quantitative and qualitative indicators: trade freedom, monetary freedom, property rights, innovation, technology, red tape, investor protection, corruption, personal freedom tax burden and market performance. Source: Forbes Publishing, October 2011 14

  15. Canada is Considered a Safe Haven for Business Investment… • According to Dun & Bradstreet’s Global Risk Indicator (GRI)*, Canada is considered one of the world’s safest countries to invest, due to the relatively mild slowdown experienced as a result of the global credit crisis. • Despite being earmarked as having a deteriorating outlook, Canada ranks 1st in the G-7 and 2nd among the 131 countries evaluated in the GRI study. • The Global Risk Indicator (GRI) assesses economic, commercial, external and political risk to provide risk ratings for 131 countries worldwide. • Source: Dun & Bradstreet, August 2009

  16. …Involving Relatively Few Steps in Establishing a Business..… • 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. Source: Doing Business in 2012 - The World Bank Group, 2011 * A "procedure" is defined as 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.

  17. …and Relatively Less Time • Canada ranks first among the G-7 for the fewest number of days required for establishing a new business. Source: Doing Business in 2012- The World Bank Group, 2011

  18. Canada also has Low Business Costs… • For the eighth consecutive time, KPMG’s Competitive Alternatives study finds Canada leads the G-7 with the lowest business costs. • Canada is the lowest-cost G-7 country in 14 of the 17 industries analyzed by KPMG’s Competitive Alternatives 2010 report: aerospace, agri-food, automotive, chemicals, electronics, medical devices, pharmaceuticals, precision manufacturing, telecommunications, back office/call centres, software design, web and multimedia, biotechnology and product testing. Source: KPMG Competitive Alternatives 2010

  19. …and Offers an Overall Tax Advantage for Firms to Expand..… • As a result of corporate income tax reductions introduced by the Government since 2006, Canada has the second lowest statutory corporate tax rate in the G-7 as of 2012. • Canada’s overall tax rate on new business investment is substantially lower than all G-7 countries. Source: Finance Canada, January 2012

  20. …with Quality R&D as its Major Benefit • Canada offers one of the most favorable tax treatments for R&D among the G-7. • Canada provides a system of tax credits and accelerated tax deductions for a wide-variety of R&D expenditures. • Eligible costs include: salaries, overhead, capital equipment, and materials. • These tax-based incentives permit firms to significantly reduce R&D costs through direct investment or sub-contracting in Canada. Source: Warda, Jacek, Rating Measuring Canada's R&D Tax Incentives: May 22, 2009. Data unchanged as of January 2012. 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

  21. Canada has Sound Financial Institutions… • With the world in the midst of the current financial crisis, investors can take comfort in the fact that Canada has the soundest banking system in the G-7. • Six of the 50 safest banks are in Canada, according to a recent study: Royal Bank of Canada (11th), Toronto Dominion Bank (13th), Scotiabank (18th), CaisseCentrale Desjardins (20th), Bank of Montreal (30th) and CIBC (31st).** *Standing among 142 countries. Ranking based on the degree of soundness of financial institutions. Source: Global Competitiveness Report, 2011-2012 ** Standing among 500 world banks based on total assets and long-term credit ratings. Source: Global Finance Magazine, August 2011

  22. …and Easy Access to Capital • Canada was able to weather the storm as world credit markets collapsed in 2008 due to the stability of its equity markets and strength of its economic policy. In 2009, the Milken Institute ranked Canada 1st in its Capital Access Index. *Standing among 122 countries. Milken Institute, April 2010

  23. Canada Offers Competitive and Affordable Business Telephone Charges… • Canada’s business telephone charges are the lowest among G-7 countries. * Business basket of telephone charges include fixed access and 260 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-month 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 2011

  24. …and Low Residential Telephone Charges • Canada has the lowest residential telephone charges among the G-7 and OECD countries. * High usage basket of residential telephone charges include fixed access and 420 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-month 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 2011

