Canada Essay

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Sprawling across the northern half of North America as the world’s second-largest country by land mass with nearly 10 million square kilometers, Canada has a diverse economy that ranks in the top 15 of global standings. The annual gross domestic product is approximately US$1 trillion. A federation and constitutional monarchy whose head of state is Queen Elizabeth II, the national capital is at Ottawa, Ontario. There are 10 provinces that range significantly in size and population (Ontario has 13 million, Prince Edward Island 130,000) and three northern territories. Eighty percent of the population lives in cities, with Toronto the largest (pop. 2.5 million, metro area 5.5 million). A member of the G8 group of industrialized nations, Canada is a founding member of the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), and is also a member of the North American Free Trade Agreement (NAFTA) with the United States and Mexico.

Economic History

A nation of approximately 32 million people mostly clustered in cities near the Canada-U.S. border, modern Canada was founded in 1867. Prior to that, the country was first a colonial possession of France, and then of Great Britain. Both powers traded extensively with the aboriginal populations that had lived on the land for thousands of years. As such, the country has always been a source of staple resources, and the region was an important element of both France’s and Great Britain’s mercantilist empires. Basque fishermen first started coming to Canada in the 1500s. France claimed it as its own and colonized New France, in the area in present-day Quebec, starting in 1608. Furs became a leading export, and the Company of One Hundred Associates, the first business association in Canada, was granted a monopoly on business matters in New France. Meanwhile, in 1670, the British granted the Hudson’s Bay Company the rights to trade on all the land that had rivers that flowed into Hudson’s Bay. This created a lively imperial competition, especially around the fur trade.

Following the defeat of the French at the Plains of Abraham and the Treaty of Paris in 1763, Britain took possession of the colony. With the independence of Britain’s American colonies in 1789, refugees loyal to the British crown flooded northward, precipitating colonial changes and population challenges for the existing French-speaking population. In the 1800s, wheat and timber became leading exports to Great Britain. After an uprising in both the French and English-speaking colonies in 1837, some local independence was granted. Eventually, the scattered British colonies united to form modern Canada, with complete control over domestic affairs, while Britain retained significant say in Canada’s international relations. In the 1867 constitution, the federal government was granted wide-ranging powers over economic concerns, with local matters left to the provinces.

In the 19th century, the federal state utilized its powers as the country expanded westward and was linked by a transcontinental railway, completed in 1885. Immigration and settlement followed, with an emphasis on wheat production. Protectionist policies helped to create infant industry, particularly in Ontario and Quebec where farm implements, steel, railways, and consumer goods became important manufacturing sectors. Banking was also a protected field, and financial services have been a strong area since 1867. An emphasis on building infrastructure (railways, canals, bridges) that was largely government-funded brought the state actively into the economy. A long depression in the 1880s and 1890s was soon eclipsed by a wheat boom that saw the population grow significantly, and the nation’s economy improve. By World War I, Canada was a choice destination for British capital and European immigrants, and had developed a solid economy with railways, timber, agriculture, mining, and manufacturing as key sectors. World War I also saw the entry of the federal state into the economy with war mobilization and the creation of new federal regulatory agencies, federally owned companies, and income taxes.

In the inter-war period, the economy expanded dramatically, with new growth in automobile production (largely fueled by companies from the United States) and other consumer goods, the expansion of wheat production, and urban growth (utilities and infrastructure). The overexpansion of the economy, persistent trade issues, and a general worldwide malaise had a profound effect upon Canada, particularly in the agricultural west, where wheat prices plummeted and natural disasters ravaged farms. By the early 1930s, Canada was among the hardest hit of all nations by the Great Depression, with nearly a quarter of the population on relief.

In World War II, the economy expanded massively to meet the challenges of war, as did the federal state’s intervention in the economy. Dozens of new federally-controlled companies were created in fields as diverse as synthetic rubber, to construction to, of course, arms manufacturing. Full employment was reached, and while labor problems persisted during the war, recognition of collective bargaining eventually led to labor peace.

These new federal policies, labor peace, and the return of consumer confidence in the postwar period brought an unprecedented level of prosperity. Between the 1950s and the 1970s, Canada experienced its greatest period of sustained economic growth. The population jumped through natural increase and immigration, from five million in the 1930s to 10 million by the 1960s. Autos, natural resources, consumer goods, and the service economy all developed significantly in this period as Canada became much more urban and suburban. Much of this economic prosperity was fueled by American investment. This was particularly true in natural resources, especially fields such petrochemicals, uranium, and refining, but also in other fields such as forest products, mining, and heavy manufacturing. Much of this was direct investment through branch plant operations of U.S. multinationals. Oil strikes in Alberta profoundly changed the dynamic of Canadian development, and provided a boom in growth in the Canadian Prairie. Interventionist governmental policies that helped to create a welfare state in this period also helped to fuel growth.

