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Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

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Falling oil price putting pressure on the Canadian prosperity model

CLÉMENT GIGNAC

Over the past decade, Canadian economic prosperity has been anchored upon two factors: elevated commodity prices and a housing boom. It can easily be argued that these two factors are connected and have contributed to attracting qualified labour from around the world to Western Canada, pushing housing prices to ever new highs.

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Corporate sponsors of the arts missing creative opportunities

TODD HIRSCH

It usually ends up on the back of the theatre program, somewhere in the soupy mess of logos and names of various banks or energy companies. In exchange for a financial donation – tiredly given the “silver, gold and platinum” ranking – corporate largesse is recognized with the company logo slapped alongside those of the other funders.

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Change of course needed to revive Canadian manufacturing

GLEN HODGSON

The future of manufacturing is a recurring question at many economic outlook events where we are invited to speak. People ask, is manufacturing in Canada dying, or at least on life support? No, but it is under constant pressure to adapt and evolve in order to stay competitive.

Reports of manufacturing’s demise have been greatly exaggerated. After dropping from nearly 16 per cent of gross domestic product in 2000, Canadian manufacturing output has stabilized since 2009 at about 10.6 per cent of GDP. This decline and then stabilization largely reflected China’s emergence as an economic powerhouse and its role as the assembly workshop to the world; the rapid rise in commodity prices and the related soaring of the loonie; the 2008-09 financial crisis and recession; and the tepid global and U.S. recovery.

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Blame Germany for Europe’s economic nightmare

CHRISTOPHER RAGAN

Germany is usually blamed for the two wars that devastated much of Europe during the first half of the 20th century. And those wars were an important motivation for the European Union, a grand project to bind together many countries, both economically and politically. Future wars in Europe may now be unthinkable, but Berlin is nonetheless wreaking havoc on its neighbours – this time through its belligerent stance on economic policies.

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Provinces making bad bets with resource-based budgets

BRIAN LEE CROWLEY

You can’t say you weren’t warned.

That’s a message that should be posted on billboards opposite the premier’s office in Edmonton, St. John’s and various other provincial capitals where falling energy prices have devastated government budgets.

Those of us who care about such things have been repeating for years the wisdom best summed up by former Alberta treasurer Jim Dinning: “Non-renewable natural resource revenues are non-reliable revenues.”

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Computers, jobs and rising income inequality

ANDREW JACKSON

Economists take a benign view of the impact of technological change on jobs, dismissing the “Luddite” view that technical progress can be a significant cause of unemployment. The core argument is that higher productivity (output per hour worked) drives increases in incomes so that demand rises, creating new jobs as old ones are destroyed.

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Cooling in the hot provinces a benefit for Canada as a whole

TODD HIRSCH

Be it a rekindled admiration for our armed forces or a new infatuation with Eugenie Bouchard, there’s much that united Canadians in 2014. But our similarities ended when it came to economic vitality. Over the past several years, growth rates have been uneven across the regions. Alberta’s real gross domestic product expanded at close to 4 per cent annually since 2011, while Ontario eked out barely half that. Saskatchewan raced ahead while Quebec languished.

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The time is right for a carbon tax that works

GLEN HODGSON

In our previous Globe and Mail commentary (“Provinces need to act now to fix their ailing finances”, Dec. 17), we described the unrelenting fiscal squeeze facing most Canadian provinces, and the options for mitigating the pressure. The collapse of global oil prices has created a window of opportunity for Canadian governments (not to mention others around the world) to tap into new fiscal revenue, while simultaneously adjusting prices for consumption of hydrocarbon-based fuels in order to reflect the environmental damage they cause.

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