Canada, the second largest country in the world, has a huge amount of natural resources and one of the best economies in the world. Constantly growing manufacturing, mining and service sectors has turned the Canadian nation from a rural economy to industrial and urban one.
Around 70% of Canadians are involved in the service industry which makes it the leading industry sector of Canadian economy. Oil and logging industries dominate in the primary sector because Canada has the second largest oil resource in the world after Saudi Arabia and the vast majority of the forests. Sub sectors of the forest industry are solid wood product manufacturing, pulp and paper product manufacturing, and forestry and logging. This sector employs more than 200,000 Canadians and brings more than $20 billion a year to the Canada’s economy. Oil and gas sector attracts approximately $80 billion. Also, the automotive industry is the largest manufacturing sector in the country. Due to NAFTA agreement Canada is one of the biggest exporters of automobile equipment and goods.
Canada is not accidentally in G8. Let’s see a few more points of its economy.
World Trade Organization
Canada is a member of the World Trade Organization (WTO) since January 1, 1995 because international trade is one of the main parts of the Canadian economy. Canada’s economic growth depends on the access to global markets for different goods and services. The USA, China, European Union and many other countries are trade partners of Canada but most products are exported to the USA, which makes it main trade partner of Canada.
Canadian GDP and NAFTA
Both GDP (Gross Domestic Product) and GDP per Capita have been growing since the North American Free Trade Agreement (NAFTA) was signed by the governments of Canada, Mexico, and the United States creating a trade bloc in North America. The agreement was signed by leaders of mentioned countries, and took effect on January 1, 1994. Since that time Canadian GDP has grown incredibly and continues growing. In 2009 GDP went down because of the global crisis but in 2010 the drop was compensated and in 2011 and 2012 GDP has been constantly growing.
During the global financial crisis at the end of the last decade the Canada’s banks were relatively stable. While US banks were collapsing Canada did not have any bank failures. Therefore its banks system was rated as the most sound in the world. There are six largest Canada’s banks which are in the list of the best banks in the world: Royal Bank of Canada, Canadian Imperial Bank of Commerce (CIBC), TD Bank Financial Group, the bank of Nova Scotia, bank of Montreal and National Bank of Canada.
Public debt of Canada is constantly growing. At the beginning of the previous decade it was roughly $500 billion and at the end of 2012 it was more than $600 billion which is around $17,000 per citizen. For comparison, every US citizen owes more than $52,000. Comparing to the USA Canada’s public debt is much lower, but anyway it always grows.
Investors play a very important role in the economic growth of any country. Therefore Canada has Foreign Investment Promotion and Protection Agreement (FIPA) with more than twenty countries: Russian Federation, Poland, Egypt, Thailand, Venezuela etc. Such agreement obligates both countries to respect foreign investors and investment. In addition, on September 9th 2012, Leaders of Canada and China signed FIPA. As Prime Minister Stephen Harper told a new trade agreement between Canada and China had the potential to create thousands of jobs and strengthen important trading ties between the two countries.
This field has a few problems. Firstly, it is a lack of physicians and nurses. Patients can wait for a visit of the doctor more than a month. This can cost somebody a life. The second problem is the cost of the medical care. Of course, all serious cases are covered by Medical insurance and generally health of Canadians is protected, but people can pay that Medical insurance organization more than 40% of their budget every month.
It is important to highlight because during the global crisis which started at the end of 2007 a lot of people around the globe lost their jobs. 240,000 Canadian workers lost jobs during just first two months of 2009.
Over the last 30 years employment insurance (EI) of Canada had several changes. Canadian government has made a few different cuts of EI since 1980s. Duration of benefits, amount of money paid and qualification periods have been cut during this period of time. In 2008 the government created several employment insurance pilot programs which influenced positively the Canadian economy and increased the citizen’s income. Under such pilot program people can have part time job while they are on claim without a deduction from their benefits.
Canada Pension Plan
Canada Pension Plan (CPP) is also a strong part of Canadian economy. Canada Pension Plan, CPP Investment Board, Quebec Pension Plan (QPP) and Old Age Security (OAS) are all programs to provide secure and wealthy lives for retired people.
In conclusion it is worth to say that globalization made all more connected and the growth of Canadian economy mostly depends on the growth or failure of its neighbor economy, the US, which currently has a recession. However, as the Prime Minister Stephen Harper told, once: Canada will emerge from the global recession before any other country and in a stronger economic position than ever. Actually, we can agree with him since Canada has the potential to do so.
Andrew Dar writes the articles for a few years. You can also visit his other writings about Canada and Canada’s economy: How World War Two Influenced Canadian Economy or Why So Many People Immigrate To Canada.