######################################## #Written by David Tam, 1999. # #davidkftam@netscape.net Copyright 1999# ######################################## From tamda@ecf.toronto.edu Mon Jul 12 18:30:52 1999 Date: Mon, 15 Mar 1999 21:46:32 -0500 (EST) From: David Kar Fai Tam To: APS 424S Subject: #20-03/17/99-"Canada lowest of G7 in business costs" The Globe and Mail, Thursday, March 11, 1999. B5. This article reports on research findings about the cost of doing business in different nations. Surprisingly (at least to me), Canada is ranked the lowest amongst the industrial super- power nations. Most importantly, it even beat the United States despite contrary popular belief. The cost of setting up and running a business for 10 years is 7.8 % lower in Canada than in the United States. Next in line was Britain, where costs are 5.2 % lower than the states. The United States itself is third. Japan had the highest costs with 21.9 % more than the states. The explanation according to analysts is the exchange rates and labour costs, including benefits. However, it should be noted that if the Canadian exchange should rise to above 79 cents US, our country would lose is competitive advantages. One particular item to note is that labour costs are lower in Canada than the states. However, this has the negative impact of meaning that highly skilled Canadians are heading south of the border due to the higher salaries offered in the states. However, it should be noted that the higher labour costs in the states is also due to the payment of Medicare. The study also found that taxes had a neutral influence on competitiveness, again despite popular misconception. A very interesting note is that the study showed the lowest business costs in Canada to be in the high-technology industries. Areas such as software development, telecommunications equipment, pharmaceuticals, plastics, medical devices, electronics, and metal fabrication fall into this category. In particular, the cost of running a software firm is very low in comparison to the United States. It is lower by 14 %. I think this study can serve as a very powerful and effective marketing tool both abroad and within Canada. When used abroad, Canada can attract new companies to set up full-blown research, development, and design centers in Canada, rather than just branch plants. It can serve as a tool for attracting foreign investments, lowering government interest rates, and benefiting all citizens. There is also an extremely urgent need to market these findings domestically. It must be used to encourage Canadian companies from becoming U.S. success stories in Silicon Valley. By encouraging domestic high tech growth, it will hopefully lead to a reduction in the brain drain to the states.