The Fraser Institute

The Fraser Institute

July 09, 2008 06:00 ET

The Fraser Institute: Quebeckers Among the Least Economically Free Citizens in Canada and Well Behind All US States

MONTREAL, QUEBEC--(Marketwire - July 9, 2008) - Quebec has one of the lowest levels of economic freedom in North America, ahead of only Prince Edward Island, according to a new study from independent research organization the Fraser Institute.

Alberta is the most economically free province in Canada and is second overall in North America, behind only Delaware and tied with Texas. Ontario has Canada's second highest economic freedom ranking, 51st in North America. British Columbia (52nd), Newfoundland (tied for 53rd) and Saskatchewan (tied for 53rd) follow Ontario. Quebec is ranked 59th in North America.

"Economic freedom is one of the main drivers of prosperity and growth. Provinces with low levels of economic freedom reduce the ability of their citizens to prosper economically, leaving people poorer than they need be," said Nathalie Elgrably-Levy, the Fraser Institute's Senior Economist, Quebec et la francophonie.

"Quebec's history of big government, powerful trade unions, and extensive social programs and entitlements are the main reasons why it has one of the lowest levels of economic freedom in North America."

The report points out the clear connection between economic freedom and prosperity. The five provinces with the highest levels of economic freedom had an average per capita GDP in 2005 of $47,472 compared to the five provinces with the lowest levels of economic freedom, where average per capita GDP was $33,579.

The Fraser Institute's peer-reviewed study, Economic Freedom of North America: 2008 Annual Report, measures the impact of economic freedom on the level of economic activity and the growth of economic activity in the 10 Canadian provinces and 50 U.S. states by creating an index utilizing 10 components based on size of government, taxation, and labor market freedom. The complete study is available as a free PDF download at

The Economic Freedom of North America index is an offshoot of the Fraser Institute's Economic Freedom of the World index, the result of two decades of work by more than 60 scholars, including three Nobel Laureates.

The 2008 Economic Freedom of the World report found that Quebec's level of economic freedom dropped slightly in the period between 2000 and 2005. Five provinces improved their levels of economic freedom led by Newfoundland and followed by Alberta, Saskatchewan, BC, and Nova Scotia. Ontario and Prince Edward Island also saw their levels of economic freedom decrease.

"Provinces with high levels of economic freedom are those that tend to have lower taxes, smaller government, and flexible labor markets. These conditions create jobs and opportunities leading to economic growth," said Tasha Kheiriddin, the Fraser Institute's Director for Quebec and la Francophonie.

"If Quebeckers seek to build a more prosperous society and improve the province's standard of living, we are going to have to reconsider the extensive role of government in our province."

The report also found that the beneficial effects of economic freedom are much weaker for Canadian provinces than for American states, primarily due to Canada's fiscal federalism and the structure of the equalization program.

"Low levels of economic freedom reduce economic activity which results in additional federal transfers of money from wealthy provinces to the have not provinces," said Fred McMahon, the report's coauthor and the Fraser Institute's director of globalization studies.

"Since most of these transfers can be captured in the have not provinces by a small group of political and business elites, it creates incentives to limit economic growth and reduce economic freedom in order to maintain the steady stream of federal largesse."

The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

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