2016 Index of Economic Freedom

Canada

overall score78.0
world rank6
Rule of Law

Property Rights90.0

Freedom From Corruption81.0

Limited Government

Government Spending50.4

Fiscal Freedom80.0

Regulatory Efficiency

Business Freedom81.8

Labor Freedom72.6

Monetary Freedom76.9

Open Markets

Trade Freedom87.0

Investment Freedom80.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 35.5 million
  • GDP (PPP):
    • $1.6 trillion
    • 2.5% growth
    • 2.6% 5-year compound annual growth
    • $44,843 per capita
  • Unemployment:
    • 6.9%
  • Inflation (CPI):
    • 1.9%
  • FDI Inflow:
    • $53.9 billion
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Canada’s economic fundamentals remain strong, well supported by solid protection of property rights and an independent judiciary that enforces the rule of law effectively. The country’s commitment to open-market policies that facilitate global trade and investment flows has been strong, and the economy has demonstrated admirable resilience in the face of recent years’ international and domestic challenges.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 78.0 (down 1.1 points)
  • Economic Freedom Status: Mostly Free
  • Global Ranking: 6th
  • Regional Ranking: 1st in North America
  • Notable Successes: Rule of Law, Open Markets, and Regulatory Efficiency
  • Concerns: Control of Government Spending
  • Overall Score Change since 2012: –1.9

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Background

In October 2015, Canada elected a new prime minister, Justin Trudeau of the Liberal Party. With the addition of 30 new seats in the House of Commons to increase representation for provinces with growing populations, Trudeau’s Liberal Party claimed 184 of the now 338 seats in Parliament. Trudeau defeated Prime Minister Stephen Harper, whose party claimed only 99 seats after nine years in power. The New Democratic Party was reduced to 44 seats in the House of Commons. Substantial autonomy is given to Canada’s 13 provinces and territories due to the country’s diversity and vast geographical size. Canada is closely tied to the U.S. economy. Leading exports include oil, minerals, automobiles, manufactured goods, and forest products.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 81.0 Create a Graph using this measurement

Canada has a reputation for clean government, a judicial system with an impeccable record of independence and transparency, and vigorous prosecution of corruption cases. Although 89 percent of Canada’s land area is owned by the state, the 11 percent that is privately owned property is well protected. Enforcement of contracts is very secure, and expropriation is highly unusual. Protection of intellectual property rights meets world standards.

Limited GovernmentView Methodology

The top federal personal income tax rate remains 29 percent, and the top corporate tax rate has been cut to 15 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 30.6 percent of total domestic income. Government spending amounts to 40.7 percent of total domestic output, with small deficits recorded in recent years. Public debt equals about 87 percent of GDP.

Regulatory EfficiencyView Methodology

Canada’s highly competitive regulatory framework promotes business formation and operation. With no minimum capital standards, starting a company requires only one procedure. Flexible labor regulations enhance employment and productivity growth. Inflation has been modest, but the government controls virtually all prices for health care services through its mandatory “single-payer” nationalized program.

Open MarketsView Methodology

Canada’s average tariff rate is 1.5 percent. Imports of dairy products are subject to tariff-rate quotas. Foreign investment in the telecommunications and airlines sectors is restricted. Negotiations for a Canada–EU trade agreement were concluded in late 2014. The banking sector remains stable, having weathered the global financial turmoil with no need for bailouts. The “big six” domestic banks dominate the sector.

Country's Score Over Time

Bar Graph of Canada Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Canada to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Canada78-1.1
2United States75.4-0.8
3Mexico65.2-1.2


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