Canada - A Strategic Choice Think Dynamic. Think Competitive. Think Bottom Line. Think Canada. March 2009

Canada - A Strategic Choice

Think Dynamic.Think Competitive.Think Bottom Line.

Think Canada.March 2009


Excellent Economic Fundamentals

3

A Sound Forecast for Canada

Canada’s federal government has made the right choices when times were good as is evidenced by its eleventh consecutive annual surplus in fiscal 2007-08.

However, in light of the current global economic downturn, Canada, in its latest budget, has deliberately chose to run short deficits to stimulate its economy without putting long-term prosperity at risk. Canada’s net debt-to-GDP ratio will remain the lowest in the G-7 by a wide margin with a return to a surplus expected by the 2013-14 fiscal year.

The U.S. will continue to experience deficits for at least the next ten years.

Federal Government Budgetary Balance

9.6

-1.1

-33.7 -29.8

-13.0-7.3

0.7

-455

-1186

-703

-498

-264 -257 -250

-120

-100

-80

-60

-40

-20

0

20 20

07

-08

20

08

-09

*

20

09

-10

*

20

10

-11

*

20

11

-12

*

20

12

-13

*

20

13

-14

*

Ca

n$

bil

lio

ns

-1200

-1000

-800

-600

-400

-200

0

200

US

$ b

illi

on

s

* Forecasts for both countriesSource Canada: The Federal Budget, Finance Canada, January 27, 2009Source United States: The Budget and Economic Outlook, United States Congressional Budget Office, January 2009.

Canada

U.S.

4

Canada and Germany were the only G-7 members to post a surplus in 2007 with Canada in the lead. Despite being in an overall deficit position during the 2008-2010 period, Canada will be in a far better position than most G-7 member countries.

Source: OECD Economic Outlook, Number 84 , December 2008

Total Government Budget Balance 2007-10 (% of GDP)

(National Accounts Basis)

1.4

-1.5

-2.8

0.1

-2.7 -2.9-2.4

-0.9

-2.8

-5.1

-0.6

-3.5

-6.3

-2.8

-7.0

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

Cana

da

Italy

U.K.

Ger

man

y

Fran

ce

U.S.

Japa

n

2007

2008-10

Leading Most Other G-7 Countries

5

Low Inflation Rates Canada’s targeted inflation rate range between 1% and 3% has been

extended until 2011.

With low inflation over the past decade, Canada is considered among the low inflation countries. Over the past five years, Canada’s inflation rate averaged 2.1%,

compared to 3.2% for the U.S.

Inflation(Year-Over-Year % Change)

2.3

2.8

1.9

2.22.0 2.1

2.4

1.6

2.3

2.7

3.43.2

2.9

3.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2002 2003 2004 2005 2006 2007 2008

Canada U.S.

Sources: Statistics Canada and the Federal Reserve Bank of St. Louis (FRED II Database), January 2009

6

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 recent months 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.

Source Canada: Government of Canada 10-Year Bond: March 13, 2009Source U.S.: U.S. Treasury, Constant Maturity 10-Year Bond: March 13, 2009

Daily Yields (%)

2.02.22.42.62.83.03.23.43.63.84.04.24.4

Long-Term Bond Yields (%)

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Jan-0

4Ja

n-05

Jan-0

6Ja

n-07

Jan-0

8Ja

n-09

Low Interest Rates

Canada

U.S.

U.S.

Canada

7

Real GDP Growth Projections (%) - Consensus Economics Inc.

Consensus Forecasts, March 2009, Consensus Ecomonics Inc.

2.3 2.2 2.2

1.8

0.9

1.9

1.4

0.3

-0.6

-1.3

-0.7

-1.3 -1.3

-2.6-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

Cana

da

U.S.

U.K.

Fran

ce Italy

Ger

man

y

Japa

n

%

2005-08

2009-10

A Stable Domestic Economy According to Consensus Economics, Canada has been the best performer

among the G-7 in GDP growth over the 2005-08 period and is expected to remain so through 2009-10 despite the recent global economic downturn.

8

Real GDP Growth Projections (%) - OECDOECD Economic Outlook, Number 84, December 2008

2.3 2.3 2.2

1.8

0.9

2.01.7

0.8

0.4

-0.1

0.6

-0.1

0.2 0.3

-1.0

0.0

1.0

2.0

3.0

4.0

Canada U.S. U.K. France Italy Germany Japan

%

A Stable Domestic Economy

2005-08

2009-10

Recent OECD statistics rank Canada as a top performer the among G-7 countries in terms of GDP growth during the 2005-08 period and the best during the 2009-10 forecast period.


Easy Access to Markets

10

Efficient Flow of Goods Across Borders

Canada leads the G-7 and ranks 5th among 118 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.

Enabling Trade Index

6.04

5.715.66 5.65 5.62 5.62 5.61 5.58 5.58

5.52 5.51 5.505.43 5.42

5.0

5.2

5.4

5.6

5.8

6.0

6.2

Inde

x

Global Enabling Trade Report 2008, World Economic Forum.

11

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

Annual Transborder CrossingsTotal Number of Trucks and Canada-U.S. Air Passengers

(Two-way movements)

0

5

10

15

20

25

1984 1988 1992 1996 2000 2004 2008*

Mil

lio

ns

Source: Statistics Canada and Transport Canada, 2008 (* Preliminary data for 2008 air passengers)

Truck

Air

Streamlined Trans-Border Flows

20.8 million

11.5 million

12

Smart Borders Canada and the United States work closely together to ensure the safety,

security, and prosperity of both our countries.

Significant steps forward were accomplished to increase overall effectiveness of border programs, such as: FAST (fast movement of pre-approved eligible goods by truck); NEXUS (special program for frequent travelers); Harmonization of procedures for commercial shipments; Harmonized timeframes for advance electronic cargo reporting; Implemented the "24-Hour Rule" for marine shipments destined to North

America; Collaborated in the development of automated risk assessment

systems, tools and methods; Improved infrastructure and border processing times.

The border system is one of the most efficient in the world: wait times are usually less than 10 minutes.

13

Direct Access to the NAFTA Market

Since the enactment of the North American Free Trade Agreement (NAFTA) in 1994, Canada provides long-term assured access to the North American market.

In addition to eliminating tariffs, NAFTA provides procedures for: border facilitation movement of personnel investment and intellectual property protection product certification

The signing of the North American Free Trade Agreement (NAFTA) integrated the Canadian, U.S., and Mexican economies for nearly all business purposes.

As a result, Canadian-based businesses have access to one market of 447 million consumers with a combined GDP (PPP*) of almost US$17.5 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.

* PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods)

** Source: CIA World Factbook, March 2009

14

Mexico City

1000 km

500 km

Los Angeles

Denver

Houston

Atlanta

Seattle

Miami

New York

Boston

Philadelphia

WashingtonBaltimore

DetroitChicago Cleveland

St. LouisPittsburgh

Milwaukee

San Francisco

St. John's

CalgaryVancouver

ReginaHalifax

Toronto

MontréalWinnipeg

Charlottetown

Edmonton

VictoriaOttawa

Windsor

Québec

Fredericton

Saskatoon

15

Canada is the United States’ Largest Trading Partner – by Far

Canada and the U.S. have the world’s largest trade partnership, with two-way trade in goods and services amounting to CAN$710 billion in 2007. This averages to more than CAN$1.3 million dollars a minute in trade.

Canada - U.S. Trade in Goods & Services($CAN Billions)

U.S. to Canada

Canada to U.S.

0

200

400

600

800

19931994

19951996

19971998

19992000

20012002

20032004

20052006

2007

Source: Statistics Canada, May 29, 2008

16

The U.S. trades more with Canada than with any other country—more with Canada than with all of the E.U. countries combined!

Distribution of U.S. Trade* - 2008 Canada17.5%

China12.0%

Mexico10.8%

Japan6.1%Germany

4.5%

All Others49.1%

Source: World Trade Atlas * Merchandise trade, February 2009

Canada is the United States’ Largest Trading Partner – by Far

17

Vital Trade Links with the Americas

Despite the lack of an expanded free trade zone beyond NAFTA for additional countries in the Americas, sizable trade opportunities are still apparent within this region for Canada.

Source: Statistics Canada, February 2009 Note: Merchandise trade * Ranking is based on 2008 data.

