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Think Creative. Think Competitive. Think Bottom Line. Think Canada. August-September 2010

Think Creative. Think Competitive. Think Bottom Line. Think Canada. August-September 2010. Table of Contents.

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Think Creative. Think Competitive. Think Bottom Line. Think Canada. August-September 2010

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  1. Think Creative.Think Competitive.Think Bottom Line. Think Canada. August-September 2010

  2. Table of Contents PageIExcellent Economic Fundamentals 3II A Cost-Competitive Business Environment 12III A Dynamic Workforce 25IV A Solid Infrastructure 33V Easy Access to Markets 39 VI An Excellent Place to Live 44

  3. I Excellent Economic Fundamentals

  4. 2010-11 Canada has a Relatively Strong Economy Despite the Global Slowdown Consensus Economics • According to Consensus Economics, Canada has been a top performer among the G7 in GDP growth over the 2006-09 period and is expected to remain so through 2010-11. 2006-09 4 Source: Consensus Forecasts, August 2010, Consensus Economics Inc.

  5. 2010-11 Other Forecasts also Highlight Canada’s Relatively Strong Economy OECD • Similarly, recent OECD statistics rank Canada as a top performer among G7 countries in terms of GDP growth during the 2006-09 period and the best during the 2010-11 forecast period. 2006-09 5 Source: OECD Economic Outlook, No. 87, May 2010.

  6. Canada also has Superior Employment Growth… • Strong economic growth and rising demand for Canadian commodities over the last decade, combined with provincial and federal policies to improve the flexibility and adaptability to the changing workplace, have helped generate healthy gains in employment. Source: U.S. Bureau of Labour Statistics, OECD Economic Outlook, No.87, May 2010

  7. …a Sound Fiscal Advantage • Canada has enjoyed eleven consecutive annual federal budget surpluses ending in 2007-08; it has undertaken one of the largest stimulus packages among developed economies in the current global economic downturn. • In Budget 2010, Canada has chosen to run short deficits to stimulate its economy without putting long-term prosperity at risk and is expected to return to balanced budgets in the medium term. • Over the coming years, Canada’s net debt-to-GDP ratio will remain the lowest in the G7 by a wide margin with a return to a surplus predicted shortly following the 2014-15 fiscal year. * Forecasts for both countries Source Canada: The Federal Budget, Finance Canada, March 4, 2010 Source United States: United States Congressional Budget Office, March 5, 2010. 7

  8. 2008 2009-11 …Leading Most Other G-7 Countries • Canada was the only G7 country to post a surplus in 2008. Despite being in an overall deficit position during the 2009-2011 period, Canada will be in a far better position than most G7 member countries. Source: OECD Economic Outlook, No.87, May 2010

  9. …a Low Inflation Rate Regime… • A low inflation environment provides business certainty for investors. Canada’s targeted inflation rate range between 1% and 3% has been extended until 2011. • Over the past five years, Canada has enjoyed relatively low inflation – averaging 1.8% compared to 2.6% for the U.S. and 1.8% for the G7. Source: OECD Economic Outlook, No. 87, May 2010

  10. ….Low Interest Rates • Canada’s solid fiscal situation and low inflation has led to lower interest rates. • The sharp decline in interest rates in both Canada and the U.S. in early 2009 were a consequence of the global economic downturn. Rates in the U.S. were lowered more than in Canada because of the greater severity of the slump in the U.S. economy. Canada U.S. Canada U.S. Source Canada: Government of Canada 10-Year Bond: September 10, 2010 Source U.S.: U.S. Treasury, Constant Maturity 10-Year Bond: September 10, 2010

  11. …and Great Potential for Future Economic Prosperity According the Prosperity Potential Index*, Canada ranks 1st in the G7 and 6th among 30 developed countries in terms of the likelihood for economic prosperity in the year 2020. * The Prosperity Potential Index measures the likelihood of economic prosperity in the year 2020 for 30 developed countries. The ranking is based on data from the OECD on areas that spark future economic development: demographics, trade, energy, technology and education. Source: Canadian Business Magazine, October 26, 2009 11

