Report: Canadian Provinces Lead North America in Economic Freedom

Published December 11, 2012

Alberta has the highest level of economic freedom among all Canadian provinces and U.S. states, according to a new report by the Fraser Institute, Canada’s leading public policy think tank.

The “Economic Freedom of North America 2012” report ranks Saskatchewan second among the provinces and third overall. Canadian provinces make up four of the top 10 jurisdictions, with Newfoundland and Labrador and British Columbia coming in ninth and 10th among all provinces and U.S. states.

The report examines key indicators of economic freedom in the Canadian provinces and U.S. states based on size of government, taxation, rule of law and property rights, and regulation, using data from 2010 (most recent year available). A separate chapter compares the economic freedom levels of the Mexican states.

Freedom from Government Interference

Economic freedom represents the ability of individuals and families to make their own economic decisions, free from government interference.

The study measures economic freedom at two levels: sub-national and all-government (comprising federal, state/provincial, and municipal/local). This year’s report includes a “world-adjusted” index for Canada and the Unites States at the all-government level using data from Fraser Institute’s “Economic Freedom of the World: 2012 Annual Report,” which ranked Canada fifth out of 144 nations and territories, well ahead of the United States at 16th.

“The link between economic freedom and prosperity is clear: Provinces that support low taxation, limited government, and flexible labor markets benefit from greater economic growth,” said report coauthor Fred McMahon, in a statement.

“In contrast, provinces with reduced levels of economic freedom see lower living standards for families and fewer economic opportunities,” he added.

More Freedom, More GDP
Reinforcing the connection between economic freedom and prosperity, the report shows the Canadian provinces with the most economic freedom (Alberta, Saskatchewan, Newfoundland and Labrador) had an average per capita GDP of $60,163 (Cdn) in 2010, while the three provinces with the least economic freedom (Quebec, Nova Scotia, Prince Edward Island) averaged only $45,872 (Cdn).

Canadian provinces are ahead of U.S. states in average levels of economic freedom. Overall, Canadian provinces averaged a score of 6.8 out of 10 compared to 6.7 out of 10 for U.S. states.

“The Canadian provinces with the most economic freedom have dynamic, growing economies and offer significant economic benefits for families,” McMahon said.

Economic freedom is based on the cornerstones of personal choice, voluntary exchange, freedom to compete, and security of private property. Research shows people living in jurisdictions with high levels of economic freedom enjoy greater economic growth, higher incomes, more individual freedom, and longer life spans.

The “Economic Freedom of North America” report is an offshoot of the Fraser Institute’s “Economic Freedom of the World” index, the result of a quarter-century of work by more than 60 scholars, including three Nobel laureates.

Source: Fraser Institute

Internet Info

“Economic Freedom of North America 2012,” Fraser Institute: