The
Economic Freedom
Network

Provincial Economic Freedom in Canada 1981-1998

by Faisal Arman, Dexter Samida, and Michael Walker

[Previous] [Contents] [Next]

Economic Freedom Analysis of the Provinces

Alberta

Alberta was ranked the freest province in Canada during all measurement periods except 1985 and 1989, when it dropped to second. Although it has consistently had a high score, Alberta's rating for economic freedom dropped from its 1981 level during the period from 1981 to 1994, only recently surpassing its initial rating.

Alberta's high level of economic freedom is reflected in its economic indicators. It has the highest level of real per-capita GDP at $26,906 and, in 1995, had the second lowest level of unemployment. In 1995, it also had one of the country's fastest rate of growth in real GDP, exceeding the average growth of the rest of the country by one percent.

Government consumption as a percentage of provincial GDP has remained relatively low in Alberta. This proportion has fluctuated over time, reaching a high in 1989 of 20.7 percent. In 1996, Alberta received the highest ranking in this component, consuming 15.8 percent of provincial GDP while second-place Ontario consumed 17.8 percent of provincial GDP. In the Takings and Discriminatory Taxation component, Alberta decreased transfers and subsidies to 3.7 percent of provincial GDP, the lowest of all the provinces in 1995. This compares very favourably to Newfoundland, the highest of all provinces in 1995, which has a transfer and subsidy sector more than three times as large, 12.5 percent of provincial GDP. In addition, Alberta has kept its top marginal tax rate low and, unique in Canada, does not impose a provincial sales tax.

Alberta has also made attempts to diminish trade barriers between itself and the other provinces: it has not excluded any of its government entities from the preferential procurement provisions set forth in the Internal Trade Agreement. Therefore, Alberta is the only province in which government organizations do not have restrictive purchasing arrangements forcing discrimination against companies outside of the province.

Alberta:Ranking for Components of the Index of Provincial Economic Freedom

	1981	1985	1989	1993	1994	1995	1998 (est.)
I.Government Operations and Regulations	1	1	3	1	1	1	1
II.Takings and Discriminatory Taxation	1	4	3	1	1	1	1
III.Interprovincial Trade	4	4	2	2	2	2	(tie) 1
IV.Regulation of the Labour Market	1	1	(tie) 1	1	1	1	1

Part 1: Economic Freedom Ratings for the Components and Various Area and Summary Indexes: 1981, 1985, 1989, 1993, 1994, 1995, 1998 estimate.
	Rating	Ranking
1981	7.7	1
1985	6.2	2
1989	6.6	2
1993	6.9	1
1994	7.6	1
1995	7.8	1
1998	7.8	1
			IPEF (1998 est.):		7.8	Trend:	Increasing

Components of Economic Freedom
			1981	1985	1989	1993	1994	1995	1998 est.

I. Government Operations and Regulations			8.6	7.8	7.1	6.5	7.3	8.1	8.1

(a) Consumption Expenditures (% of GDP)			10.0	9.0	7.0	7.0	8.0	9.0	9.0
(b) Government Enterprises and Guarantees			8.0	6.0	6.0	6.0	6.0	6.0	6.0
(c) Price Controls			6.0	6.0	6.0	6.0	8.0	8.0	8.0
(d) Regulatory Effort			10.0	9.5	9.0	7.0	7.0	9.0	9.0

II. Takings and Discriminatory Taxation			7.4	4.9	6.1	7.0	8.0	7.7	7.7

(a) Transfers and Subsidies (% of GDP)			9.0	6.0	6.0	7.0	9.0	9.0	9.0
(b) Top Marginal Tax Rate and Threshold			10.0	4.0	8.0	7.0	7.0	7.0	7.0
(c) Direct Corporate Taxes (% of profits)			0.0	0.0	0.0	4.0	6.0	5.0	5.0
(d) Provincial Sales Tax			10.0	10.0	10.0	10.0	10.0	10.0	10.0

III. Interprovincial Trade			5.7	5.4	6.2	6.4	6.5	6.6	6.6

(a) Occupational Licensing			2.0	2.5	3.1	3.6	3.7	3.9	4.0
(b) Marketing Boards			9.0	8.0	9.0	9.0	9.0	9.0	9.0