Total Trade in Top Sectors, 2008, CAN$ Billions

Transportation Equipment 125.7

Oil & Gas Extraction 109.6

Chemicals 51.2

Machinery 44.8

Primary Metals 43.1

Other Sectors 241.9

Total Trade 616.4

18

Strong Historical Trade Tieswith Europe

European markets continue to provide tremendous trade opportunities for Canada.


Chemicals 12.7


Machinery 11.1

Mining (except oil & gas) 10.8

Primary Metals 6.0

Other Sectors 35.8

Total Trade 87.8

Source: Statistics Canada, February 2009 Note: Merchandise trade * Ranking is based on 2008 data.

19

Unique Access to Asia-Pacific Markets

With its geographical location, its immigration links and active involvement in APEC to reduce trade barriers, Canada is uniquely positioned to gain from the long-term potential of Asian economies.

Source: Statistics Canada, February 2009, Note: Merchandise trade * Ranking is based on 2008 data. ** Includes Oceania and the Middle East


Computer & Electronic Products 23.5


Machinery 10.6

Mining (except oil & gas) 9.8

Primary Metals 7.7

Other Sectors 70.3

Total Trade 134.6

20

Efficient Transport Linkages between North America and Asia

A reliable and efficient transportation system is key to facilitating 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.


Growing Foreign

Direct Investment

Linkages

22

A Highly Globalized Infrastructure

Due to its rapidly growing prominence as an outsourcing market of choice, Canada ranked second in the G-7 and eighth among 72 countries profiled in the recent A.T. Kearney/”Foreign Policy” Magazine Globalization Index* which measures economic integration, personal contact, technological connectivity and political engagement.

In technological connectivity, one of the four components of the index, Canada’s ranking rose from sixth place in 1999 to second in 2006. It maintained this position in 2007.

Globalization Index Rankings, 2007*

34th

28th25th

22nd

12th8th7th

U.S. Canada U.K. Germany France Japan Italy

Inde

x

Source: A.T. Kearney/”Foreign Policy” Magazine, 2007 * Standing based on 12 characteristics under the headings of trade, FDI, telephone, travel, remittances & personal transfers, internet users, internet hosts, secure servers, international organizations, UN peacekeeping, treaties and government transfers.

23

Over the past two decades, Canada has witnessed a substantial growth in both inward and outward FDI.

Canada’s inward FDI stock reached C$501 billion in 2007, an almost 8-fold increase from C$65 billion in 1980.

As for Canada’s outbound FDI, the expansion of Canadian direct investment abroad (CDIA) has been even more spectacular, rising from C$28 billion in 1980 to $515 billion in 2007, an 18-fold increase.

Since 1997, Canada has been a net exporter of FDI, with outward FDI stock outstripping inward FDI stock each consecutive year.

CDIA

FDI

Driven by a Dynamic Two-Way Investment Process


24

The United States is Canada’s Largest Source of FDI

In 2007, the U.S. share of foreign direct investment (FDI) in Canada stood at 57.6%, down from the 10-year record level of 69.7% in 1999.


Geographic Distribution of Inward FDI Stock in Canada 2007

United Kingdom10.9%

Netherlands 6.3%

France 3.5%

Japan 2.7%

Switzerland 2.8%

United States 57.6%

Others 16.2%

25

From 2000-2007, the US share of FDI stock in Canada declined from 61% to 58%, while that of the EU, the second largest contributor to FDI in Canada, declined from 30% to 28%.


0

100

200

300

400

500

600

'90 '92 '94 '96 '98 '00 '02 '04 '06

24%30% 28%

64% 61% 58%

12% 9% 15%

0%

20%

40%

60%

80%

100%

1990 2000 2007

Foreign direct investment in Canada by geographic area of origin 1990-2007

Billion$Cdn

EU

US

Others

FDI stock: distribution by geographic region of origin (%)

EU

US

Others

Outnumbering the EU by More than Two to One

26

The United States is the Largest Recipient of CDIA

In 2007, the U.S. share of outward FDI or Canadian direct investment abroad (CDIA) was 44.0%, down from the 10-year record level of 52.2% in 1999.


