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Highlights of the Alberta Competitiveness Council's report on competitiveness : Alberta 2010 PDF

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Highlights of the Alberta 2010 Competitiveness Council’s ALBERTA REPORT ON COMPETITIVENESS About the Alberta Competitiveness Council TheAlbertaCompetitivenessCouncil (theCouncil) - agroupofelected officialsand industry leaders-hastaken onthetaskofworkingtogetherto makeAlbertaoneofthemostattractive placesto investand do business. PremierEd Stelmach establishedtheCouncilthroughthe AlbertaCompetitivenessAct.TheAct laysthegroundworkforthe provinceto beamongthe most competitivejurisdictions intheworld and strengthens partnershipsamong government, industry, businessandAlbertans. MakingAlberta morecompetitive isvitaltothe province’s long-term successandtothe well-being ofAlbertans, business, and communities. Amorecompetitiveeconomy isable toadaptquicklyand improves living standardsforallAlbertans. TheCouncil will providean analysisofAlberta’scompetitiveness in comparisontoother national and internationaljurisdictionsand makerecommendationsto improveAlberta’s position. TheCouncil began itsworkbyassessing variousfactorsthat impactthe province’seconomic growth such as regulation andfiscal policy, theavailabilityofskilled workers, transportation and infrastructure, productivity, and innovation. This benchmarking workisthe beginning ofan ongoing annual process.Throughthecoordinated effortsofindustryand government, therewill be improvementstoAlberta’soverall prosperityand tothecompetitivenessofourbusinesses. Alberta Competitiveness Council COUNCIL CO-CHAIRS FINANCIAL SERVICES TASKTEAM EdStelmach JanisTarchuk PremierofAlberta MLA, Banff-Cochrane Bob Brawn GregTurnbull Chair,AlbertaEconomic DevelopmentAuthority Partner, McCarthyTetrault LLP Ted Morton MANUFACTURING TASKTEAM Minister, Alberta Financeand Enterprise George Rogers OVERALL ECONOMICFACTORS MLA, Leduc-Beaumont-Devon OFCOMPETITIVENESS TASKTEAM LarryKaumeyer Doug Griffiths Presidentand CEO,Almita Manufacturing MLA, Battle River-Wainwright PETROCHEMICALS/CHEMICALS Les Larocque TASKTEAM President, Botting andAssociatesAlberta Ltd. RayPrins AGRICULTURETASKTEAM MLA, Lacombe-Ponoka GeorgeGroeneveld Val Mirosh MLA, Highwood President, Mircan Resources Ltd ChristophWeder SpiritView Ranch The ResultforAlberta Sustainablegrowthinlivingstandards Sustained Prosperity The Outcome Betteruseofresources Productivity The Enabler Newandimprovedproducts,services andprocessesforaglobalmarketplace Industryinpartnershipwithgovernment Innovation The Foundation Factorsthatshapethe businessenvironment Governmentinpartnershipwithindustry Human Transportation Capita* Regulation and Education infrastructure policy The Bedrock Humancharacteristics:demography,society(politicalandlegalsystem,culture,socialinfrastructure) Naturalcharacteristics:naturalresources,location(distancetomarkets,landbase,climate) Benchmarking Alberta’s Competitiveness IntheCompetitiveness Pyramid, the bottom Innovation is any newwayofdoing something layeristhe bedrock: aseriesofhuman and better-likeindustrytakingthelead in investing natural characteristicswithin everyjurisdiction in new machinery. which generallyonlychange incrementally overtime. The Pyramid’s bedrockcomprises Growth in productivitysimply meansa better characteristicssuch asthe location, climate, useofresources, ratherthan relying on more geography, political system, and social or peopleto work more hours. Productivitygains cultural aspectsofsociety. areessential to sustained prosperityand this iswhat mattersforAlbertans-assustained Thefoundation layeriscomposed ofthe key prosperity means a higherqualityoflifeand structural areas upon which acompetitive improved living standards. environment is built. Thesearefactorsthat government is primarily responsiblefor TheCouncil hasdeveloped a reportthat shaping, and includetaxesandfiscal policy, benchmarksthecurrentstateofAlberta’s regulation, transportation and infrastructure, competitiveness. The report identifiesareas human capital and education, and access ofstrength, highlightsareaswhereopportunities tocapital markets. forimprovement mayexist, and defines benchmarksformeasuring future progress. Anycompetitiveenvironmentenables and By reviewing Alberta’s position in comparison requirescontinual innovation. Innovation to 14jurisdictionsand across60 indicators, isany newwayofdoing something better- theCouncil’s report provides governmentand likeinvesting in newmachineryandequipment, industrywiththe necessary information to adopting moreeffective processes, training improvethe province’sfuturecompetitiveness. skilled labour, orundertaking research and development (R&D) activities. HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 3 | A total 14jurisdictions have United States - Colorado, Idaho, been chosen forcomparison Minnesota, Oregon, Texas, and withAlberta: Washington State. Canada - British Columbia, International - Finland, Norway, Saskatchewan, Manitoba, and the state ofQueensland, Ontario, and Quebec. Australia. The 14jurisdictionswerechosen because Sustained Prosperity oftheirsimilarsize, location, relativelystrong recenteconomic performance, and/orother Sustained prosperitymeansan improving similaritieswithAlberta.The indicatorswere selected usingthreecriteria: relevancefor standard ofliving and qualityoflifefor Albertans. This includesagood environment, Alberta, the reliabilityofavailabledata, and comparabilitytootherjurisdictions. positivehealth outcomes, andfirst-rate education, aswell ahigh level ofincome. Thecomplete80-page report isavailable onlineatwww.finance.alberta.ca/ Economic prosperity istypically represented competitiveness.Thecomplete report bygrossdomestic product(GDP), which includes more measurementdetail and reflectsthetotal incomegenerated bythe an overviewofthefoursectorsoffocusfor economyeach year. WhileGDP represents 2010/11: agriculture(grainsand oil seeds), oneimportantmeasureofeconomicprosperity, financial services, manufacturing, and to betrulycompetitiveeconomic, social, and petrochemicals/chemicals. environmentalconsiderationsmustbebalanced. Alberta’s performance in the benchmarking Key Measures: comparisons isgenerally positive-a result that is notsurprising giventhestrength and After-taxpersonal income, housingaffordability, dynamic natureoftheAlbertaeconomy. thestateofthejob market, and an indexof Alberta’sstrongest result is intheareaof economicwell-being arethe key indicators taxesand fiscal policy. Albertaalsoshows forsustained prosperity. good results inthe indicatorsforsustained AlbertahasahighlevelofGDPpercapita,which prosperity, regulation, transportation and infrastructure, and human capital. isattributabletothestrength ofthe resource sectorand high resourcepricesin recentyears. The resultsforproductivity, innovation, and Growth in realGDPpercapitahasbeen modest accesstocapital markets identifyareaswhere and between 2003 and 2008Albertahad the focusand improvementcould addtoAlberta’s 5^'' lowestgrowth rateofthejurisdictions competitiveness. Specifically, theareas examined. Real GDP percapitaremovesthe whereAlbertaranks behind otherjurisdictions effectsofchanging prices, including pricesfor includegrowth in real GDP percapita, rate naturalresources. Inessence, it isthechange in ofproductivitygrowth, non-resourceexports, theproductionofgoodsandservicesperperson. R&D investment, high-tech employment, and venturecapital investment. Industryand governmentareworkingtogether to