  12. II A Cost-CompetitiveBusiness Environment

  13. Canada’s Positive Business Climate… • Canada understands the importance of its business community and has created an environment to encourage its success. • Canada is the best place for doing business among the G7 over the next five years according to the Economist Intelligence Unit and it ranked fourth overall out of 82 countries in the Economist Intelligence Unit’s global business rankings for the forecast period (2010-14), down slightly from third from the historical period (2005-2009). • The country also ranks well for its infrastructure, market opportunities, low taxes, and foreign trade and exchange controls. Source: The Economist Intelligence Unit, August 2010

  14. …is a Safe Haven for Business Investment… According to Dun & Bradstreet’s Global Risk Indicator (GRI)*, Canada is considered one of the world’s safest countries to invest, due to the relatively mild slowdown experienced as a result of the global credit crisis. Despite being earmarked as having a deteriorating outlook, Canada ranks 1st in the G7 and 2nd among the 131 countries evaluated in the GRI study. • The Global Risk Indicator (GRI) assesses economic, commercial, external and political risk to provide risk ratings for 131 countries worldwide. • Source: Dun & Bradstreet, August 2009 14

  15. …Involving Relatively Few Steps in Establishing a Business… • Regulations pertaining to the creation of new businesses are considerably more flexible in Canada than those in the rest of the G7. • Canada ranks first among the G7 and OECD countries for the lowest number of procedures required to establish a new business. Source: Doing Business in 2010 - The World Bank Group, 2009 * A "procedure" is defined as any interaction of the company founder with external parties (government agencies, lawyers, auditors, notaries, etc). Interactions between company founders or company officers and employees are not considered as separate procedures. For example, an inauguration meeting where shareholders elect the directors and secretary of the company is not considered a procedure, as there are no outside parties involved.

  16. …and Relatively Less Time • Canada ranks first among the G7 for the fewest number of days required for establishing a new business. Source: Doing Business in 2010- The World Bank Group, 2009

  17. Canada also has Low Business Costs… • For the eighth consecutive time, KPMG’s Competitive Alternatives study finds Canada leads the G7 with the lowest business costs. • Canada is the lowest-cost G7 country in 14 of the 17 industries analyzed by KPMG’s Competitive Alternatives 2010 report: aerospace, agri-food, automotive, chemicals, electronics, medical devices, pharmaceuticals, precision manufacturing, telecommunications, back office/call centres, software design, web and multimedia, biotechnology and product testing. Source: KPMG Competitive Alternatives 2010

  18. …and Offers an Overall Tax Advantage for Firms to Expand… • As a result of corporate income tax reductions introduced by the Government since 2006, Canada will have the lowest statutory corporate tax rate in the G7 by 2012. • Canada is on track to having the lowest overall tax rate on new business investment (marginal effective tax rate (METR*)) in the G7 in 2010. Source: The Federal Budget, Finance Canada, March 4, 2010 and the OECD Tax Database. * METR takes into account federal and provincial statutory corporate income tax rates, deductions and credits available in the corporate tax system and other taxes paid by corporations, including provincial capital taxes and retail sales taxes on business inputs.

  19. …with Quality R&D as its Major Benefit • Canada offers one of the most favorable tax treatments for R&D among the G7. • Canada provides a system of tax credits and accelerated tax deductions for a wide-variety of R&D expenditures. • Eligible costs include: salaries, overhead, capital equipment, and materials. • These tax-based incentives permit firms to significantly reduce R&D costs through direct investment or sub-contracting in Canada. Source: Warda, Jacek, Rating Measuring Canada's R&D Tax Incentives: May 22, 2009 Note: Relative generosity is determined by dividing the after tax cost of performing $1.00 of R&D by 1 less the corporate tax rate. Results are indexed to the relative generosity of Canada's system of tax-based support for R&D. The higher the ratio the more competitive the tax system. * Calculations based on large firms

