Alberta, fortis et liber. Ontario, not so much…

The BC-based Fraser Institute and the National Centre for Policy Analysis in Dallas have released the 2004 Annual Report on Economic Freedom of North America. The report casts a critical eye on all 50 U.S. states and the 10 Canadian provinces (sorry, no territories were surveyed), using the following criteria to determine the economic freedom rating for each jurisdiction:

“The study rates economic freedom on a 10-point scale for two indexes. An all-government index captures the impact of restrictions on freedom by all levels of government. A sub-national index captures the impact of restrictions by state or provincial and local governments.”

What is remarkable about this years analysis is that for the first time a Canadian province has finished in the top ten of a survey index. Alberta, which had scored much lower in previous years, leap-frogged all the way to tenth place on the all-government index, behind chart topping Delaware, and economic powerhouses such as New Hampshire (5th) and South Dakota (6th). The survey based Alberta’s strong performance on the province’s high per-capita GDP, falling unemployment rates, and the relatively low level of government expenditures.

With it’s top-ten performance Alberta far outpaced the number two province, Ontario, who placed 51st out of the 60 states and provinces surveyed. It’s not surprising then that bringing up the rear are the remainder of the Canadian provinces, with Newfoundland and Labrador finishing runner-up to PEI as the jurisdictions with the least economic freedom in North America.

The authors of the survey chalk up this sub-par performance by the Canadian provinces to an over-dependence on transfer payments from wealthy regions of the country (Alberta) to sustain their economies. This in turn lessens the incentive for fostering competitiveness within the provincial economies.

Despite Alberta’s breakthrough in to the top-ten on the all-government index, the province did not fare as well on the sub-national index, placing 25th. Noting the province’s “middling level of economic activity within the North American context,” the authors of the survey contend that in this regard, Alberta is “hardly the star performer usually visualized in Canada.”

While the survey both complemented and criticzed Alberta’s performance over the past year, the strongest criticism of all was saved for Ontario. The authors of the survey contend that despite being considering “Canada’s industrial heartland”, Ontario’s prosperity is far below that of “the advanced, industrial US states.”

The authors also point out that when Ontario’s prosperity is compared to that of the US states, the province is barely able to out pace West Virginia and Mississippi, the poorest states in the Union. The authors summarize the plight of Ontario in this fashion:

“…[O]ne would never think of calling West Virginia or Mississippi an economic powerhouse even though their levels of prosperity are similar to Ontario’s.”

This criticism aside, the report notes that in comparision to the rest of the country, Ontario and Alberta still enjoy relatively high economic freedom, and that their respective economies will continue to be the benefactors.

The 2004 Annual Report on Economic Freedom of North America is available at http://www.freetheworld.com