Others27.8%

United States44.0%

Cayman Islands3.4%

Bermuda3.4%

Ireland3.8%

Barbados7.0%

United Kingdom10.6%

Geographic Distribution of Outward FDI Stock from Canada 2007

27

While the United States remains the largest single recipient of Canadian direct investment abroad, the EU has gradually been gaining ground in recent years.

From 2000-2007, CDIA stock in the US declined from 50% to 44%, while that of the EU rose from 21% to 24%.


0

100

200

300

400

500

600

'90 '92 '94 '96 '98 '00 '02 '04 '06

21% 21% 24%

61%50% 44%

18%29% 32%

0%

20%

40%

60%

80%

100%

1990 2000 2007

Canadian direct investment stock abroadby geographic area 1990-2007

Billion$Cdn

EU

US

Others

CDIA stock: distribution by geographic Area (%)

EU

US

Others

The EU is Also An Important Destination for CDIA

28

399

240

AffiliateSales

Exports

Affiliate Sales and Exports of Goods and Services ($Billion), 2006

European Union

United States

43

86

AffiliateSales

Exports

Exports from Canada to the U.S. far outweigh sales by American affiliates of Canadian multinationals in the U.S.

Conversely, sales in Europe by European affiliates of Canadian multinationals are more than twice the level of Canadian exports to the European Union*.

* Does not include Bulgaria and Romania which joined the EU in January 2007 to form the EU-27Source: BIA compilations based on data from Statistics Canada, November 2008

Investment is the Main Mode for Delivering Goods and Services

29

Increasingly more investment goes toward industries such as manufacturing, mining and oil and gas extraction and the management of companies and enterprises. Since 2000, significant growth in terms of FDI has occurred in the utilities industry.

Average Annual Growth Rates of Foreign Direct Investment by Industry (%) 2000-2007*

-1.3-0.7

3.84.85.66.27.98.29.09.910.9

13.517.217.7

20.4

-7.9

13.4

-20 -10 0 10 20 30 40 50 60

Information and communication technologiesReal estate and rental and leasingInformation and cultural industries

ManufacturingWholesale trade

OVERALLAgriculture, forestry, fishing and hunting

ConstructionProfessional, scientific and technical services

Finance and insuranceAccomodation and food services

Management of companies and enterprisesRetail trade

Transportation and warehousingMining and oil and gas extraction

UtilitiesAll other industries


Canada Welcomes Foreign Investment

3.2 0.8

15.7

1.1

3.8 8.9

0.6 13.0 2.4

0.6 0.3100.0 6.3

37.2 1.3 1.1 3.7

2007 Distribution (%

)

* North American Industry Classification System (NAICS)

30

Canada’s outward FDI is focused largely in the finance & insurance, manufacturing and mining and oil and gas extraction industries. Retail trade and Management of companies and enterprises has seen significant growth since 2000 in terms of CDIA.

Canada Actively Invests Abroad

Average Annual Growth Rates of Canadian Direct Investment Abroad by Industry (%) 2000-2007*

-7.4-5.9

-1.61.1

4.29.410.010.311.0

14.815.1

18.418.7

22.725.7

16.6

-12.4

-20 -10 0 10 20 30 40 50 60

Information and communication technologiesInformation and cultural industries

All other industriesManufacturing

Transportation and warehousingOVERALL

Mining and oil and gas extractionReal estate and rental and leasing

Professional, scientific and technical servicesFinance and insurance

Wholesale tradeAccommodation and food services

ConstructionUtilities

Agriculture, forestry, fishing and huntingManagement of companies and enterprises

Retail trade


1.211.5 0.3

1.4

0.5 0.5

0.9 36.2 1.6

1.9 14.9

100.0 3.4

18.9 0.4 3.2 3.5

2007 Distribution (%

)

* North American Industry Classification System (NAICS)


A Cost-CompetitiveBusiness Environment

32

Source: Department of Finance’s Economic Statement, October 30, 2007 and the March 19, 2007 budgetAverage federal and provincial/state corporate income tax rates.* Provincial retail sales tax harmonization plus Federal-Provincial corporate income tax rate to 25%.

