Copyright ® 2004 Global Insight, Inc. Canada’s Key Economic Policy Challenges Dale Orr Canadian Macroeconomic Services Global Insight
Copyright ® 2004 Global Insight, Inc. 2 Outline 1.Our Standard of Living: How Are We Doing? 2.What Determines Our Standard of Living? 3.Policy Options for Improving Our Standard of Living 4.Canada’s Productivity Performance (cont’d)
Copyright ® 2004 Global Insight, Inc. 3 Outline (cont’d) 5.Canada’s Labor Market Performance 6.Potential GDP Gain By Moving Productivity in Lagging Provinces Up 7.Potential GDP Gain By Moving Labor Market Performance in Lagging Provinces Up 8.Conclusions
Copyright ® 2004 Global Insight, Inc. 4 Canada: Standard of Living
Copyright ® 2004 Global Insight, Inc. 5 Canada vs. G7: Standard of Living
Copyright ® 2004 Global Insight, Inc. 6 Canada: Unemployment Rate
Copyright ® 2004 Global Insight, Inc. 7 Canada and U.S. Standards of Living
Copyright ® 2004 Global Insight, Inc. 8 Canada Labor Productivity
Copyright ® 2004 Global Insight, Inc. 9 Determinants of the Standard of Living Standard of Living Labor Productivity Labor Market Performance =
Copyright ® 2004 Global Insight, Inc. 10 Policy Options for Productivity Policies to Improve Productivity: To Improve Business Investment To Improve Incentives to Work and Invest To Improve the Quality of the Labor Force
Copyright ® 2004 Global Insight, Inc. 11 Policy Options for Labor Markets Policies to Improve Labor Market Performance: To Improve Incentives to Work To Improve the Quality of the Labor Force To Reduce Unemployment To Increase Labor Force Participation
Copyright ® 2004 Global Insight, Inc. 12 Framework for Policy Response Move Productivity of Lagging Provinces up to Canadian Average Move Labor Market Performance (labor force participation, unemployment rate, work intensity) of Lagging Provinces up to Canadian Average
Copyright ® 2004 Global Insight, Inc. 13 Productivity by Province
Copyright ® 2004 Global Insight, Inc. 14 Labor Force Participation by Province
Copyright ® 2004 Global Insight, Inc. 15 Unemployment by Province
Copyright ® 2004 Global Insight, Inc. 16 Work Intensity by Province
Copyright ® 2004 Global Insight, Inc. 17 Potential GDP from Moving Productivity Up to Standard
Copyright ® 2004 Global Insight, Inc. 18 Potential GDP from Moving Labor Market Performance Up to Standard
Copyright ® 2004 Global Insight, Inc. 19 Conclusions: Provincial Perspective Most Important to Provincial GDP/person, (% gain) Productivity: PEI (50%), NS (22%), NB (19%), MB (16%) Labor Mkt. Performance: NL (20%), QC (8%), NS (6%), NB and BC (both 5%)
Copyright ® 2004 Global Insight, Inc. 20 Conclusions: Canada Perspective Most Important to Canada's GDP, (B$ gain) Productivity: QC (10 B$), NS and MB (both 6 B$) Total Gain to Canadian Economy (31 B$) or 2.7% Labor Market Performance: QC (19 B$), BC (8 B$) Total Gain to Canadian Economy (33 B$) or 2.9%
Copyright ® 2004 Global Insight, Inc. 21 Policy Recommendations Continue planned policies to improve productivity (and labor market performance) Improve labor market performance by: Reductions in P.I.T. Move E.I. closer to insurance principles Increase incentives, programs, subsidies for geographic mobility
Copyright ® 2004 Global Insight, Inc. Thank You Dale Orr Global Insight (Canada) Ltd.