MONTREAL, QC- 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
"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-Lévy, the Fraser Institute's Senior Economist, Québec
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
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 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
"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
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."