News   Mar 28, 2024
 218     0 
News   Mar 28, 2024
 308     1 
News   Mar 28, 2024
 678     0 

Canada dives in economic ranking

A

Are Be

Guest
&nbsp &nbsp &nbsp &nbsp
Friday » October 31 » 2003

Canada dives in economic ranking
Fears of government favouritism blamed for drop from 9 to 16 on competitiveness scale

Steven Edwards &nbsp &nbsp &nbsp &nbsp
CanWest News Service

Thursday, October 30, 2003

NEW YORK - Canadian business chiefs expressed alarm yesterday as a leading international index on competitiveness showed Canada had plunged from ninth to 16th place over the last year.

The Geneva-based World Economic Forum will officially release its 2003-2004 rankings today, saying Canada's fall is mainly caused by a marked decline in the level of confidence business operators have in the government's ability to limit corruption and bias in the public sector.

Of greatest concern to the business operators, according to the Global Competitiveness Report, is "favouritism in decisions of government officials."

The finding follows the admission by five federal Cabinet ministers that they accepted free flights or hospitality from the Irving family, whose many business interests are often subject to government scrutiny and regulation.

"It is a signal that people are unhappy about what they hear, read and see," said Tom D'Aquino, president and CEO of the Canadian Council of Chief Executives, which represents 150 companies.

"We should take no comfort in this result and we should try to do better."

The results of the WEF index contrast sharply with the results of a study last year by the management consulting firm KPMG, which ranked Canada as the leading cost-competitive country among the most advanced industrial economies.

Citing that report, André Lemay, a spokesman for the Department of Foreign Affairs and International Trade, said the index should be "taken with a grain of salt."

But the stature of the WEF, whose annual meetings in Davos, Switzerland, bring together world political, business and academic leaders, means that the new study will be taken seriously by potential investors around the globe.

"If you are on the edge of trying to decide, 'Well, should I pay some attention to Canada or not,' then something like this could turn you off," said Mr. D'Aquino, who has represented his organization at the past 17 WEF annual meetings, and will attend the next one in January.

Addressing the forum last January, Allan Rock, the Industry Minister, showed that he considers the WEF index a valid indicator of how the government is performing.

In his speech, he used the index's 2000 first-place ranking of Canada for its educated labour force as vindication of the government's "ambitious new agenda to promote skills."

Spokespeople for both Mr. Rock and his department did not return calls yesterday for comment about the latest index and Canada's poor showing.

The WEF index ranks 95 countries on factors relating to technology, public institutions and the macro-economic environment.

Finland retains its position as the most competitive country, according to the index, while the United States returns in second place. Among non-Western countries that have secured a spot above Canada are Taiwan, which is fifth, and Singapore, which is sixth. Malta, the tiny Mediterranean island state that will join the European Union next year, is just three spots below Canada.

Canada is not alone in slipping because of what WEF calls a "decline in quality of public institutions." Britain dropped for similar reasons, from 11th to 15th.

"If there is one lesson to be drawn from our exercise, it is that the strength of the coherence of government policies has an enormous bearing on the country's ranking," said Dr. Augusto Lopez-Claros, WEF chief economist.

The WEF's assessment of the government's ability to run a transparent public sector is based on a survey of 75 chief executive officers across the country.

Despite the relatively small sampling, the result is not inconsistent with Canada's slippage in another recent poll on corruption, this one conducted by the German non-governmental organization Transparency International. Canada dropped from seventh in 2002 to 11th this year in that survey, which was based on the perceived corruption of politicians and public officials in 133 countries.

One official attributed the drop to scandals involving current and former prime ministers, members of Parliament and Canadian companies, saying such incidents were tarnishing the country's image.

The WEF questionnaire on government controls was put to the CEOs between January and June. On corruption, it asked them to assess how common are bribes when they seek import and export permits, connection to utilities such as water and electricity, or finalization of annual tax payments.

On other dealings with the government, it asked the CEOs to assess the independence of the judiciary from political influence, the level of legal protection of assets, and the degree to which government officials may be biased when awarding public contracts.

On the specific ranking for corruption, Canada was 25th in the world in the survey results. On the questions touching on contracts and law, Canada was 26th.

Mr. D'Aquino, whose organization used to conduct the survey in Canada on behalf of WEF, said he cannot believe its results reflect the reality, especially given Canada's strong economic performance over the past few years.

But he said it does illustrate how news of scandals can create impressions that might be harmful to the economy. Although the ethics commissioner has exonerated each of the Cabinet ministers who participated in the Irving family fishing expedition, concern remains over the propriety of their accepting such favours.

"Anything that is going to be published worldwide, I have to take very seriously," Mr. D'Aquino said of the WEF index. Mr. D'Aquino said he will try to set the record straight by calling Klaus Schwab, president and founder of WEF.

He will also note the Business and Intelligence Unit of the leading economics magazine The Economist recently rated rated Canada the best country in the world in which to do business over the next five years.
© Copyright 2003 National Post



Copyright © 2003 CanWest Interactive, a division of CanWest Global Communications Corp. All rights reserved.
Optimized for browser versions 4.0 and higher.
 
Perhaps a more interesting fact to note is how the Nordic countries, with their socialist policies, actually fared rather well on the competitive ranking. So much for that high taxes = economic stupor nonsense. It's competence that counts.

GB
 
Hmmm, from first to 16th place in 3 years, with no change in government, no change in economic policy, very little change in taxes and no big economic shakeup. Something suggests that this evaluation is a bit too sensitive to subtle variations.

Or... maybe its a complete pile of crap produced by a bunch of publicity hungry economists? It's really a bit obvious. Every year the US is second - that makes it interesting because the layman would assume that the economic superpower is the most competitive. Also, a tiny little Nordic country tops the list because that shows left/right balance. Beyond that the authors just use the study as a vehicle to vent their spleens over whatever government practices they don't like.

Safely ignored.
 

Back
Top