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Financial Post, Weekly edition, Fri 19 Jan 96, page 6

Keywords: Competition Reports Canada Canadian Manufacturers' Association World Economic Forum

Canada jumps to third in G7 competitiveness

Erik Heinrich

Canada jumped to third place from sixth in competitiveness among G7 countries in 1995, thanks largely to the declining fortunes of some of its biggest European rivals.

Canada scored an average of 68% on eight key measures of productivity, including real interest rates, unit labor costs, investment and exports, says a Canadian Manufacturers' Association report released yesterday.

The results are in part based on a competitiveness report published each year by the World Economic Forum based in Lausanne, Switzerland.

While Canada ranked behind Japan and the U.S., which scored 90.2% and 75.6%, it moved ahead of Germany (62.5%), Italy (62.1%) and France (61.7%).

Britain was at the bottom of the heap with 50.7%.

``The relative rise of Canada has a currency effect in it,'' said Joanne Plaxton, an economist at Canadian Imperial Bank of Commerce who specializes in G7 countries.

Appreciation of the German mark and French franc against the US$, the currency used in the competitiveness measures, had an adverse impact on those two countries, Plaxton said.

Germany also suffered from wage settlements above the rate of inflation, which, combined with a strong mark, tended to scare away investment.

But Canada deserves some credit. Said Plaxton: ``Investment growth has been strong in Canada, and productivity has increased with the restructuring that has taken place.''

The CMA report also found that Canada ranked first among the G7 nations in export growth and unit-labor costs.

It was last in capital investment, technology commercialization and domestic market share.

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Revised: May 10, 1996

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