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Economic Freedom of the Arab World: 2016 Annual Report

Economic Freedom of the Arab World aims to provide a reliable and objective metric of economic policy throughout the Arab World. It measures the extent to which citi-zens of the nations of the Arab League are able to make their own economic decisions without limitations imposed by the government or by crony elites. The report provides sound empirical measurement of economic policy that can distinguish between phony reform that leaves economic and political power in the hands of crony elites, and real reform that creates new prosperity, entrepreneurship, and jobs, by opening business and work opportunities for everyone no matter whom they know.

Arab and Islamic societies have a rich trading tradition, one that celebrates mar-kets open even to the humblest members of society. Economic freedom is consistent with that proud history and provides a path to a more prosperous and freer tomorrow. Economic freedom is simply the ability of individuals and families to take charge of their fate and make their own economic decisions—to sell or buy in the marketplace without discrimination, to open or close a business, to work for whom they wish or hire whom they wish, to receive investment or invest in others.

As discussed later in this report, economic freedom has a proven fact-based record of improving the lives of people, liberating them from dependence, and leading to other freedoms and democracy. Unfortunately, many in the Arab world believe their nations have already gone through a period of free-market reform and that it hasn’t worked. This misconception deprives many of an economic alternative and vision for the future.

In fact, reform was frequently phony. Economic “reform” before the Arab Spring was all too often crony capitalism dressed up in the language of free markets. In many nations, it simply replaced elite control of the economy through government with elite control through crony capitalism—handing off state assets, monopolies, and other rent-seeking opportunities to friends, supporters, and relatives of the regime. Rather than releasing entrepreneurial drive, it protected privilege. Yet, governments in the region and international institutions like the International Monetary Fund promoted this as “free market” reform. An examination of the tables in this report will show little or no real reform in many nations in most areas of economic policy.

However, the tables do show apparent progress in some nations in divesting state enterprises and opening up the market through privatization. This has often been illusionary. The old elites simply took the “privatized” assets and continued their control of the economy under crony capitalism. This is the very opposite of economic freedom, with the rich and the powerful suppressing the freedom and opportunity of others.

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The Human Freedom Index, 2016

The index published here presents a broad measure of human freedom, understood as the absence of coercive constraint. It uses 79 distinct indicators of personal and economic freedom in the following areas:

  • Rule of Law
  • Security and Safety
  • Movement
  • Religion
  • Association, Assembly, and Civil Society
  • Expression
  • Relationships
  • Size of Government
  • Legal System and Property Rights
  • Access to Sound Money
  • Freedom to Trade Internationally
  • Regulation of Credit, Labor, and Business

The Human Freedom Index (HFI) is the most comprehensive freedom index so far created for a globally meaningful set of countries. The HFI covers 159 countries for 2014, the most recent year for which sufficient data are available. The index ranks countries beginning in 2008, the earliest year for which a robust enough index could be produced.

On a scale of 0 to 10, where 10 represents more freedom, the non-weighted average rating for 159 countries in 2014 was 6.93. The level of global freedom stayed about the same compared to 2008, but almost all countries experienced changes in their ratings, with about half of those increasing their ratings and half decreasing.

The top 10 jurisdictions in order were Hong Kong, Switzerland, New Zealand, Ireland, Denmark, Australia (6), Canada (6), the United Kingdom (6), Finland (9), and the Netherlands (10). The United States is ranked in 23rd place. Other countries rank as follows: Germany (13), Chile (29), France (31), Japan (32), Singapore (40), South Africa (74), Brazil (82), India (87), Russia (115), Nigeria (140), China (141), Saudi Arabia (144), Zimbabwe (148), Venezuela (154), and Iran (157).

Out of 17 regions, the highest levels of freedom are in Western Europe, Northern Europe, and North America (Canada and the United States). The lowest levels are in the Middle East and North Africa, South Asia, and sub-Saharan Africa. Women’s freedoms, as measured by seven relevant indicators in the index, are strongest or least repressed in Europe and North America and least protected in the Middle East and North Africa, South Asia, and sub-Saharan Africa.