  20. Canada Offers Competitive and Affordable Business Telephone Charges… • Canada’s business telephone charges are relatively low among G7 countries. * Business (small and medium-sized enterprises) basket of telephone charges include fixed access and 84,000 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-year period. **PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods) Source: OECD Communications Outlook 2009

  21. …and Low Residential Telephone Charges • Canada has the lowest residential telephone charges among the G7 and OECD countries. * High usage basket of residential telephone charges include fixed access and 2,400 calls broken down according to distance, destination (fixed, mobile and international), time of day over a one-year period. ** PPP = Purchasing Power Parity (equalization of purchasing power of different countries in their home countries for a given basket of goods) Source: OECD Communications Outlook 2009

  22. Canada has Sound Financial Institutions… • With the world in the midst of the current financial crisis, investors can take comfort in the fact that Canada has the soundest banking system in the G7. • Six of the 50 safest banks are in Canada, according to a recent study: Royal Bank of Canada (10th), Toronto Dominion Bank (15th), Scotiabank (22nd), Caisse Centrale Desjardins (25th), Bank of Montreal (36th) and CIBC (37th).** *Standing among 139 countries. Ranking based on the degree of soundness of financial institutions. Source: Global Competitiveness Report, 2010-11 ** Standing among 500 world banks based on total assets and long-term credit ratings. Source: Global Finance Magazine , September 2010

  23. …Easy Access to Capital… • Canada was able to weather the storm as world credit markets collapsed in 2008 due to the stability of its equity markets and strength of its economic policy. In 2009, the Milken Institute ranked Canada 1st in its Capital Access Index. *Standing among 122 countries. Milken Institute, April 2010 23

  24. … and Stands Among Leaders in IT Industry Competitiveness • Canada ranks second behind the U.S. among the G7 and fourth in a 66-country review of the countries best suited to provide an optimally competitive environment for information technology (IT) firms. *Standing among 66 countries. Index based on the following six categories of quantitative and qualitative indicators: overall business environment; IT infrastructure; human capital; legal environment; R&D environment; and support for IT industry development. Source: Economist Intelligence Unit, September 2009.

  25. III A Dynamic Workforce

  26. Canada has one of the World’s Best-Educated Workforces… • The overall skill level of Canada’s workforce ranks high among competing countries. • Canada has the second highest percentage of individuals achieving at least college or university education, among OECD member countries. Source: IMD, World Competitiveness Yearbook 2010

  27. Canadian schoolchildren ranked third among the 30 OECD countries and fourth among all 57 countries surveyed in the OECD Program for International Student Assessment (PISA). The PISA survey is conducted annually among 400,000 school pupils across 57 countries, and evaluates the capacity of 15-year old schoolchildren to understand and solve academic problems. It also provides insights into the reading ability and mathematical knowledge of schoolchildren. …is a World Leader in Youth Academic Performance… Source: OECD 2007 27

  28. …and Manufacturing Sector Innovative Performance • Canada ranked 3rd in the G7 and 14th in a 110-country study measuring innovation performance in the manufacturing sector. • Canada stood in the top tier, ranking ahead of traditionally strong innovators such as Britain (15th), Israel (16th), Germany (19th), France (20th) and Australia (22nd). *Standing among 110 countries. Index based on government support for innovation - through tax and education policies, and the quality of infrastructure; the performance of innovative companies, measured by factors such as high-tech exports, the amount of intellectual property generated and employment growth. Source: The Innovation Imperative in Manufacturing – How the United States Can Restore its Edge, Boston Consulting Group, March 2009 28

  29. Canada has Superior Management Training… Canada ranks first in the G7 and third in a 139-country study of locally available management education in first-class business schools. (see chart below) In addition, six Canadian schools of management are ranked among the top 100 in the world according to the Financial Times (UK) Global MBA rankings for 2010. University of Toronto (Rotman) 45th; University of Western Ontario (Ivey) 49th; York University in Toronto (Schulich) 54th; University of British Columbia (Sauder) 82nd ; University of Alberta 86th; and McGill University (Desautels) 95th. • *Standing among 139 countries. Index based on the quality of Management education in first-class business schools. • Source: Global Competitiveness Report, 2010-2011 29