An Overall Tax Advantage for Firms to Expand in Canada

International Comparison of Marginal Effective Tax Rates (METR) on Business Investment in 2012

43.4

34.4

29.6 29.3 27.7 26.5

16.4

25.3

1015202530354045

%

The overall impact of the business tax system can be measured by the marginal effective tax rate (METR).

By 2012, Canada’s METR will be the lowest in the G-7 when the measures proposed in the March 2007 Federal Budget, the October 2007 Economic & Fiscal update, along with provincial measures such as retail sales tax harmonization and elimination of capital taxes are in place.

33

Quality R&D — Canada’s Big Bargain

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.

Relative Generosity of

R&D Tax Incentives*(Index: Canada = 100.0)

79.7

80.3

87.9

90.8

93.1

100.0

101.2

50 60 70 80 90 100 110

Germany

Italy

U.S.

U.K.

Japan

Canada

France

Source: Warda, Jacek, Rating Canada's R&D Tax Treatment: September 20, 2007Note: 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

34

Competitive Business Telephone Charges

Canada’s business telephone charges are relatively low among G-7 countries.

Source: OECD Communications Outlook 2007

Annual Business* Telephone Charges(US$ PPP**, Price per line)

963

956

880

792

655

588

442

0 200 400 600 800 1000 1200

Japan

Italy

U.K.

France

Canada

Germany

U.S.

* Business (small and medium-sized enterprises) basket of telephone charges include fixed access and 84,000 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-year period. **PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods)

35

Canada has the lowest residential telephone charges among the G7 and OECD countries.

Annual Residential* Telephone Charges(US$ PPP, Price per line)

1027

989

922

796

794

518

368

0 200 400 600 800 1000 1200

Italy

France

Japan

U.K.

Germany

U.S.

Canada

The Most Affordable Residential Telephone Charges

Source: OECD Communications Outlook 2007

* High usage basket of residential telephone charges include fixed access and 84,000 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-year period.** PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods)


A Dynamic and Welcoming

Infrastructure

37

Highest Concentration of Entrepreneurs

From a global standpoint, Canada has the 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 2008

Number of Entrepreneurs as a Percentage of the Working Population

15.9

11.5 11.2 11.1 11.110.1 9.7

8.6 8.56.9

0

5

10

15

20

Canad

a

Netherla

nds

U.K.

Irelan

d

Belgium U.S.

German

y

Finland

Sweden

Denmark

38

Positive Business Climate Canada understands the importance of its business community and has

created an environment to encourage its success.

Canada’ business climate ranked first in the G-7 and fifth out of 82 countries in the Economist Intelligence Unit’s global business rankings for the forecast period (2009-13), up from sixth and still first in the G-7 out of the full 82 countries from the historical period (2004-2008).

The country ranks well for its infrastructure, market opportunities, taxes, and foreign trade and exchange controls.

Business Environment of Top Ten Countries, Rank for Forecast Period 2009-2013

10th9th

8th7th

6th5th

4th3rd

2nd1st

Ran

k

Source: The Economist Intelligence Unit, March 2009

39

Ease in Establishing a Business in Terms of Procedures

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.

Number of Procedures*

1

5

6

8

9

5.8 66

0123456789

10

Canada France OECDAverage

U.S. U.K. Italy Japan Germany

Source: Doing Business in 2009 - The World Bank Group, 2008 * 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.

40

Canada ranks first among the G-7 for the fewest number of days required for establishing a new business.

Duration (days)

56

7

10

13 13.4

18

23

0

5

10

15

20

25

Canada U.S. France Italy U.K. OECDAverage

Germany Japan

Source: Doing Business in 2009- The World Bank Group, 2008

And in Terms of Time

41

Canadian schoolchildren ranked second in the world in the OECD Program for International Student Assessment (PISA).

The PISA survey is conducted annually among 400,000 school pupils across 57 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.

PISA Score (points)

553

529521

514 510 509 505 504 502 501 500

450

500

550

600

Finland

Canad

a

Netherl

ands

Switzerla

nd

Belgium

Irelan

d

German

y

Sweden U.K.

Denmark

OECD Average

Source: OECD 2007

A World Leader in Youth Academic Performance

42

The World’s Best-Educated Workforce

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.

