Protected industries: Why more than a third of the Canadian economy is walled from competition
A new report has emerged from the Fraser Institute which shows that approximately 35 percent of Canada’s economy is protected from foreign competition. In fact, it has been said that industries are protected.
According to the report, from maple syrup to milk producers, telecommunications companies and taxi companies, Canadian companies “are walled from competition”, which has caused a delay in trade, investment, and innovation in the country and has left consumers with fewer options. Also according to the study
Thus, according to the new study conducted by the Fraser Institute, it is estimated that 35 percent of Canada’s economy is protected from foreign competition, through rules, government intervention and various interprovincial requirements. Likewise, the study classifies the level of protectionism in Canada against other developed nations. While there are protectionist factors outside of human control, such as geography and distance, the lack of foreign competition in Canada is largely due to governmental factors.
Protection that affects consumers
For his part, a senior member of the Institute, Vincent Geloso, has pointed out that “When governments in Canada protect industries, they have less choice and/or less innovations compared to consumers in other countries”.
In addition, the study highlights several industries where protectionism is exacerbated, including air transport, telecommunications, and broadcasting. Similarly, the study recognizes other barriers, such as state monopolies, including liquor sales in Canada and Quebec and the Canadian Post owned by the Crown. With these factors, the low limit restriction estimate is around 22 percent.
Now, it is important to mention that the aforementioned report goes beyond the regular definition of protection to include both interprovincial barriers and the potential impact of occupational licenses, which is the way in which the study reaches its figure of 35 percent. Interprovincial barriers refer to difficulties in marketing across provincial boundaries, such as the restrictions inherent in the sale of alcohol from Ontario in Alberta.
Source: Nicholas Sokic | Financial Post