This Photo by Unknown Author is licensed under CC BY-SA
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
This Photo by Unknown Author is licensed under CC BY
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
This Photo by Unknown Author is licensed under CC BY-ND
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
This Photo by Unknown Author is licensed under CC BY-ND
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
This Photo by Unknown Author is licensed under CC BY-ND
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?
This Photo by Unknown Author is licensed under CC BY-SA-NC