• Canada:
• Economy

Canada - Economy

Overview: Until the early 20th century Canada had a predominantly agricultural economy. Even after the Second World War, a quarter of the workforce was still engaged in agriculture. Today, it is highly industrialised with one of the world’s highest per capita income rates. Ontario is the centre of economic activity and the province with the largest manufacturing base and agricultural sector. Toronto in Ontario is the leading financial and services centre. The country is exceptionally well endowed with natural resources: minerals, petroleum and natural gas, forests, extensive coastal waters for fishing, and rivers and falls for hydroelectric power.

Canada is among the world’s leading exporters of potash, uranium, nickel, zinc and asbestos and a major producer of aluminium, cadmium, cobalt, copper, gold and, in the 2000s, diamonds. There are large reserves of nickel, copper and cobalt.

It has one of the world’s most open economies, where exports account for around 40% of GDP. It enjoyed strong growth from the mid-1990s, mainly in exports and the services sector, and growth in manufacturing output averaged around 3% p.a. during the decade. This then continued into the 2000s until 2001 when economic growth slowed to 2–3%, 3.3% in 2004 and 2.9% in 2005. Rapid growth in private-sector services has occurred while there have been spending cuts in the public sector.

Economic links with its giant neighbour were cemented by the Free Trade Agreement (FTA) of 1989. This was subsequently enlarged to include Mexico under the North American Free Trade Agreement (NAFTA).

Both federal and provincial governments have undertaken privatisation in order to reduce their fiscal deficits. Air Canada was privatised in the late 1980s and rail networks Canadian Pacific and Canadian National Railway followed by the mid-1990s. There are limits to the level of foreign ownership permitted in areas such as broadcasting, telecommunications, transportation and uranium mining.

Trade: Exports of goods and services account for around 38% of GDP and manufactured exports for 60% of total merchandise exports (2004). The trade flow between Canada and the USA is the largest in the world between any two countries; 83% of exports are to, and 63% of imports from the USA (2005). There are strong intra-industry links between, in particular, the motor and aircraft industries in both countries. Many US corporations operate subsidiaries in Canada. Canada’s other major trading partners are Japan, China, the EU and Mexico. Main exports are motor vehicles and parts, machinery, equipment, manufactured goods, petroleum, natural gas, and forestry and agricultural products. Main imports are machinery, equipment, motor vehicles and parts, industrial and consumer goods, and agricultural and energy products.