Higher Education Achievement

54.053.0

51.4 51.050.0

47.8

41.0 41.0 41.040.0 40.0 39.8 39.0 39.0

30

35

40

45

50

55

%

Source: IMD, World Competitiveness Yearbook 2008

43

Canada ranks second behind the U.S. among the G-7 with respect to the share of GDP that is invested in public education.

Public Expenditure on Education

6.2 6.1 6.1

5.6

4.7

4.0 3.9

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

U.S. Canada France U.K. Italy Germany Japan

%


A Leading Investor in Public Education

44

Top-notch Management Training Canada ranks among the top-ten in a 134-country study of locally available

management education in first-class business schools. (see chart below)

In addition, five Canadian schools of management are ranked among the top 100 in the world according to the Financial Times (UK) Global MBA rankings for 2009. University of Toronto (Rotman) 47th; University of Western Ontario (Ivey) 47th; York University in Toronto (Schulich) 49th; University of British Columbia (Sauder) 71st ; and University of Alberta 77th.

*Standing among 134 countries. Index based on the quality of Management education in first-class business schools.•Source: Global Competitiveness Report, 2008-2009

Management Education* World Rank

10th9th

8th7th

6th5th

4th3rd

2nd1st

Ran

k

45

State of the Art Venues for Scientific Research

Canada ranks second behind the U.S. among the G-7 and fourth in a 134-country review of the quality of scientific research undertaken in government and university laboratories.

*Standing among 134 countries. Index based on the quality of scientific research in government and university laboratories. Source: Global Competitiveness Report, 2008-2009

Quality of Scientific Research Institutions* World Rank

10th9th

8th7th

6th5th

4th3rd

2nd1st

Ran

k

46

Among Leaders in IT Industry Competitiveness

Canada ranks third behind the U.S. and the U.K. among the G-7 and sixth 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 2008.

IT Industry Competitiveness Index* World Rank

10th9th

8th7th

6th5th

4th3rd

2nd1st

U.S.

Taiwan U.K.

Swedem

Denmark

Canad

a

Austra

lia

South

Korea

Singap

ore

Netherl

ands

Ran

k

47

PC and Internet Users

Canada is second to the U.S. among the G-7 in terms of personal computers and second to Japan among the G-7 with respect to Internet users per capita.


Internet Users Per 1,000 Inhabitants

745 740 739

697

647

593583

500

550

600

650

700

750

800

Personal Computers Per 1,000 Inhabitants

836

790

729706

645 642

559

500

550

600

650

700

750

800

850

900

48

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).

And Manufacturing Sector Innovators

International Innovation Index* World Rank

38th

20th19th

15th14th

9th8th

U.S. Japan Canada U.K. Germany France Italy

Inde

x

*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

49

Sound Financial Institutions

With the world in the midst of the current financial crisis, investors can take comfort in the fact that Canadian banks are generally healthy with solid balance sheets and least likely to require a government bailout in the event of a major economic downturn.

*Standing among 134 countries. Ranking based on the degree of soundness of financial institutions. Source: Global Competitiveness Report, 2008-2009

Soundness of Banks* World Rank

10th9th

8th7th

6th5th

4th3rd

2nd1st

Ran

k

50

With Superior Credit Ratings

Canadian banks rank first among the G-7 in terms of their intrinsic credit worthiness. (see chart below)

In addition, Moody’s Investors Services raised Canada’s credit rating to AAA (the highest rating) in May 2002 in response to Canada’s improved fiscal balance sheet and excellent long-term growth prospects. Similarly in July 2002, Standard & Poor’s raised Canada’s long-term foreign sovereign credit rating to AAA. These ratings have since been maintained.

Source: Moody's Financial Services, March 2009 B= Strong, intrinsic financial strength C = Good D = Adequate E = Very weak

Moody's Average Bank Financial-Strength Rating

Canada

U.S.

U.K.

France

Italy

Japan

Germany

E E+ D- D D+ C- C C+ B- B

51

Forward-Looking Framework Policies

The economic policies of the Government of Canada are focused on making Canada a world leader in the global knowledge-based economy of the 21st century. Commitments include: making broadband Internet access available in all communities by

2009. becoming one of the top five countries for research and development

by 2010. shaping a “National System of Innovation”. providing marketplace frameworks/services benchmarked against the

best in the world.

