Policy’s Role in Economic Development – November 9, 2018

Good morning subscribers!

Economic growth is of vital importance for the well-being of Canadians. Increases in Gross Domestic Product (GDP) help improve tax revenues for governments, living standards, and development outcomes. It is also associated with reduced unemployment and poverty rates. Given the grand significance of the Canadian economy, today’s Weekly Brief includes several articles explaining some potential strategies that Canada could explore to support economic growth and improve the socio-economic statuses of Canadians.

This week’s Morning Brief was prepared by Jasper Paredes. Sign up here to receive the Morning Brief directly to your inbox.money-2724241

  • Capital flight occurs when investors pull their money out of one country and invest it somewhere else. This often occurs when these investors believe that they would receive a higher return on investments by deploying their money in countries with lower corporate tax rates and less-restrictive business regulations. However, Megan Mattes explains that fears of capital flight in Canada are largely overblown and that Canada should keep its corporate tax rate [Mattes/PPGR]
  • Canada has often placed politics ahead of economic prosperity when faced with controversial foreign direct investment (FDI) opportunities. This tendency has been fueled by distrust of state-owned enterprises (SOEs) and potential geopolitical interests. Accordingly, Kyle Muir explains that fears of national security and sovereignty loss could be constraining economic growth. He also proposes some practical strategies to better inform all relevant parties about the potentially positive impact of FDI. [Muir/PPGR]
  • Earlier this year the United States-Mexico-Canada Agreement (USMCA) was successfully negotiated between the three North American countries. However, there remains a large bilateral trade issue between Canada and the United States. Accordingly, Aniket Bhushan explains how the US’ import tariffs on Canadian iron, steel, and aluminum are affecting Canada’s economic activity. [Bhushan/PolicyOptions]
  • Large targeted investments in the past three Federal budgets have reflected Canada’s commitment to advancing capacity-building, self-determination, and self government for indigenous communities. However, despite heavy financial support from the Government of Canada, the majority of Indigenous people still live in poverty. Allan Clarke explains how Canada could take a comprehensive approach to support economic development and reduce the socio-economic gap between Indigenous peoples and the rest of Canada. [Clarke/PolicyOptions]


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