  30. … the Highest Concentration of Entrepreneurs… From a global standpoint, Canada has the highest concentration of entrepreneurs within its working population. Businesses, including start-ups, develop new products and services and get them to market and conceive new types of organization and production and put them into practice. New companies also serve to remind existing firms of the need to adapt and continue innovating. 30 Source: Statistics Netherlands 2008

  31. …PC and Internet Users… Canada has a technology savvy population and workforce. It leads the G7 with respect to Internet users per capita and is second to the U.S. among the G7 in terms of personal computers per capita. Source: IMD, World Competitiveness Yearbook 2010 31

  32. …and a Readily Available Army of Qualified Engineers… Canada ranks second in the G7 in terms of the availability of qualified engineers in its labour market. Source: IMD, * Rank among 58 economies considered in the World Competitiveness Yearbook 2010. 32

  33. IV A Solid Infrastructure

  34. Canada’s Highly Globalized Infrastructure…. • Due to its rapidly growing prominence as an outsourcing market of choice, Canada ranked second in the G7 and eighth among 72 countries profiled in the recent A.T. Kearney/Foreign Policy Magazine Globalization Index* which measures economic integration, personal contact, technological connectivity and political engagement. • In technological connectivity, one of the four components of the index, Canada’s ranking rose from sixth place in 1999 to second in 2006. It maintained this position in 2007. Source: A.T. Kearney/Foreign Policy Magazine, 2007 * Standing based on 12 characteristics under the headings of trade, FDI, telephone, travel, remittances & personal transfers, internet users, internet hosts, secure servers, international organizations, UN peacekeeping, treaties and government transfers.

  35. ….is Driven by a Dynamic Two-Way Investment Process • Over the past decade, Canada has witnessed a substantial growth in both inward and outward FDI reflecting its strong connection to global supply chains. • Canada’s inward FDI stock reached C$549 billion in 2009, a more than 2-fold increase from C$253 billion in 1999. • As for Canada’s outbound FDI, the expansion of Canadian direct investment abroad (CDIA) has been equally spectacular, rising from C$291 billion in 1999 to C$593 billion in 2009, a more than 2-fold increase. CDIA FDI Source: Statistics Canada, April 14, 2010

  36. The United States is Canada’s Largest Source of FDI… • In 2009, the U.S. share of foreign direct investment (FDI) in Canada stood at 52.5%, demonstrating its confidence in Canada’s business climate. Source: Statistics Canada, April 14, 2010

  37. …and Companies from Other Countries are also Increasing their Investments in Canada • From 2000-2009, EU countries increased their FDI in Canada by C$68 billion and other non-EU countries together with the US increased their investment in Canada by C$163 billion, thus demonstrating their confidence as well in Canada. Foreign direct investment in Canada by geographic area of origin 1990-2009 Billion $Cdn Others US EU Source: Statistics Canada, April 23, 2010

  38. Canada Welcomes Foreign Investment in Various Industries • Increasingly more investment goes toward industries such as manufacturing, mining and oil and gas extraction and toward the management of companies and enterprises. Since 1999, significant growth in terms of FDI has occurred in utilities and in mining and oil and gas extraction. 1.1 19.0 2.9 1.6 2.5 10.9 0.9 2009 Distribution (%) 100.0 13.1 2.7 35.5 6.4 1.9 0.5 0.2 0.9 Source: Statistics Canada, April 23, 2010 * North American Industry Classification System (NAICS)

  39. V Easy Access to Markets

  40. Canada Offers Efficient Flows of Goods Across Borders… • Canada leads the G7 and ranks 8th among 125 countries in terms of the enabling trade index, which measures the effectiveness of the combined factors of market access, border administration, transport & communications infrastructure, and business environment towards the efficient flow of goods over borders and to their final destination. Global Enabling Trade Report 2010, World Economic Forum.