Countries in the top quartile of freedom enjoy a significantly higher per capita income ($37,147) than those in other quartiles; the per capita income in the least-free quartile is $8,700. The HFI finds a strong correlation between human freedom and democracy. Hong Kong is an outlier in this regard.

The findings in the HFI suggest that freedom plays an important role in human well-being, and they offer opportunities for further research into the complex ways in which freedom influences, and can be influenced by, political regimes, economic development, and the whole range of indicators of human well-being.

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Waiting for treatment has become a defining characteristic of Canadian health care. In order to document the lengthy queues for visits to specialists and for diagnostic and surgical procedures in the country, the Fraser Institute has—for over two decades—surveyed specialist physicians across 12 specialties and 10 provinces.

This edition of Waiting Your Turn indicates that, overall, waiting times for medically necessary treatment have in-creased since last year. Specialist physicians surveyed report a median waiting time of 20.0 weeks between referral from a general practitioner and receipt of treatment—longer than the wait of 18.3 weeks reported in 2015. This year’s wait time—the longest ever recorded in this survey’s history—is 115% longer than in 1993, when it was just 9.3 weeks.

There is a great deal of variation in the total waiting time faced by patients across the provinces. Ontario reports the shortest total wait (15.6 weeks), while New Brunswick reports the longest (38.8 weeks). There is also a great deal of variation among specialties. Patients wait longest between a GP referral and Neurosurgery (46.9 weeks), while those waiting for Medical oncology begin treatment in 3.7 weeks.

The total wait time that patients face can be examined in two consecutive segments.

From referral by a general practitioner to consultation with a specialist. The waiting time in this segment increased from 8.5 weeks in 2015 to 9.4 weeks this year. This wait time is 155% longer than in 1993, when it was 3.7 weeks. The shortest waits for specialist consultations are in Ontario (7.2 weeks) while the longest occur in New Brunswick (21.5 weeks).

From the consultation with a specialist to the point at which the patient receives treatment. The waiting time in this segment increased from 9.8 weeks in 2015 to 10.6 weeks this year. This wait time is 88% longer than in 1993 when it was 5.6 weeks, and more than three weeks longer than what physicians consider to be clinically “reasonable”. The shortest specialist-to-treatment waits are found in Saskatchewan (7.9 weeks), while the longest are in Nova Scotia (17.7 weeks).

It is estimated that, across the 10 provinces, the total number of procedures for which people are waiting in 2016 is 973,505. This means that, assuming that each person waits for only one procedure, 2.7% of Canadians are waiting for treatment in 2016. The proportion of the population waiting for treatment varies from a low of 1.6% in Quebec to a high of 5.8% in Nova Scotia. It is important to note that physicians report that only about 10.8% of their patients are on a waiting list because they requested a delay or postponement.

Patients also experience significant waiting times for various diagnostic technologies across the provinces. This year, Canadians could expect to wait 3.7 weeks for a computed tomography (CT) scan, 11.1 weeks for a magnetic resonance imaging (MRI) scan, and 4.0 weeks for an ultrasound.

Research has repeatedly indicated that wait times for medically necessary treatment are not benign inconveniences. Wait times can, and do, have serious consequences such as increased pain, suffering, and mental anguish. In certain instances, they can also result in poorer medical outcomes—transforming potentially reversible illnesses or injuries into chronic, irreversible conditions, or even permanent disabilities. In many instances, patients may also have to forgo their wages while they wait for treatment, resulting in an economic cost to the individuals themselves and the economy in general.

The results of this year’s survey indicate that despite provincial strategies to reduce wait times and high levels of health expenditure, it is clear that patients in Canada continue to wait too long to receive medically necessary treatment.

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One Energy Boom, Two Approaches: Fiscal Restraint Has Left Texas in Better Shape than Alberta

Prior to the recent fall in energy prices, the economies of Alberta and Texas enjoyed prolonged economic booms.

The booms began in earnest in 2004, when real economic growth in the two jurisdictions reached approximately 5 percent. Although there have been significant fluctuations in the years since, both jurisdictions generally enjoyed enviable economic performance between 2004 and 2014.

Although both Alberta and Texas both experienced prolonged booms between the start of the energy price rally in 2004 and the downturn in com­modity prices starting in late 2014, there are important differences between the two jurisdictions’ economic experiences both during the years of the boom itself and in very recent years since energy prices fell.