elevateawarenessofAlberta’s position andtakeactions necessaryto improve Alberta’scompetitiveness. HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 Real personal incomegrewbetween2003-2008 GDPpercapita(2008)andrealGDPpercapitagrowth(2003-2008) atan averageannual rateof4%, morethan $70,000 3.5% re threetimestherateofrealGDPpercapita Q. re growth. Much ofthiscan beattributed to ^ $60,000 3.0% .c workersbenefitingfromtheboomingeconomy. ^ $50,000 inymi o On 2.5% ou05 Asilgbneirftiac’asnthloyubseitngweaefnfor2d0a0bi5liatnydde2c0l0i7n,ed |re $$4300,,000000 . • • II nil 21..05%% rDr0ee. but hassincestabilized and improved o • • • MM 1 relativetotheotherCanadian provinces. roe. $20,000 MM 1.0% OQQ. Q $10,000 0.5% o Florwoemst20a0v5e-r2a0g0e9u,nAelmbperltoaymheandtthreatseeacmoondn-g $0 imai:esi£0i?a<izi<rieiQtzizozQiCiDig 0.0% CrrCee thejurisdictions, at4.2%. A balanced labour mhiagrhkentorwhtoeorelouwneismipmlpooyrmteanntttiossnuesittahierntoo GDPpercapita, US$atPPP(LHS) O gRreaolwtGhDrPatep,er20c0a3pi-t2a00a8nn(uRaHlS) prosperity. Forexample, when unemployment istoo highAlbertanssufferandtheirskills aNtot2e0s0:2GpDriPcepelreveclasp,itianlaotccalurcruernrtenpcryi.ceSsoiusrcinesU:SSStaattisPtPicPsRCeaanlaGdaDPCApNerSIcaMpiTtaablgersow3t8h4-i0s0b0a2seIdGDoPr.)GaDnPd aisretonootloewffelcatbiovuerlyshuosretdagaensdoifccuunremcprelaotyimngent W0Fae5cb1t-SF0ti0an0td1eDra:(tPSaotpbauatlsiaest,tiioNcnsa)t;NiooUnrSawlaByAu,crcesouaubunjteoscf;tEE0cu9ro-ons0ot1amt,i:AcnPnAonupaaulllyasntiaisto.inoRnbeayglisaoecxn.caolaugEnetcsog.nrooTumapbilcaenA2dc:ccSiottuaitnzietsnstsihacispn;dFQiUnuSleaenCndesnlPsaXund^ challengesforbusinessgrowth. TOrEeaCsDuryP,PSPtaetxecAhcacnoguentrsat,esT.ables1and11;AustralianBureauofStatisticsPublication3101.0Table4. The IndexofEconomicWell-being used inthis study, developed bytheCentreforStudyof Unemploymentrate(2005-2009average,and2009) LivingStandards, incorporateseconomic, social 12% and environmental measures. Albertaranked 5%unemploymentisconsidered A 2'^^on this Indexand had thegreatest increase tobetheidealrateforabalanced ofalljurisdictions between 2002 and 2008. 9% AlabAourmark1et A -A A- What it means for Alberta: 6% iimArmiiiii f Albertahasachievedagood ratingforsustained 3% prosperity. Certainly higherresource prices llllllllllllll have played an important role inthisoutcome; however, both industryand government have 0% strategically positioned Albertato capitalizeon II n I I I I I<§ 9Oir! OHtr availableopportunities. Alberta has prospered. 2008-2009average 2009 Challengesstill remain.TheAlbertaeconomy issensitivetoglobaleconomiccyclesand rNaotteeso:fT5h%e,owrdheirchofijsurtirsedaitcetdioanssirnetphriesscehnatritnigsAblabseerdtao'nstihdeeiarldbeavilaatnicone,dilnaabbosuorlumtaertkeertmst,haftrowmoraknsjinnetmhpelobyesmtent globalenergydemand.Theprovincecannot interestsofbothemployeesandemployers.Sources:StatisticsCanada.Labourforcesurveyestimates. Table282-0002;USBureauofLabourStatistics.LocalAreaUnemploymentStatistics;Eurostat.Unempiloyment affordtoreston itseconomiclaurelsand ratesbygender;AustralianBureauofStatistics.6202LabourForce.Australia,asreportedbytheQueensland assumefutureprosperityisassured. Someof OafnfdicEedoufcaEtcionngoTmoimcorarnodwS'tsatWiostrikcfaolrRcees,eAalrbcehr.taI'dsea1l0uYneeamrpSltoraytmeegyn.tGroatveerfonrmAelnbterotfaAolfbe5r%ta,is2f00r6o.mBuilding Alberta’sprosperitytodayisactuallyadepletion ofourprovince’snaturalwealth.Wemust avoidattitudesofcomplacencyarisingfrom thisadvantagethatAlbertaenjoys, andwork diligentlytoenhanceproductivityand innovation inordertoimproveourqualityoflife. HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 5 1 Productivity Key Measures: Labourproductivitylevelsand growth Productivity issimplydefined as making better useofresourcesand labourproductivity (both overall and in keysectors), aswell as internationaltrade performance, are used representsthesingle most importantfactor toassessAlberta’scompetitiveness. in maintaining and enhancing longterm sustained prosperity. Productivity improves Alberta’s level ofproductivityranks2"^overall byworking smarter-byfinding newways with GDP perhourworked ofUS$62.80. to produce morevaluewiththesame level Yet,Alberta’s real productivitygrowth is ofeffort. Improved productivity may be comparativelyweak. The highvalueofnatural achieved through new processes, products, resourcescombinedwiththecapital intensityof ortechnologies. theoilsanddevelopmentsexplainsmuchofthis result. Inotherwords,Albertahasahigh levelof GDPperhourworked(2008)and productivity, butstrugglestofind newwaysto realGDPperhourworkedgrowth(2003-2008) producemorevaluefromthesamelevelofeffort. Albertacompanies ranked 10^^amongthe 15 jurisdictionsfornon-resourceexportspercapita in 2009.This underscoresthatoureconomy is highlyfocused on resourceextraction. What it means for Alberta: Sustainablegrowth in GDP-and sustained prosperity-must resultfrom working smarter and improving productivity. Productivitygains inthe resourcesectorare important, but qo:<c(q->5<o<o«^2z0oe:-z^qocodzooocsq challenging inthefaceofproduction declines intheconventional energy resourcesector 1 GDPperhourworked, US$atPPP(LHS) andthefrontend capital intensityofoil sands O GDPperhourworkedgrowthrate,2003-2008(RHS) dbeevyeolnodpmreenstosu.rcTeheextsreagctmieonntasreofalosuorcercitoicnaolmy Notes:GDPperhourworkedatcurrentpricesisinUS$atPPP.RealGDPpercapitagrowthisbasedon to provide balanceand mustcompetewith GanDnPualath2o0u0r2spwroirckeeldevpelesr,eimnpllocoayleceurinreQnucye.enQsuleaenndslisanedqunalumtboetrhseanraetibonaasledavoenraages.suSmoputricoens:thSattataivsetircasge theworld’s best. In all sectorsofAlberta’s CanadaCANSIMTables384-0002(GDP)and383-0009(Hours);USBureauofEconomicAnalysis, economy, innovation will bethe keyto RegionalEconomicAccounts(GDP)andBureauofLaborStatistics,CurrentEmploymentStatistics (Hours);StatisticsNorway,subject09-01,Annualnationalaccounts.Tables1and2(GDP),andTable resolvingthe productivitychallenge. 05217(Hours);StatisticsFinlandPXWebStatDatabase,NationalAccounts(GDPandHours);;Australian BureauofStatisticsPublication3101.0Table4(GDP)and6202.0Tables12and19(Hours);QECDPPP exchangerates. Alberta’s levelofproductivity ranks 2^^ overall. .yet, Alberta’s . realproductivitygrowth is comparatively weak. 6 HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 I Innovation R&Dexpenditures,percentageofGDP(2007) andgrowth(2002-2007) 5% a 15% Innovation isthecreationofnewand improved r«. products, services, and processesfora global g 4% 12% marketplaceand represents acritical driverof 3% M 9% productivitygrowth in the modern knowledge- i*n‘ ( o % driven economy. Theonecommon element in • llliHa' 6 Miim acslrelirtfviociarclemsssoaounfrdcienpnrfooovrdautncietoswn.aisntdhaitmppreoovpleedairdeeatsh,e TQC(&(1Ji>) 01%% 1 II 30%% <(C3C0 Q0P<K)0. -3% 0C0C o 0c0r Key Measures: % ii'iiiiiiisiiaiiz -6 The measuresselected forjurisdictional comparison ofinnovationfocus on its BusinessR&D(LHS) Government,academic,andotherR&D(LHS) process and outcomes. Thefull report O includes indicatorsforR&D, university AnnualgrowthintotalR&D(RHS) patents, business investment in innovative Sources:StatisticsCanada,CANSIMTable358-0001:OECDStats.Extract.RegionalStatistics, technologies, employment in selected sectors, LargeRegions,InnovationIndicators:AustralianBureauofStatisticsCatalogue8112.0,Resea'cn and entrepreneurship. andExperimentalDevelopment,AllSectorSummary,ByLocation. Albertaranks belowaverageforboth total Newbusinessstart-ups,per1,000population(2005) and businessR&Dintensity: hovyever, between 3.5 2002 and 2007, Albertadid experiencegrowth AlbertaleadsCanadianandUSlocationsfornew businessstart-ups of7.1 % intotal R&D expenditures. 