IV. Regulation of the Labour Market			10.0	10.0	9.0	9.0	10.0	10.0	10.0

(a) Minimum Wage Legislation			10.0	10.0	9.0	9.0	10.0	10.0	10.0

Economic Freedom Rating			7.7	6.2	6.6	6.9	7.6	7.8	7.8
Ranking of Province			1	2	2	1	1	1	1

Components of Economic Freedom

I. Government Operations and Regulation
	1981	1985	1989	1993	1994	1995	1996	1997
(a) Consumption Expenditures (% of GDP)	15.6	17.1	20.7	19.9	17.6	16.7	15.8	—
(b) Government Enterprises & Guarantees	24.7	28.0	39.4	32.2	29.4	—	—	—
(c) Price Controls	Price controls are often applied in energy markets; marketing boards often influence prices of
	agricultural products; controls are also present in a few other areas, but most prices are
	determined by market forces
	The privatization of retail alcohol outlets improved Alberta's rating in later years
(d) Regulatory Effort	0.179	—	0.186	—	—	0.231	0.200	—


II. Takings and Discriminatory Taxation

(a) Transfers and Subsidies (% of GDP)	4.2	7.2	6.6	5.5	4.2	3.7	—	—
(b) Top Marginal Tax Rate and	42.1	50.5	45.7	46.1	46.1	46.1	46.1	46.1
Threshold at Which It Applies	$53,377	$62,161	$70,330	$63,315	$63,396	$63,438	$63,438	$63,409
(c) Direct Corporate Taxes (% of profits)	42%	44%	42%	33%	28%	31%	31%	31%
(d) Provincial Sales Tax	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0


III. Interprovincial Trade

(a) Occupational Licensing	48.0	—	—	—	—	—	—	41.0
(b) Marketing Boards	7.4	9.0	8.4	8.1	7.6	7.3	7.3	—


IV. Regulation of the Labour Market

(a) Minimum Wage Legislation	33.6	28.3	34.2	34.5	32.8	32.4	30.9	—

Click Here to View Key to Areas and Components of the Index and the Weights Assigned to Each

Alberta:Recent Economic Indicators
Population 1996 (in thousands):2,790 Average annual rate of change 1985–1996:1.3 percent
Real per-capita GDP 1996: $26,906 Average rate of economic growth 1985–1990:2.3 percent; 1991–1996:1.2 percent

	1981	1982	1983	1984	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996
Annual change (%) in population		5	3	1	0	1	0	1	2	2	2	2	1	1	1	1
Annual change (%) in real GDP		-2.6	-2.9	5.2	9.0	-1.1	1.0	8.5	0.9	2.4	0.06	0.32	5.7	5.2	2.1	2.5
Annual change (%) in real GDP (average of other provinces)		-3.4	4.9	6.1	3.9	4.1	4.6	4.5	2.6	-.47	-2.0	0.85	1.8	3.9	2.3	1.3
Annual change (%) in real per-capita GDP		-5.6	-3.8	5.2	8.4	-2.2	0.84	7.7	-0.7	0.36	-1.6	1.4	4.2	4.0	0.78	1.1
Annual change (%) in real per-capita GDP (average of other provinces)		-2.7	4.0	3.7	2.5	2.7	2.9	1.8	1.7	0.22	-1.6	-0.2	1.05	2.6	1.06
Ratio of business investment to GDP (%)	32	27	21	18	18	19	20	23	22	22	20	20	22	23	22	21
General government budget deficit (-) or surplus (+) (% of GDP)	+7	+5	+3	+4	+3	-2	-1	0	-2	0	-2	-3	-1	+1	+1
Unemployment rate (%)	3.9	7.7	10.7	11.1	10.1	9.9	9.7	8.1	7.3	7.1	8.3	9.5	9.7	8.6	7.8	7.1

[Previous] [Contents] [Next]

info@fraserinstitute.ca

You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.

Last Modified: Wednesday, October 20, 1999.