PEST Analysis
Political
Canada is a democratic system with a parliament government. Canada’s system was adopted in 1848 and derives from that of the United Kingdom’s Parliament. Stephen Harper has served as Canadian Prime Minister since February 6th, 2006. Canada’s parliament has three distinct elements: the Crown, Senate and House of Commons. The Senate serves as the upper-chamber while the House of Commons serves as the lower-chamber. The members of the House of Commons are elected from their corresponding electoral district by receiving the largest number of votes. While Canada has many political parties, the most dominant are the Conservative Party of Canada and the Liberal Party of Canada.
From 1996-2013, The World Bank rates Canada’s political stability at an average value of 1.01. As of 2011, they ranked 27th in the world and 5th in the North America at 1.06 behind Aruba, Barbados, Dominica and the Bahamas respectively.
Contrary to popular belief, freedom of speech in Canada is not considered absolute. Under Section 1 of the Constitution Act of 1982, freedom of speech is given to Canadian citizens within certain limits. Although individuals have freedom of speech, it is not given freely of Government ramifications.
In regards to foreign investors, Canada has a wealth of opportunity for global business. Canada offers a low tax establishment with corporate tax rates 13% below that of the United States. At a Federal corporate income tax rate of 16.5% and plans to reduce the rate further, Canada has presented itself as a viable option for business. Canada plays home to one of the largest free-trade zones in the world, offering a tariff-free zone to industrial manufacturers. On top of this, Canada has reduced import costs for machinery and equipment.
The Canadian Competition Act sets out four purposes: (i) To promote the efficiency and adaptability of the Canadian economy (ii) To expand opportunities for Canadian participation in world markets (iii) To ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy (iv) To provide consumers with competitive prices and product choices.
Under Canadian markets, it is the goal of these laws to benefit the consumer.
The Canadian labor law promotes unions and opposition to unjust labor practices. They promote workplace health and safety along with just wages and vacation days for their employees as well. The Canadian labor code treats all employees as individual citizens with rights to work in a healthy, growing environment.
Economic
Part of a network of 24 countries as a developed OECD high income country, Canada has a well-developed economy. In Q4 of this past year, Canada expanded its GDP 0.6%. From 1961-2014, Canada averages 0.82% GDP with a solid 0.8% this past year.

This past month, Canada’s inflation rate was at a solid 1%. Over the past 90 years, the country has had an average inflation rate of 3.2%.

Minimum wage levels differ province to province, averaging at about $10.50. Of all minimum wage workers in 2013, 40% were between 15-19 years old. Canada shows trends of growth in regards to minimum wage levels, recently reviewing an act to pass $15 per hour.
Canada is currently at an unemployment level of 6.8% with a high of about 8.75% in the past 15 years. Like the US, this rate averages those workers actively pursuing work.

The USD is 80% of the Canadian Dollar. While Canada has experienced criticism regarding an overvalued currency, their business environment has made it a positive. Often times the Canadian dollar must drop to account for exports. The Canadian dollar is considered a major currency in foreign trading.
Canadians pay 11-15% federal tax rate and 0-16% province tax rate. Paradoxically, Canadians don’t always pay more in taxes. Where Alaska and Florida in the US have no income tax rate, all provinces are subject to an income tax. The recently lowered corporate tax rate actually raised tax revenues, proving Canada’s attractiveness to do business.
Social
Canada is home to 34.9 million citizens. Over 61% of those individuals live in Ontario or Quebec alone, making those cities central hubs. At a bilingual rate of 17.5%, most citizens speak French or English. The growth rate has declined in recent years but from 2000-2010 it averaged 1.1% per year. There are 1.06 males to every female and the life expectancy is just over 81 years, ranking 11th in the world. Canadian Age Structure | 0-14 | 16.1% | 15-64 | 68.7% | 65+ | 15.2% |
The majority of the religious population is Christian at almost 67% of citizens. Runner up to the Christian faith, 24% of Canadians don’t adopt religion.
64.1% of individuals aged 25-64 have post-secondary academic qualifications. Most Canadians major in business related studies. Men hold a larger number of degrees than women.
Canada has multicultural diversity environment. Canada is becoming more economically unequal with a Gini coefficient rating of 0.32 in the 2000’s.
Women traditionally earn less than men in Canada. In 1995, Canada established a Federal Plan for Gender Equality, ensuring women had a voice in decision making.
Technological
The country has one of the lowest R&D costs in the world. They promote scientific research and experimental development (SR&ED) at about 70.7% less the cost of the US standard. They offer a SR&ED tax incentive program as well at an average 30% benefit per investor. A 42% increase in R&D spending occurred from 2000-2010 at a total $29.2 billion spent in the last year. Nine out of the top twenty five corporate R&D spenders were derived from foreign investment.
Canada’s patent office has hundreds of employees with over half having legal and technical training to provide protection for applicants. They receive more than 30,000 requests per year and stay on top of new technology to make sure everything stays within the legal realm.
Canada has a large amount of energy resources, oil and natural gas being the leaders. Canada’s energy production is expected to grow substantially. By 2035, energy output is expected to be 20% lower due to increased efficiency.
Canada is such a vast country that it still lacks proper infrastructure. There is over-capacity on public transportation and deterioration on highways and roads. Due to the extreme weather, infrastructure is a must.
Canada’s innovation has recently declined compared to other nations. At the forefront of R&D costs, Canada feels it is their duty to continue to grow and develop upon ideas. Canadian universities are actively engaging in technology transfer practices to enhance diffusion from the universities into the workforce.

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