Paul Krugman noted a few days ago that
[A]s far as underlying economic inequalities are concerned, the EZ is no worse than the US.
The difference, mainly, is that we think of ourselves as a nation, and blithely accept fiscal measures that routinely transfer large sums to the poorer states
[Update: Frances caught something important here. The numbers for federal transfers to provinces include the tax points that were transferred to the provinces. For example, the revenue numbers for the Manitoba 2008-9 budget include $3.6b from the federal government, but the data from that table show transfers well above $4b. The difference is presumably due to transferred federal tax points that show up as own-source revenues. I don't *think* this changes the main conclusions you'd want to draw from this exercise.]
The data are available for the period 1981-2009; here is a summary table based on averages during 2003-2008. Positive numbers mean that the province/region is a net recipient, and negative numbers indicate net contributors:
Federal transfers: 2003-2008 Population share GDP share Net transfers:
per capita 2009 dollars
share of GDP
Atlantic provinces 7.2% 6.0% $5,801 14.9% Quebec 23.5% 19.8% $980 2.4% Ontario 38.8% 38.9% -$1,448 -3.1% Manitoba 3.6% 3.1% $4,137 10.2% Saskatchewan 3.1% 3.3% $2,874 5.2% Alberta 10.4% 16.0% -$4,241 -5.9% British Columbia 13.1% 12.4% -$644 -1.5% Core provinces 62.3% 67.2% -$1,765 -3.5% Periphery 37.4% 32.3% $2,358 5.8%
Here I'm defining the 'core' provinces to be Ontario, Alberta and BC - the only provinces where net federal transfers are negative.
Here are some graphs of net transfers between the core and periphery over the last 30 years or so:
It would appear that these transfers have become less important over time. I'm not sure if this is due to a policy change, or simply because the provinces in the periphery are catching up to the core.
I've prepared similar graphs for Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and for the Atlantic provinces; that would take up too much room to post, so click on the links if you're interested.
But there's one case that is interesting simply because it's so unremarkable: Manitoba. Manitoba's weight in Canada is similar to that of Greece in the eurozone: 3.6% of the population (3.4% of the eurozone population is in Greece) and 3.1% of GDP (Greece's share of eurozone GDP was 2.6% in 2008). Here is how net federal transfers to Manitoba have evolved since 1981:
According to Wikipedia, EU transfers to Greece were 1.3% of GDP in 2009; federal government transfers to Manitoba are routinely - blithely, even - 8 times as large.
The question of whether or not the euro will survive may simply come down to whether or not a framework can be devised in which eurozone core countries like Germany would be willing to regularly send 3%-4% of its GDP to the periphery. From where I'm sitting, I don't think a system to make possible those sorts of intra-eurozone transfers is likely to be created very soon. And if it doesn't happen very soon, it likely won't happen for a very, very long time.