By the 1970s, the worldwide economic downturn took its toll on Canada, as inflation increased and growth slowed. With some industrial dislocation and the high cost of energy, the central provinces of Ontario and Quebec lost some of their economic primacy within the federation. The passage of free trade agreements with the United States (1989) and then with Mexico (1993) ended the long-standing protectionism that had existed in the economy, and shifted economic ties from an east-west axis, to a north south one.

Modern Economy

In the 1990s, restructuring shifted the economy to one even more dependent upon services, particularly high technology, but Canadians still remained largely tied to commodity production and manufacturing. By 2008, Canada ranked sixth place in a global ranking for information-technology competitiveness, according to the Economist Intelligence Unit, behind the United States, Taiwan, Britain, Sweden, and Denmark.

Today, Canada has a diversified economy. Natural resources continue as a key element. Oil and gas production in the western provinces of Alberta and Saskatchewan, and the Atlantic provinces of Nova Scotia, Newfoundland, and Labrador have led to high growth rates in those regions. Continued restructuring in Ontario, particularly in the auto industry (the leading export since the 1960s) have slowed growth in central Canada. Service sectors, such as financial services, health, and education have all grown dramatically. There has been a significant increase in the number of leading Canadian firms purchased by foreigners (mainly Americans), which has been a growing concern of Canadians. This is especially true in the mining and natural resource fields where long-standing Canadian firms such as Alcan (aluminum products), MacMillan Blodel (forestry), Molson (beer), Inco (nickel), and the Hudson’s Bay Company (retailing).

Nonetheless, many Canadian firms continue to be leaders in their fields. Leading international and domestic firms include Research in Motion, Nortel, and CAE in technology; Magna International, Wescast, and Linamar in auto parts production; Bombardier in transportation equipment; EnCana, PetroCanada, and Barrick in oil and gas and mining; TD Canada Trust, BMO, and Royal Bank in banking; Manulife and Sun in insurance; Canadian National and Canadian Pacific in transportation services. Virtually all of these companies are traded on the Toronto Stock Exchange (TSX), the country’s largest (and the third-largest in North America).

In terms of its external trade, Canada attributes 40 percent of its gross domestic product to external trade. By far, Canada’s main trading partners are the United States and Mexico. Every day more than $1 billion of goods crosses the Canada-U.S. border. Canada’s merchandise trade with the United States and Mexico has risen from US$112 billion in 1993 to US$235 billion in 2000. Canadian trade with NAFTA countries has more than doubled, while trade with the rest of the world has grown only by 29 percent, chiefly with the European Union and Japan. Along with the auto trade, lumber, agricultural products, and energy (oil and gas) exports constitute the primary trade for Canada. The currency is the Canadian dollar.


  1. Michael Bliss, Northern Enterprise: Five Centuries of Canadian Business (McClelland and Stewart, 1987);
  2. Canadian Statistics Agency, (cited March 2009);
  3. Diane Francis, Who Owns Canada Now?: Old Money, New Money and the Future of Canadian Business (Harper Collins, 2008);
  4. Amal Henein and Françoise Morissette, Made in Canada Leadership: Wisdom from the Nation’s Best and Brightest on the Art and Practice of Leadership (Wiley, 2008);
  5. International Business Publications Canada: Country Study Guide (International Business Publications, 2008);
  6. International Business Publications Canada Customs, Trade Regulations and Procedures Handbook (International Business Publications, 2008);
  7. International Business Publications Canada Government and Business Contacts Handbook (International Business Publications, 2008);
  8. Kenneth MacLean, Out of Control: Canada in an Unstable Financial World (Canadian Centre for Policy Alternatives/James Lorimer, 1999);
  9. James H. Marsh, The Canadian Encyclopedia, 2nd ed (Hurtig, 1988);
  10. McCalla, ed., The Development of Canadian Capitalism (Copp Clark Pitman, 1990);
  11. T. Stanbury, Business-Government Relations in Canada: Grappling With Leviathan (Methuen, 1986);
  12. Statistics Canada, Canada Yearbook 2007 (Statistics Canada, 2007);
  13. Graham D. Taylor and Peter A. Baskerville, A Concise History of Business in Canada (Oxford University Press, 1994).

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