3.0 The proportion ofhigh growthfirmsand new OQQ. 2.5 business start-upswas used asa measure 2.0 forentrepreneurship. Alberta leadsamong the ninejurisdictionscompared, with almost 1.5 8% offirms meetingthecriteriaforhigh growth firmsand also rankedfirstamongthe 1.0 12 provincesand statescompared fornew 0.5 business start-ups. III!I 0.0 What means for Alberta: I I I I I it nz z-5 ?t<- “"5 Innovation goes beyondjust new ideas- Sources:StatisticsCanada,SmallandMediumSizedEnterprisesDataWarehouse,December2008 these ideas must havevaluetotheend user (onCDwithAFE).USCensusBureau,BusinessDynamicsStatistics,FirmAgebyFirmSizebyState. orimproveexisting processes, products, or services. Growth in thequalityand skill of Alberta’sworkforce, improved R&D intensity levels, and strategic investments in machinery and equipmentand otherinnovative technologiesarecriticalto improving our innovation performance. Albertahas many ofthe raw ingredients necessaryto meet thechallenge. Industryand government mustworktogetherto harnessourcreativity and bring newwaysofthinking, managing, creating and doing businessto market. HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 7 | Foundation Innovation, productivity, and sustained TRANSPORTATION AND prosperityareall influenced bythe INFRASTRUCTURE competitivenessfactors inthe Pyramid’s foundation including: taxesandfiscal policy, Public infrastructure, transportation, utilities, regulation, transportation and infrastructure, and technological infrastructuresupportthe human capital, and accesstocapital markets. modern economy. AmongthesixCanadian Developing arobustfoundation does not provincescompared, Alberta hasthesecond- ensuresustained prosperity; however, ifthe lowestageofpublic infrastructure. Alberta’s foundation isweak, achieving sustained investments in high qualityinfrastructure prosperity becomesfarmorechallenging. contributetoqualityoflifeforindividuals, and Overall, Albertahasaverystrongfoundation facilitatetheeaseand costofdoing business. butthere remains roomforimprovement. Intechnology infrastructure, Alberta ranks2^^ forbroadband internetaccessat home. Competitiveness Factors: HUMAN CAPITAL AND EDUCATION TAXES AND FISCAL POLICY Humancapitalandeducationencompassesthe collective knowledge, skills, and competencies Albertaranks2^^ in its netfinancial assetsasa ofAlbertans. Having workerswiththeskills resultofthe province’s policies related todebt required in theeconomy isessential. Alberta financing and significant natural resources. generallyfareswell acrossthe 11 measures, Albertahasa lowcorporate incometax rate especially in apprenticeshiptraining.Alberta and does not levyothertaxessuch ascapital, students’ high scoresalso reflectfavourably payroll, and salestaxes. Alberta’s leadership onthe province’sfutureworkforce. However, inthis indicatormeansthe province iswell Albertadoes lagthe United States in both positionedto makestrategic investments high school and bachelordegreecompletion. toenhancecompetitiveness. In additionto education, thesizeand age oftheworkforce isalso important. Albertahas REGULATION a relativelyyoung labourforce, yet population Measuring regulation iscomplex.Thequality, aging remainsan issue. integration, and processesofregulatory developmentand reform are important; ACCESS TC CAPITAL MARKETS moreover, theeffectofregulation on business Accesstocapital influencestheabilityofthe productivityand innovation isalsoacritical economyto prosperatevery level.Alberta consideration. Two indicatorsconsidered are hasahigh level offoreign investment in its thecostsandtimeto startabusiness, which economy, bringing necessarycapital and