While politicians chest thump how great Canada is, and how crappy the US is, we still can't rest on our laurels. There is still a gap in the prosperity of Canada vs the US... and it's time to action to strengthen our cities further to power real estate across the country.First off, why is there a prosperity gap?
Simply its because of our poor productivity performance. According to Martin Prosperity Institute at the University of Toronto, Canadians do not innovate enough or create comparable value add in our hours worked (take a look at their full report here). Our low dollar has allowed this to happen for too long.
Why is improving the productivity gap important to real estate investors?
First and foremost, increasing increasing our GDP/capita would increase our after-tax disposable income. Which means Canadians would be able to afford mortgages and more rents...increasing the value of real estate.
As can be seen from exhibit 4 from Martin Prosperity, if Canadians close the prosperity gap we would increase our disposable income by $11,500. This increase in disposable income would basically match the total Canadians spend on mortgages.
Finally, what should governments in Canada do to improve our economy?
According to Martin Prosperity, we should take on an attitude of offense and not defense:
- Develop a more competitive economy (hello cell phone providers and CRTC)
- Encourage business leaders to be ambitious, raise their sights, seek out and capitalize on new opportunities and focus relentlessly on improving how their business opportunities via a tax system that encourages investment and innovation in the long term.
- Regain our mindset to be the best...no more Mr Nice Canadian. Think bold and go all out baby
Take a look at Richard Florida's theory on city prosperity here:
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McGuinty Government Lands Major Video Game Studio, 800 Jobs
One of the world's leading game developers -- Ubisoft -- is coming to Toronto to establish a major video game studio and create 800 high-quality jobs over 10 years.
Ubisoft chose Ontario because of our talented workforce, competitive tax environment and strong ties with the film industry. The McGuinty government is investing $263 million over 10 years in the company. Ubisoft will invest over half-a-billion dollars in the new studio, which will begin operation in late 2009.
Ubisoft is a worldwide leader in producing, publishing and distributing interactive entertainment products. The company has been in Québec since 1997 and today employs 2,200 people there. As of January 2009, they also have a presence in Vancouver.
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