  25. Canada Stands Among Leaders in IT Industry Competitiveness… • Canada ranks third behind the U.S. and the U.K. among the G-7 and seventh in a 66-country review of the countries best suited to provide an optimally competitive environment for information technology (IT) firms. *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 2011

  26. …and Consumer Internet Activity • Canada’s internet activity was ranked second in the G-7 and third globally in 2010 and is forecast to remain among the top to 2015. Source: CISCO Visual Networking Index IP Forecast, Cisco Systems Inc., June 2011

  27. III A Dynamic Workforce 27

  28. Canada has one of the World’s Best Educated Workforces… • The overall skill level of Canada’s workforce ranks high among competing countries. • Canada has the highest percentage of individuals achieving at least college or university education, among OECD member countries. • Four Canadian universities are ranked among the top 100 in the world according to the UK-based Quacquarelli Symonds (QS) World University rankings for 2011: McGill University 17th; University of Toronto 23rd; University of British Columbia (UBC) 51st; and University of Alberta 100th. Source: OECD, Education at a Glance 2011

  29. …is a World Leader in Youth Academic Performance… • Canadian schoolchildren ranked third among the 34 OECD countries and fifth among all 65 countries surveyed in the OECD Program for International Student Assessment (PISA). • The PISA survey is conducted annually among 470,000 school pupils across 65 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. Source: OECD 2010

  30. …and Manufacturing Sector Innovative Performance • 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 (20th) and Australia (22nd). *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

  31. Canada has Superior Management Training… • Five Canadian schools of management are ranked among the top 100 in the world according to the Financial Times (UK) Global MBA rankings for 2011. University of Toronto (Rotman) 46th; Western University (Ivey) 47th; York University in Toronto (Schulich) 51st; McGill University (Desautels) 57th and University of British Columbia (Sauder) 80th. • In addition, Canada ranked second in the G-7 in a study measuring the extent to which management education meets the needs of the business community. (see chart below) Source: IMD, * Rank among 59 economies considered in the World Competitiveness Yearbook 2011.

  32. …nearly the Highest Concentration of Entrepreneurs… • From a global standpoint, Canada has the 2nd 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. Source: Statistics Netherlands 2011

  33. …PC and Internet Users… • Canada has a technology savvy population and workforce. It leads the G-7 with respect to Internet users per capita and is second to the U.S. among the G-7 in terms of personal computers per capita. Source: IMD, World Competitiveness Yearbook 2011

  34. …and a Readily Available Army of Qualified Engineers • Canada ranks first in the G-7 in terms of the availability of qualified engineers in its labour market. Source: IMD, * Rank among 59 economies considered in the World Competitiveness Yearbook 2011.

  35. IV A Solid Infrastructure

  36. Canada’s Highly Globalized Infrastructure… • Due to its rapidly growing prominence as an outsourcing market of choice, Canada ranked second in the G-7 and thirteenth among 208 countries profiled in the recent KOF Index of Globalization* which measures the economic, social and political dimensions of globalization. Source: KOF Swiss Economic Institute, Swiss Federal Institute of Technology, Zurich, 2011 * Standing based on 5 sub-indices: actual economic flows, economic restrictions, information flows, personal contact and cultural proximity under the economic, social and political dimensions of globalization.

  37. …is Driven by a Dynamic Two-Way Investment Process… • Over the past decade, Canada has witnessed a substantial growth in both inward and outward FDI reflecting its strong connection to global supply chains. • Canada’s inward FDI stock reached C$562 billion in 2010, an almost 2-fold increase from C$319 billion in 2000. • As for Canada’s outbound FDI, the expansion of Canadian direct investment abroad (CDIA) has been equally spectacular, rising from C$357 billion in 2000 to C$617 billion in 2010. CDIA FDI Source: Statistics Canada, April 15, 2011

  38. The United States is Canada’s Largest Source of FDI… • In 2010, the U.S. share of foreign direct investment (FDI) in Canada stood at 54.5%, demonstrating its confidence in Canada’s business climate. Source: Statistics Canada, April 15, 2011