This paper examines the similarities and differences between the two jurisdictions’ experience in recent years, both in terms of overall economic performance and in terms of successful management of public finances by their governments.

We find that Texas enjoyed slightly faster growth in terms of gross domestic product per capita, while Alberta produced a slightly faster rate of job creation. Each jurisdiction has some metrics on which it outperformed the other but, on the whole, we conclude that the two jurisdictions enjoyed comparably strong overall economic performance.

By contrast, we find that there was a marked difference between Alberta and Texas in terms of how successfully their governments managed public finances during the 2004–2014 period. Program spending per person in Alberta increased by 49 percent during this timeframe, compared to 37.3 percent in Texas. Further, public sector employment growth was approxi­mately twice as rapid in Alberta (2.6 percent) as in Texas (1.2 percent).

The absence of spending discipline in Alberta led to a string of budget deficits, something which did not occur in Texas. As a result, Alberta saw significant erosion in its financial position during this period. In 2006/07, Alberta held net assets representing 12.4 percent of provincial GDP. By 2013/14, provincial net assets had declined to 2.9 percent of GDP. By contrast, Texas saw very little change in its financial asset position during this period.

Problematically, this decline in Alberta’s assets was occurring during a period when commodity prices and provincial resource revenue were gener­ally high. In this report, we document the extent to which these developments put the province in a precarious financial position, such that when energy prices did fall, the province’s budget deficit ballooned and its pace of asset erosion increased quickly. The province will this year become a net debtor for the first time since 2000/2001, and is projected to see a rapid run-up in debt over the next several years. By contrast, Texas—thanks largely to more prudent fiscal management during the boom years—faces no similar run-up in debt and generally brighter fiscal prospects.

Although Alberta’s economy is much more diversified than some car­toonish descriptions of the province as a “petro state” suggest, the province nonetheless relies heavily on its energy sector as a major driver of economic growth. This means Alberta is more prone to pronounced economic booms and slumps than most other jurisdictions.

This feature of the Albertan economy makes it especially important for governments to manage public finances cautiously and prudently during good economic times in preparation for revenue dips and other challenges. The evidence presented here shows that successive Alberta governments did not meet this test during the recent boom.

Alberta and Texas are now on very different fiscal trajectories, as Texas’ financial position is comparatively strong while Alberta faces a potentially costly and economically damaging run-up in debt. One can hope that when Alberta’s economy does recover and begins to grow strongly again, policy­makers will have learned the lesson from this energy price cycle and will manage the province’s finances more prudently during good times, in order to avoid painful fiscal consequences in the future similar to those the prov­ince is confronting today.

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Regulation and Funding of Independent Schools: Lessons from Sweden

As the share of students attending independent schools across Canada increases, the regulatory context of these non-government schools becomes increasingly relevant. Innovation, performance, and efficiency in this education sector can be enhanced by appropriate regulation and funding—or hindered by onerous or inappropriate regulation and funding—and thus other countries with long histories in independent schooling have lessons for Canada. Sweden’s experience is the focus of this paper.

Since Sweden embarked on its educational reforms in the early 1990s, its independent schooling sector developed and matured to the point where the share of students in Sweden enrolled in independent schools has increased significantly, rising from less than 2 percent in 1992 to 14.1 percent in primary and lower secondary grades and to 25.1 percent in the upper secondary grades in 2014.

Indeed, during this period education in Sweden was fundamentally transformed from one of the most centralized education systems in the OECD to one of the most decentralized. Funding was decentralized from the national to the municipal level, public school choice opportunities increased, and a national voucher system allowed for-profit and non-profit independent elementary and secondary schools to receive funding equivalent to 100 percent of the per-student allocation for average operating costs at local municipal schools.

Perhaps surprisingly, the most significant independent school enrolment growth occurred in the for-profit sector. In all, 64 percent of elementary and lower-secondary independent school students and 85 percent of upper-secondary independent school students attend for-profit schools. Thus, not only do independent schools in Sweden attract one in seven lower-grade students and one in four upper-secondary students in the country, but the vast majority of those students attend for-profit institutions.