52

The Government of Canada has numerous policies/programs aimed at building the knowledge infrastructure. Examples include: Technology Partnerships Canada, Canadian Network for the Advancement of Research, Industry and Education (CANARIE), and Co-operative sectoral research programs (PAPRICAN).

Canada leads the G7 in public sector R&D investment as a share of GDP. The public sector currently finances 85% of primary research in Canada.

The Government of Canada will spend over $2.7 billion in 2008-2009 in support of research and development conducted in post-secondary institutions. The Government spends more than $2 billion each year on its own research activities.

The SR&ED Program provides more than $2.5 billion in support of Canadian private sector innovation and is accompanied by more than $15 billion in investments by claimants each year.

Since its creation in 1997, the Canada Foundation for Innovation has invested $4.5 billion in more than 6,000 research projects in 129 Canadian universities, colleges, research hospitals, and research institutions in 64 municipalities. Source: Canada Foundation for Innovation, January 2009.

Forward-Looking Support for Innovation Programs


An Excellent Place to Live

54

A Champion in Attracting Capital and Talent through Immigration and Investment

Canada ranks first in a 60-country study that measures the potential of a country as an ideal place to live, work, study and invest.

Immigration/Investment Index*

62.3

61.1 61.1 61.0 60.7 60.5

59.659.0

57.757.1

5556575859606162636465

Canad

aU.K.

U.S.

Switzerla

nd

German

y

France

Austra

lia

Sweden Ita

ly

Japa

n

Imm

igra

tion/

Inve

stm

ent S

core

•Index ranging from 0-100 based on five components of a country’s potential for immigration and investment: (a) Willingness to live and work for a substantial period in the country; (b) Quality of life; (c) Good place to study for educational qualifications; (d) The country has businesses I’d like to invest in; (e) Equal opportunity. Source: Red Hot Locations, London U.K. 2009

55

Best Overall Quality of Life Canada has the best overall quality of life among the G-7.

Source: IMD, * Rank among 55 economies considered in the World Competitiveness Yearbook 2008.

Quality of Life Index*

9.27

8.89

8.53

8.17

7.166.90 6.86

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Canada Germany U.S. France U.K. Japan Italy

Inde

x

56

According to a recent annual quality-of-life ranking of 215 world cities, five Canadian cities ranked among the top 25.

Source: Mercer Human Resources Consulting: June 2008

Exceptional Quality of Life in Cities

57

According to a recent annual health and sanitation ranking of 215 world cities, five Canadian cities ranked among the top 25 with Calgary topping the list and Ottawa ranking 4th.

Source: Mercer Human Resources Consulting: April 2007* Hospital Services; Medical Supplies; Infectious Diseases; Water Portability; Troublesome and destructive animals/insects; Waste Removal; Sewage and Air Pollution

With Exceptional Health & Sanitation* Standards

58

A Vast Arable Landscape

Source: IMD, World Competitiveness Yearbook 2008.

Arable Land(Thousands of Square metres per capita)

16.15

5.98

3.241.77 1.47 0.96

0.370

5

10

15

20

Canada U.S. France Italy Germany U.K. Japan

Canada ranks highest in the G-7 and second with respect to the area of available land for agricultural usage on a per capita basis.

59

Backed by a Strong Environmental Record

As measured by the Environmental Performance Index (EPI), Canada’s ranks 2nd in the G-7 and 12th in a 149-country study in terms of effectively reducing environmental stresses on human health and promoting ecosystem vitality and sound natural resource management.

* Perfect EPI Score = 100. Country rank based on twenty-five indicators tracked in six established policy categories – Environmental Health, Air Pollution, Water Resources, Biodiversity & Habitat, Productive Natural Resources, and Climate Change. Source: Yale Center for Environmental Law and Policy, January 23, 2008

Environmental Performance Index* 2008

87.8

86.686.3 86.3

84.584.2

81.0

80

85

90

France Canada Germany U.K. Japan Italy U.S.

Inde

x

60

A Leader in Human Development*

In the latest United Nations Human Development Report, Canada ranked first among the G-7 countries and third among 179 countries surveyed.