  41. …a Streamlined Trans-Border Transportation System… • The North American market is serviced through a well-integrated transportation system, which is among the world’s best. • Automated permit ports, transponder identification systems and joint processing centres are being tested and deployed for easy movement of goods • Bottom line – the border system is one of the world’s most efficient. Air 20.8 million 11.5 million Truck Source: Statistics Canada and Transport Canada, 2008 (* Preliminary data for 2008 air passengers)

  42. 500 km St. John's Edmonton 1000 km Québec Charlottetown Regina Calgary Winnipeg Fredericton Halifax Victoria Vancouver Montréal Ottawa Seattle Toronto Boston Milwaukee Windsor New York Chicago Cleveland Philadelphia Detroit Baltimore Pittsburgh Washington St. Louis Denver San Francisco Atlanta Los Angeles Houston Miami …and Direct Access to the NAFTA Market • Canadian-based businesses have access to one market of 444 million consumers with a combined GDP of about US$16.7 trillion.* • Many Canadian production hubs are actually closer to U.S. markets than American production sites — of Canada’s 20 largest cities, 17 are within an hour and half drive of the U.S. • Direct air service between major cities in Canada and the U.S. has nearly doubled in the last six years. Saskatoon * Source: World Bank: World Development Indicators database, October 2009 Mexico City

  43. Canada has Efficient Transport Linkages Tying North America with Asia • A reliable and efficient transportation system is key to effective participation in global supply chains. • In October 2006, Canada has launched the Asia-Pacific Gateway and Corridor Initiative, an unprecedented alignment of public and private sector investments to strengthen Canada’s position as a fast, efficient and secure gateway between North America and Asia. • These investments will improve the flow of people, goods and services across Canadian rail, roads, bridges and through our ports and airports.

  44. VI An Excellent Place to Live

  45. Canada is a Desirable Location to Live, Work, Study and Invest… • Canada ranks first in a 50-country study that measures the potential of a country as an ideal place to live, work, study and invest. • Index ranging from 0-100 based on five components of a country’s potential for immigration and investment: (a) Willingness to live and work for a substantial period in the country; (b) Quality of life; (c) Good place to study for educational qualifications; (d) The country has businesses I’d like to invest in; (e) Equal opportunity. • Source: Anholt-GfK Roper Nation Brands Index 2009 Report, October 2009

  46. … and has the Best Overall Quality of Life Among Countries… • Canada has the best overall quality of life among the G7. Source: IMD, * Rank among 58 economies considered in the World Competitiveness Yearbook 2010.

  47. …with Exceptional Quality of Life in Cities…. • According to a recent annual quality-of-life ranking of 221 world cities, four Canadian cities ranked among the top 25. Source: Mercer Human Resources Consulting: May 2010

  48. …and Superior Eco-City* Standings • According to a recent Eco-City* ranking of 221 world cities, four Canadian cities ranked among the top 25 with Calgary topping the list and Ottawa ranking 3rd. Source: Mercer Human Resources Consulting: May 2010 * Includes the following criteria: Water availability, water portability, waste removal, sewage, air pollution and traffic congestion.

  49. Canada is a Leader in Human Development*… • In the latest United Nations Human Development Report, Canada ranked first among the G7 countries and fourth among 182 countries surveyed. *Standing among 182 countries. Index based on achievements in terms of life expectancy, educational attainment, and adjusted real income. Source: United Nations Human Development Report 2009-2010, October 5, 2009

  50. …and Ranks Among Model Nations of Peace • According to the Global Peace Index, a recently released measure by the Economist Intelligence Unit, Canada ranked second in the G7 and fourteenth among 149 countries surveyed. *Standing among 149 countries. Index ranking countries based on peacefulness, both domestically and abroad using 23 indicators, including the number of soldiers killed overseas, the level of violent domestic crimes and relations with neighbouring countries. Source: Economist Intelligence Unit, June 2010

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