is inclusiveofprovincial incorporation and demonstrating confidence inAlberta. Access municipal licensing and permitting.Alberta’s tocapitalforAlberta resourcefirms isstrong; majorcities ratewell against international however, the non-resourcesectorfaces peersandthe provincecontinuestoevaluate challenges in attracting investment. Alberta therelevancy, transparency, and efficiency ranks H'*"ontheamountofventurecapital ofgovernment regulation. invested asa percentageofGDP and based onthe numberofventurecapital dealsclosed per100,000 people in 2009, Albertaranks9'^ 8 HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 I Conclusion The benchmark measurements identify both areasof relativestrength that need to be maintained aswell asareaswhereAlberta performs lesswell and whereactions by governmentand industry mayhavethepotentialto boostAlberta’s competitiveness. Italso providesawaytotracktrends and changes inAlberta’scompetitivenessovertime. LEGEND H I I I Sustained Prosperity Productivity Innovation Foundation AREASOF COMPETITIVE STRENGTH AREAS OF COMPETITIVE CHALLENGE -> High level ofGDP percapita -> Lowgrowth rateforreal GDPpercapita Stronggrowth in personal income -> Lowgrowth in productivity(GDP perhour) -> Entrepreneurship-numberofbusiness Declining productivityin mining, start-upsand high growthfirms oil andgas -> Taxesandfiscal policy -> Amountandgrowthofnon-resourceexports Good investment in public infrastructure Level ofoverall investmentin R&D byindustry Highemploymentrates Level ofemploymentin hightech manufacturing and knowledgeintensive serviceindustries ^ Strong high schooltestscores Universitydegreecompletion -> Highratesofapprenticeshipandvocational/ Accesstoventurecapital technical post-secondaryeducation Alberta is in astrong competitive position. Thegood news iswe haveastrong economy “Competitiveness is notabout and good qualityof life. Yet, the province’s a low-costlabourforce, the prosperity is, in part, highlydependenton largestshare ofexports oreven the resourcesector.Thereportshowsthere the fastest economic growth. isworktodo intheareasofproductivity, innovation, managing ourhuman capital, and Itisaboutcreating theconditions ensuringthat non-resourcefirmscan access underwhich companies thefinancial capital they needto prosper. and citizens can be the most Thefocusmustbeon industryandgovernment productive so that wages workingtogetherto achievethesegoals. andreturn on investment From here, theCouncil will worktowards can supportan attractive recommendationsforaction; the necessary standardofliving” stepsto keepAlberta’seconomyontrack. Thestakesare high-thefuture prosperity Competitiveness Index: Where ofAlbertaandAlbertansare being determined America Stands, US Council bytheactionsoftoday. on Competitiveness, 2007 V HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 | 9 - Competitiveness Benchmarking Summary ThischartsummarizesAlberta’srelativeratingonall60benchmarksintheCompetitivenessPyramid. Wheredatawasnotavailable,fewerjurisdictionswereused. Forcomprehensivedataandanalysis pleaseseethecompletereport. SUMMARYOFCOMPETITIVENESSBENCHMARKINGINDICATORRESULTSFORALBERTA LEGEND^ 1 Thenumberofjurisdictionscomparedvariesduetoavaiiabiiityofdata.Alberta’srank isshownrelativetohowmanyjurisdictionswerecomparedforeachmeasure. 00 Excellent(topquintile) 2 TheratingsofExcellent,Good,Average,Weak,andPoortakeintoaccountboth 0 Alberta’srankingamongthejurisdictionscompared,andAlberta’smeasuredvalue Good(secondquintile) relativetootherjurisdictions. ^ Average(middlequintile) 0 Weak(lowerquintile) 00 Poor(bottomquintile) 10 HighlightsoftheAlbertaCompetitivenessCouncil’sReportonCompetitiveness:Alberta2010 I

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Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.