*Standing among 179 countries. Index based on achievements in terms of life expectancy, educational attainment, and adjusted real income.Source: United Nations Human Development Report 2008-2009, December 18, 2008

Human Development Index* World Rank

23rd21th

19th

15th

11th8th

3rd

Canada Japan France U.S. Italy U.K. Germany

Inde

x

61

Among Model Nations of Peace According to the Global Peace Index, a recently released measure by the

Economist Intelligence Unit, Canada ranked second in the G-7 and eleventh among 140 countries surveyed.

*Standing among 140 countries. Index ranking countries based on peacefulness, both domestically and abroad using 24 indicators, including the number of soldiers killed overseas, the level of violent domestic crimes and relations with neighbouring countries. Source: Economist Intelligence Unit, May 2008

Global Peace Index* World Rank

97th

49th

36th28th

14th11th5th

Japan Canada Germany Italy France U.K. U.S.

Inde

x

62

A Safe and Just Society Canada is among G-7 leaders in terms of the safest place to live and conduct

business with the most fairly administered judicial system.

Source: IMD * Confidence that person and property is protected. Rank among 55 economies considered in the 2008 World Competitiveness Yearbook. **Degree of fairness of the judicial system in Society. Rank among 55 economies considered in the 2008 World Competitiveness Yearbook.

Security* — World Rank

8.58.3

8.1

7.8 7.7

6.1

5.7

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

Ind

ex

Justice** — World Rank

8.38.1

7.57.2 7.1

6.9

3.5

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Ind

ex

63

A Land of Equal Opportunity Canada ranks first among the G-7 in providing equal opportunities for

individuals.

Source: IMD * Race, gender, family background does not pose a handicap for competitiveness. Rank among 55 economies considered in the 2008 World Competitiveness Yearbook.

Equal Opportunity* — World Rank

7.5

6.8

6.4

6.16.0

5.6

5.2

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Canada U.S. Japan France Germany U.K. Italy

Inde

x

64

And a Society Rich in Multiculturalism

Canada has one of the world’s most multilingual societies with over 200 languages identified as the mother tongue.

While there has been a decline in the proportion of the Canadian population whose mother tongue is one of the two official languages, there has been an overall increase in the proportion of the population whose mother tongue is neither English or French from 18.0% in 2001 to 20.1% in 2006.

Source: Statistics Canada, 2001 and 2006 Census * based on mother tongue. ** includes Cantonese and Mandarin

Top Ten Spoken Languages in Canada* (% of Population)

0.7

0.9

0.9

1.2

1.21.5

1.53.3

22.1

57.8

0.8

0.7

0.7

0.9

1.01.5

1.72.9

22.9

59.1

0

10

20

30

40

50

60

%

2006 Census 2001 Census

65

Canada – A Strategic Choice

Canada’s economic fundamentals and relative cost advantages provide a first-rate business environment. Canada offers:

Solid Economic Fundamentals Low inflation and low interest rates

Easy Access to Markets Geography and NAFTA provide easy

access to the world’s most prosperous market

A Cost-Competitive Business Environment Competitive tax system

(particularly for R&D)

Think Dynamic. Think Competitive. Think Bottom Line.Think Canada.

An Energetic and Welcoming Infrastructure Ease in establishing a new business The world’s best-educated workforce Strong technological environment Forward-looking framework policies

An Excellent Place to Live Superb overall quality of life A strong environmental record A society rich in multiculturalism

66

Invest in Canada Through Canadian diplomatic missions around the world, and with direct

access to investment contacts at national, provincial and municipal levels within Canada, the Invest in Canada Bureau of the Department of Foreign Affairs and International Trade Canada is well positioned to assist in attracting and expanding your investment. We invite you to explore all that Canada has to offer.

Please contact your local Canadian Embassy, High Commission or Consulate, or write to us at:

Foreign Affairs and International Trade CanadaInvest in Canada Bureau, 111 Sussex Drive, 3rd FloorOttawa, Ontario, Canada K1A 0G2E-mail: [email protected]

www.investincanada.gc.ca

Think Canada! is prepared by Arif Mahmud, Invest in Canada Bureau.

Documents

Canada - A Strategic Choice Think Dynamic. Think Competitive. Think Bottom Line. Think Canada. March 2009