Wednesday, April 11, 2007

Report: Canadian economy stifled by chronically low productivity

Sources: Toronto Star, Boston College International and Comparative Law Review

A report issued by the Canadian think tank Centre for the Study of Living Standards asserts that Canada will lag economically and ultimately suffer a lowered or stagnant standard of living if it does not make changes to increase productivity.

The report notes that Canada’s business output grew an average of only 1.1% per year between 2000 and 2006, or only a third as much as the United States over the same period. It also points to the fact that between 1973 and 2006, Canada was the third lowest-producing member country in the Organization for Economic Cooperation and Development (OECD).

Among the recommendations set fort in the report were:

*** to increase competitiveness through deregulation;

*** to weaken current unemployment health benefits for temporary and unemployed workers; and

*** to remove “institutional rigidities” such as inter-province trade and labor movement restrictions.

The last of these recommendations is perhaps the most interesting from a comparative standpoint. The Constitutions of both Canada and the United States have commerce clauses—language that among other things encourages free trade among the political entities—provinces and states, respectively—that make up each country.

While jurisprudence in the United States has found that the bulk of the power with respect to this issue lies with the federal government, Canadian case law has found the opposite: as a result, the provinces have been empowered to exercise more control over trade amongst themselves which has in turn led to some barriers to trade—and productivity—that may be constraining economic progress in Canada.

For discussion:

Does Canada’s interpretation of its Constitution with respect to province versus national government powers to regulate inter-province commerce need to be revisited?

Click here for a comparative analysis of commerce clauses found in United States, Canadian, and Australian constitutions.

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