Canada, best known for its maple syrup and hockey teams, has now become a serious player on the international business stage.
According to a study conducted by Bloomberg, our neighbors up north have now surpassed the United States and claimed the number two spot for the most business-friendly country. Not bad, eh?
Canada’s rise to economic-stardom comes after a two year slump brought on by weak exports. The jump to the number two spot is mainly a consequence of reforms that cut the corporate income tax and the decreasing value of the dollar.
“Those are two big factors,” John Manley, a former Canadian finance minister who is now head of the Ottawa-based Canadian Council of Chief Executives, told Bloomberg. “Compared with a lot of the world, we have a pretty good story to tell.”
Behind many of the country’s economic reforms stands Prime Minister Stephen Harper of Canada’s Conservative Party. Since Harper came to power in 2006, he has steadily lowered the corporate income tax from 22 to 15 percent. This economic adjustment has given entrepreneurs new opportunities and has saved existing businesses from extra monetary burdens that made it difficult for them to expand operations.
Some of Harper’s political opposition have criticized his measures to lower taxes on businesses.
The leader of the rival New Democratic Party, Thomas Mulcair, promised that if he were elected he would reverse Harper’s reforms and tax corporations to fund social programs. Mulcair believes that the tax cuts have mainly benefited Canada’s largest companies.
The value of Canada’s currency over the past several years has also impacted its business climate. After rising for almost a decade, the country currency began dropping in 2011 and continued to decline at an accelerated rate since last October, after the Bank of Canada let go of its preference for higher interest rates.
In order to reach the number two spot, Canada needed to prove it was strong in the following six categories: economic integration, cost of setting up shop, cost of labor and material, cost of moving goods, less tangible goods, and consumer readiness.
Businesses owners below the Canadian border are not feeling as optimistic about their economic prospects. A poll conducted by the National Federation of Independent Businesses found that small U.S.-based business owners fear that among other factors, new regulations and the looming costs of healthcare will negatively impact their bottom line in 2014.
Due to these exterior influences on the American business climate, Bloomberg downgraded the U.S. to third place from its previous ranking as the second most-business friendly country. Hong Kong came in first and Singapore and Australia came directly after the U.S.
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