Don MacKinnon, Minister of Development for the Government of Prince Edward Island, is pleased about the results of a new study, Provincial Economic Freedom in Canada 1981-1998. Prince Edward Island ranked third in the study for 1998, the largest improvement of any province over the 17 year period. In 1981, PEI was ranked sixth.
The study, conducted by The Fraser Institute of British Columbia, was released yesterday and establishes the first-ever benchmarks for measuring economic freedom in Canada's provinces. The study examines the effects of government operations, transfer and taxation policy, inter-provincial trade restrictions, and labour market regulations. Economic freedom is defined as the percentage of government controls over individuals to interact with others to create their own economic stability.
"This study is an indicator of the progress that has been made over the past two decades in increasing economic independence on PEI," said Minister MacKinnon. "It is important that, as a government, we continue to work towards increasing the economic freedom, and in turn the economic well-being, of all Islanders. An increase in a province's economic freedom generally results in greater economic growth and a higher standard of living. Everybody benefits."
The study attributes Prince Edward Island's improvement to the reduction in government consumption as a percentage of GDP: government in PEI now has a smaller percentage of the total value of goods and services than it did 17 years ago. This means that the private sector has a greater responsibility for the economic stability of the province. Another contributing factor was that the annual minimum wage, as a percentage of GDP per capita in PEI, has increased from a rating of 4.8 in 1989 to 5.4 in 1998.