For-profit independent schools tend to enrol, on average, more students from lower socioeconomic backgrounds compared with non-profit independent schools. Currently, the ten largest chains of for-profit schools enrol 36 percent of all independent school students.

The growth of independent schools has led to beneficial results. Research has indicated that the performance of independent school students, as well as the competitive presence of independent schools, has moderated, rather than exacerbated, the decline in Sweden’s student performance on international standardized tests.

Both for-profit and non-profit independent schools are heavily regulated in Sweden. Independent schools are required to follow the national curriculum, use progressive pedagogical approaches, meet instructional time requirements for each subject (at the elementary and lower-secondary level), hire certified teachers, and be regularly inspected by both national and municipal inspectorates, and they may not be selective in the students they enrol. Students must participate in national proficiency tests in grade 3, 6, and 9 (and additional ones in upper secondary school).

Countries like Canada have much to learn from Sweden’s experience. Lessons from Sweden include:

1. Parity of public funding

Sweden’s precedent of funding independent schools at 100 percent (of the allocation for per-pupil operating expenditure in local government schools) is worth consideration. Although buildings and other capital assets are not funded, and thus full funding of independent schools is not achieved, a more level playing field for the schools and the families that choose them is created.

2. Ownership neutrality

For-profit independent schools should not only be permitted, but they should also be eligible for funding equivalent to non-profit independent schools, as they have stronger economic incentives and opportunities to start new schools, scale up excellent schools, and crowd out poorer performing schools. Sweden’s experience with this practice is almost unique in the world and should be considered.

3. Output accountability

It is important to learn from the lack of good information and output accountability of student performance in the Swedish system. Publishing output measures in terms of academic achievement, especially if constructed to generate value-added measures at the school level, as well as measures of parent satisfaction, gives parents and inspectors better information and holds all schools accountable.

4. Avoid onerous curricula and input regulations

Restrictive requirements on inputs (as is the case in Sweden) for curricula, pedagogy, and teacher certification should be minimized. Independent schools need flexibility in the professionals they hire and the curriculum and approaches to teaching they use. This mitigates the monopoly on teacher certification and protects against having to adopt harmful practices across the jurisdiction.

5. A depoliticized approval process

Sweden’s practice of allowing local competitors a say in the approval process for new or expanding independent school applicants should not be mimicked. Provincial level registrations, accreditations, or approvals (or the equivalent) would ensure a more arm’s length approval process.

6. Selection practices and top-up fees

Although independent schools in Sweden may neither use selective practices when enrolling students nor charge top up fees, more research is needed to consider the potential benefits of these practices.

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Why First Nations Succeed

The status of Canada’s First Nations is widely debated, but the debate is often based on abstract visions rather than actual evidence. Against the backdrop of the world-wide research findings on governance and economic progress, this paper marshals the empirical evidence on the factors that improve the well-being of Canada’s First Nations. Specifically, it synthesizes the results of eight studies that have used the Community Well-Being (CWB) Index as a measure of outcomes. The CWB, computed every five years by Indigenous and Northern Affairs Canada, aggregates census data on income, employment, education, and housing in First Nation communities. The First Nations CWB average is about 20 points lower than for other Canadian communities, but there is tremendous variance among First Nations, creating the possibility of using empirical research to find what correlates with higher CWB scores.

The eight studies synthesized here highlight the importance of governance. First Nations tend to have higher CWB scores if they run stable governments with leaders serving long terms, pay their leaders less than other First Nations of comparable size, stay out of third-party management, and take advantage of ways to escape the strictures of the Indian Act, such as creating their own property taxes and entering the First Nations Land Management Agreement. Custom governments and Indian Act governments experience similar levels of success; what matters is what governments do, not how they are chosen.

Economic strategies are also important. Successful First Nations take advantage of their main economic assets, which are land, location, and natural resources. This means adopting an open and welcoming attitude toward other elements in Canadian society as they seek investors, customers, and professional advisers. Successful First Nations enter into partnerships with investors in real estate developments, both residential and commercial. They are particularly strong in attracting customers to their entertainment and hospitality industries, featuring casinos, hotels, restaurants, golf courses, and marinas. Where possible, these nations develop natural resources in agriculture, energy, and mining. Though they follow community-based strategies under their political leadership, they also encourage private initiative with Certificates of Possession, which are particularly useful in improving the quality of housing for band members.