  39. …and Companies from Other Countries are also Increasing their Investments in Canada • From 2000-2010, EU countries increased their FDI in Canada by C$77 billion and other non-EU countries together with the US increased their investment in Canada by C$165 billion, thus demonstrating their confidence as well in Canada. Foreign direct investment in Canada by geographic area of origin 1990-2010 Billion $Cdn Others US EU Source: Statistics Canada, April 15, 2011

  40. Canada Welcomes Foreign Investment in Various Industries • Increasingly more investment goes toward industries such as manufacturing, mining and oil and gas extraction and toward the management of companies and enterprises. Since 2000, significant growth in terms of FDI has occurred in mining and oil and gas extraction and in management of companies and enterprises. 3.0 16.4 13.1 1.0 1.1 14.6 2.9 2010 Distribution (%) 100.0 0.9 0.5 2.3 1.9 6.2 34.8 0.2 1.0 Source: Statistics Canada, April 15, 2011 * North American Industry Classification System (NAICS)

  41. V Easy Access to Markets

  42. Canada Offers Efficient Flow of Goods Across Borders… • Canada leads the G-7 and ranks 8th among 125 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. Global Enabling Trade Report 2010, World Economic Forum.

  43. …a Streamlined Trans-Border Transportation System… • The North American market is serviced through a well-integrated transportation system, which is among the world’s best. • Automated permit ports, transponder identification systems and joint processing centres are being tested and deployed for easy movement of goods. • Bottom line – the border system is one of the world’s most efficient. 22.0 million Air 10.5 million Truck Source: Statistics Canada and Transport Canada, 2011 (* Preliminary data for 2011 .)

  44. 500 km St. John's Edmonton 1000 km Québec Charlottetown Regina Calgary Winnipeg Fredericton Halifax Victoria Vancouver Montréal Ottawa Seattle Toronto Boston Milwaukee Windsor New York Chicago Cleveland Philadelphia Detroit Baltimore Pittsburgh Washington St. Louis Denver San Francisco Atlanta Los Angeles Houston Miami …and Direct Access to the NAFTA Market • Canadian-based businesses have access to one market of 456 million consumers with a combined GDP of about US$17.2 trillion.* • Many Canadian production hubs are actually closer to U.S. markets than American production sites — of Canada’s 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. Saskatoon * Source: World Bank: World Development Indicators database, December 2011 Mexico City

  45. Canada has Efficient Transport Linkages Tying North America with Asia • A reliable and efficient transportation system is key to effective participation in 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 Canada’s 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.

  46. VI An Excellent Place to Live

  47. Canada Overall Quality of Life is One of the World’s Best… • Canada ranks highest in the G-7 and second among the 34 OECD countries in terms of overall living conditions and quality of life. Source: Compendium of OECD Well-Being Indicators, OECD May 2011, * Index based on weighted average of 11 topics (housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety and work-life balance) identified as essential by the OECD in the areas of material living conditions and quality of life.

  48. …with Exceptional Quality of Life in Cities… • According to a recent annual quality-of-life ranking of 221 world cities, four Canadian cities ranked among the top 25. Source: Mercer Human Resources Consulting: November 2011

  49. …Superior Eco-City* Standings… • According to a recent Eco-City* ranking of 221 world cities, four Canadian cities ranked among the top 25 with Calgary topping the list and Ottawa ranking 3rd. Source: Mercer Human Resources Consulting: May 2010 * Includes the following criteria: Water availability, water portability, waste removal, sewage, air pollution and traffic congestion.

  50. …and the Best Overall Reputation on the Global Stage • The Reputation Institute ranks Canada as having the highest reputation ranking among 50 countries based on several indicators, including a good quality of life, a safe place to live, an advanced economy, an effective government and an appealing environment. Ranking based on the Reputation Institute's 2011 Country RepTrak(TM), an annual study measuring the public perceptions of 50 countries around the world. The study measures the overall Trust, Esteem, Admiration and Good Feelings the public holds towards these countries, as well as their perceptions across 16 different attributes, including a good quality of life, a safe place to live and a strong attention to their environment.. Source: Reputation Institute, New York, January 2012

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