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Overview
1.
How Canada’s Economy Looks and its
Characteristics
2.
Importance of International Trade
3.
Economic Dependence on the US
The Situation Today and Looking
Forwards
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How It Works
“Mixed Economy”
Pure capitalist model as a foundation, then adds a significant role for
government to provide goods, services, and regulate economic activity
Service sector dominates
Finance, education, healthcare, trades, retail, bureaucratic work, etc.
How It Works
Gross Domestic Product (GDP)
Used to measure prosperity; refers to the value of goods and services produced
in a given year
Canada’s GDP is mostly comprised of trade (approx. 65%)
Most of this trade is done with the US
Energy resources and raw natural resources make up the biggest amount
How It Works
Canadian agriculture focused mainly
on prairie provinces, though in decline
Wheat, cattle, pigs, canola, corn, fruit
Manufacturing focused primarily in the
core (Ontario and Quebec)
Lumber dominates the west coast for
manufacturing, with the forestry industry
also active across pockets across the
country
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How It Works
Government involvement is more significant than say, the United States,
but has declined in recent decades
Corporations owned by the government, like Air Canada, sold to private
investors
Subsidization: i.e. fossil fuel industry; agriculture (i.e. dairy)
Enhances stability and sustainability, though perhaps at the cost of pure
growth
Who gets subsidized?
How It Works
Canada’s central bank, the Bank of
Canada, uses macroeconomic policy
to promote national economic goals
This government involvement, with
stricter regulations, is a big reason why
Canada was less severely hit by the
2008 economic crisis
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How It Works
Taxes
Comparatively lower than other developed industrialized democracies
Most is drawn from taxes paid on incomes and purchases, and depend in some
cases on provinces as well as income levels
Corporate taxes are a flat 15% (or 10% for small businesses); one of the lowest
rates in the world
Importance of International Trade
Vast majority of Canada’s exports are sold to the United States
Upwards of 75%
The European Union, Mexico, and China make up a majority of the rest
Canada exports more oil products to the US than any other country
Canada also provides about a third of the softwood lumber used in the US
Importance of International Trade
However, a key source of imports is also the United States
Determinant factors:
Proximity
Consumer preferences
Industry practices
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Importance of International Trade
Relationship with the US is very much a “making things together”
approach than a competitive one
The United States-Mexico-Canada Free Trade Agreement (USMCA) signed
in 2018
However this isn’t always the case for every industry all the time
Formerly the North American Free Trade Agreement (NAFTA)
Economic hardship in the US is particularly felt in Canada
Especially with American Foreign Direct Investment (FDI)
Importance of International Trade
With Canada having a small domestic market, it is quite reliant on foreign
markets
Allows a range of different industries to flourish, even if Canada doesn’t have
the market for said goods or services
This certainly allows Canada to economically competitive, but it does
have drawbacks…
Challenges
Foreign control
When foreign companies buy or build factories in Canada, they obtain control
over their investment
Research and development in Canada suffers
Domestic producers have to compete with foreign producers
Distinctive Canadian products can also get squeezed out –most concerning for
“cultural industries” like TV, movies, books
Challenges
New markets?
How should Canada approach its
relationship with the United States moving
forward?
How will the Arctic and climate change
impact everything?
What matters most to Canadians?
Growth? Economic independence?
Sustainability?
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