Not all First Nations start with the same advantages. Everywhere in Canada, it is advantageous to be located near a city or town, which brings many economic opportunities. First Nations in British Columbia, southern Ontario and Quebec, and the Atlantic provinces have on average achieved higher CWB scores than those in the Prairie provinces or in northern Ontario. The causal explanations for these differences remain to be established, but the statistical evidence shows that they include the general applicability of good governance combined with economic strategies to capitalize on available assets.

It is striking that the measurable progress achieved by First Nations is not a result of government programs. It comes from self-determination: taking control of their own affairs and making the most out of their assets. The most effective government intervention has been legislation to remove roadblocks and create opportunities that First Nations can exploit under their own initiative.

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Report Card on Quebec's Secondary Schools 2016

The Report Card on Quebec’s Secondary Schools 2016 ranks 459 public, private, Francophone and Anglophone schools based largely on the results from provincewide tests in French, English, science, mathematics and history. The Report Card provides parents and educators with objective information that’s difficult to find anywhere else, which is why it’s the go-to source for school performance in Quebec.

To see the detailed results of all schools ranked, go to compareschoolrankings.org.

The below PDF document contains both French and English.

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Comparing the performance of different countries’ health-care systems provides an op-portunity for policy makers and the general public to determine how well Canada’s health-care system is performing relative to its international peers. Overall, the data ex-amined suggest that, although Canada’s is among the most expensive universal-access health-care systems in the OECD, its performance is modest to poor.

This study uses a “value for money approach” to compare the cost and perfor-mance of 28 universal health-care systems in high-income countries. The level of health-care expenditure is measured using two indicators, while the performance of each country’s health-care system is measured using 42 indicators, representing the four broad categories:

  • availability of resources
  • use of resources
  • access to resources
  • quality and clinical performance

Five measures of the overall health status of the population are also included. However, these indicators can be influenced to a large degree by non-medical determinants of health that lie outside the purview of a country’s health-care system and policies.

Expenditure on health care
Canada spends more on health care than the majority of high-income OECD countries with universal health-care systems. After adjustment for age, it ranks third highest for expenditure on health care as a percentage of GDP and fifth highest for health-care ex-penditure per capita.

Availability of resources
The availability of medical resources is perhaps one of the most basic requirements for a properly functioning health-care system. Data suggests that Canada has substantially fewer human and capital medical resources than many peer jurisdictions that spend comparable amounts of money on health care. After adjustment for age, it has signifi-cantly fewer physicians, acute-care beds and psychiatric beds per capita compared to the average OECD country (it ranks close to the average for nurses). While Canada has the most Gamma cameras (per million population), it has fewer other medical technologies than the average high-income OECD country with universal health care for which comparable inventory data is available.

Use of resources
Medical resources are of little use if their services are not being consumed by those with health-care demands. Data suggests that Canada’s performance is mixed in terms of use of resources, performing higher rates than the average OECD country on about half the indicators examined (for example, consultations with a doctor, CT scans, and cataract surgery), and average to lower rates on the rest. Canada reports the least amount of hospital activity (as measured by discharge rates) in the group of countries studied.

Access to resources
While both the level of medical resources available and their use can provide insight into accessibility, it is also beneficial to measure accessibility more directly by examining measures of timeliness of care and cost-related barriers to access. Canada either ranked last or close to last on all indicators of timeliness of care, but ranked in the middle on the indicator measuring the percentage of patients who reported that cost was a barrier to access.

Quality and clinical performance
When assessing indicators of availability of, access to, and use of resources, it is of criti-cal importance to include as well some measure of quality and clinical performance in the areas of primary care, acute care, mental health care, cancer care, and patient safety. While Canada does well on four indicators of clinical performance and quality (such as rates of survival for breast and colorectal cancer), its performance on the seven others examined in this study are either no different from the average or in some cases—particularly obstetric trauma and diabetes-related amputations—worse.

The data examined in this report suggests that there is an imbalance between the value Canadians receive and the relatively high amount of money they spend on their health-care system. Although Canada has one of the most expensive universal-access health-care systems in the OECD, its performance for availability and access to re-sources is generally below that of the average OECD country, while its performance for use of resources and quality and clinical performance is mixed.

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New Homes and Red Tape in Alberta: Residential Land-Use Regulation in the Calgary-Edmonton Corridor

As an increasing number of people move to major Canadian cities, housing prices have continued to rise in its most desirable markets. Understanding how public policy affects the supply of new homes is critical. The Fraser Institute’s survey of housing developers and homebuilders provides new insight into this issue. New Homes and Red Tape in Alberta: Residential Land-Use Regulation in the Calgary-Edmonton Corridor is part of a series of publications tallying the data to represent industry professionals’ experiences and opinions of how residential development is regulated in cities across Canada. This report presents survey results for cities in Alberta’s Calgary-Edmonton Corridor (CEC).

We found disparate estimates of typical project-approval timelines in CEC cities: estimates range from 5.7 months in the Municipal District of Foothills No. 31, and 6.1 months in Strathmore to 15.1 months in Rocky View County and 18.1 months in Strathcona County.

Typical approval timelines in Calgary and Edmonton, the CEC’s two largest cities, are comparable, at 13.5 months and 12.9 months, respectively, although Calgary’s are among the region’s most uncertain. Calgary’s average reported impact of timeline uncertainty is rivaled only by Rocky View and Strathcona Counties. In Edmonton, our survey suggests the impact of timeline uncertainty is in the middle of the pack, while results for Foothills No. 31 and Strathmore on this measure are particularly encouraging.

Reported compliance costs and fees add up to a low of $12,250 per home built in Foothills No. 31 and a high of $51,000 per home in Strathcona County. Calgary and Edmonton rank closer to the regional average: reported compliance costs for Calgary are $27,625 per new home; for Edmonton, $32,273.

The survey reports that properties need to be rezoned to accommodate more than 50% of new residential development in all but two municipalities (High River and Foothills No. 31). Estimates of rezoning’s effect on approval timelines range from under two months in Red Deer to 14.7 months in Rocky View County.

Opposition from the Council and community to residential development is perceived as strongest in cities where dwelling values are highest, raising questions about the causes and consequences of local resistance to new housing. The strongest opposition is reported in Rocky View County. Opposition from Council and community is typically not perceived as a deterrent to building in Strathmore, Cochrane, and Okotoks.

The publication provides a summary index of residential land-use regulation that is calculated by tallying across five key components of regulation’s impact—Approval Timelines, Cost and Fees, Council and Community, Timeline Uncertainty, and Rezoning Prevalence—in the twelve cities that generated a sufficient number of survey responses. This index ranks Strathmore as the least regulated and Strathcona County as the most. Calgary comes in below average in all categories and is the third most-regulated city ranked overall, while Edmonton ranks closer to the regional average.

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The Importance of International Trade to the Canadian Economy: An Overview

In 2015, exports accounted for 31.5% of GDP, up from 25% before Canada signed a series of free trade agreements starting in 1988. Exports were 36% of GDP before the global recession began in 2008. Value-added exports, which subtract the imports embedded in exports, represented 22.2% of GDP.

Exports directly and indirectly accounted for 2,942,400 jobs in Canada in 2011 according to Statistics Canada, or 16.7% of all employment.

Imports were the equivalent of 33.8% of GDP in 2015. About 26% of imports are used as inputs into production in Canada, notably in export-intensive sectors like autos and high-tech. The effective tariff rate on imports is 1%, down from 3.5% before the push to more free trade began in the late 1980s.

Trade overwhelmingly is still oriented to the United States. The stagnation of exports to Europe and Japan in recent years was offset by increases to Asia. Because Canada exports to Asia, notably natural resources, it has a relatively small trade deficit with Asia compared with the US. Canada has little direct trade with Mexico.

Both exports and imports are beneficial to economic growth, largely by boosting productivity. Firms in Canada that export have significantly higher productivity than firms that do not export. Imports of intermediate inputs contributed over half of Canada’s recent productivity growth. However, trade does create winners and losers, which has fuelled protectionist sentiment.
 

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