Canada: Economy

For seven consecutive years—from 1994 to 2000—Canada held the distinction of being the best country in the world in which to live. The annual ranking by the United Nations assesses such things as life expectancy, adult literacy, and economic prosperity. Canada's life expectancy is 79 years, with a literacy rate of 97 percent. These high standards of living combine with the high-tech industrial society of Canada to make it an economic competitor in the global economy. In this chapter we will explore some of the economic successes Canada is presently maintaining.


Being the second-largest country in the world posed many communication difficulties until recent decades. The successful launch of the Canadian Anik A1 communications satellite in 1972 was a first step in linking people from all corners of Canada.

This achievement established the country as a world leader in satellite technology. It made Canadians pioneers in what has developed into a lucrative industry for the country.

Satellite communications ensure that all Canadians have access to the most recent communications and services. This infrastructure has the promise to increase efficiency, reduce cost, and improve public and social services—especially in rural and remote areas. Cost-effective education, health, and e-commerce services can be transmitted to the most physically remote locations in Canada.

The Canadian Space Agency's satellite communications program is also bringing international economic benefits to the country. Expertise and developing technology of this program are securing a place in the global economy for Canada. Being able to access a view of the world through an electronic window continues to open new opportunities. One such opportunity is that of the “Canadarm” technology.

The Canadarm was first launched into space in 1981 with the Columbia space shuttle. Its success on that mission secured a position in the future of space technology. Canadarm2 traveled to the International Space Station on the Endeavor space shuttle in 2001. This robotic arm is capable of lifting heavy modules, weighing tons, to continue construction of the space station. It sits on a power-providing platform and is remotely “flown” like an airplane. A camera mounted on the end of the arm offers a space vision for the controller in the space station as well as the Canadian Space Agency ground center in Quebec. This impressive camera checks to make sure outer surfaces of the space station are in healthy shape for future international dockings. Additionally, the arm flexes its muscle during maintenance and assembly phases of the International Space Station.

In return for the technology of the Canadarm, Canada will continue to send astronauts to the Space Station and assist with its management.Who knows where Canada will go from here!


When waking up to rural landscapes in Canada, a different way of life greets Canadians. Less hurried and often more casual than large cities, these areas are home to one-fifth of Canada's population. Rural Canadians offer significant contributions to the country's wealth and prosperity.

Exports of agricultural and agri-food products have reached an all-time high. By sending more products to more countries, Canada has proven that it is a global supplier of choice for international customers. While total numbers of farms in Canada have decreased, the average farm size, crop yields, and livestock numbers are increasing. Technological changes and innovations in agriculture, domestic and global economic factors, and changing consumer tastes are events and trends to which farmers are responding.

Only 7 percent of Canada's land area is utilized for agriculture. Most of this productive area is along the southern border of Canada. Wheat is the country's largest agricultural export. Many of the world's top pasta producers, such as Italy and Turkey, import voluminous quantities of Canadian durum wheat. Livestock productions of cattle and hogs have provided valuable export markets of beef and pork to several countries.

Canadians have also identified prominent issues of concern for these less-populated regions in which they live. Access to federal government programs and resources for community development, targeted opportunities for rural and Aboriginal youth, and partnerships for rural development are priority concerns. The Canadian Rural Partnership, a key federal framework for supporting rural communities, works to respond to such issues. The “Rural Lens” policy is a way of viewing federal issues through the eyes of Canadians earning a living from the land. Increased awareness for rural issues is happening because of federal programs such as these. By understanding the impact of new policies and programs on the lives of Canadians, it is hoped future initiatives will assess rural implications before legislative acts are passed.

Also of concern is the quality of life in rural areas. Receiving proper health care and educational services, in addition to economic and community benefits, will hopefully strengthen the decreasing numbers of Canadians living in these areas. By providing training, economic development, and strategic partnerships, smaller communities hope to be better equipped to compete in a global economy.

Increasing youth participation can play an important role in shaping a successful future for rural Canada. Young people are key to sustaining long-term economic and social development. They will be vital in building stable, vibrant communities for the future.


Many visitors come to Canada to view nature's breathtaking and unspoiled beauty. Visually magnificent and naturally diverse, Canada's 39 national parks weave through every province and territory.

By the dawn of the twenty-first century, tourism spending exceeded $54 billion (Canadian Dollars) a year—and was increasing annually. The United Kingdom, Japan, France, and Germany were at the top of the overseas visitor market, while United States residents were significant continental visitors. Sightseeing, at both natural landscapes and cultural heritage sites, and shopping top the list of visitor activities in Canada.


Canada has become a favorite destination for whale watchers, birders, and nature photographers. A range of adventure travel, including hiking, canoeing, kayaking, and snowmobiling, offers additional choices for Canada's lucrative tourism industry. The Canadian wilderness has become a natural, financial resource for the tourism economy.

In Manitoba, scuba diving the clear, cold depths of ancient glacial-formed lakes is an adventue for some ecotourists. Clinging to granite faces reaching a quarter-mile into the sky in the Cordillera of British Columbia offers an adrenaline rush for rock climbers of all ages. In areas of cold climate, you can tiptoe across an aluminum ladder spanning a deep, yawning, glacial crevasse. Twice each day, New Brunswick's Bay of Fundy offers the marvel of the greatest tides on earth: At low tide, you can literally walk on the ocean floor, and the high tide rolls in 50 feet higher (roughly the same height as a four-story building). Rich feeding grounds in this region also make it one of the world's most accessible sites for viewing marine animals such as whales.


Of course, there are numerous shopping opportunities in the large cities of Canada such as Vancouver, Toronto, and Montreal. In addition, at eight city blocks long by three city blocks wide, the West Edmonton Mall in Alberta holds the record for the world's largest shopping and entertainment center—more than 800 stores, in addition to services and attractions located inside the mall, offer respite for Canadians and visitors alike. Submarine rides, a zoo, the world's largest indoor “lake,” a roller coaster, an NHL-size hockey rink, and fantasy-themed hotels are just a few of the sights to be seen in this megacomplex.

West Edmonton Mall's location may seem unlikely—it attracts million of visitors and generates multimillions of dollars in revenue.Why? Spurred by petroleum production, the city of Edmonton has become a huge regional economic hub with a population exceeding 1 million. But ask any Albertan on a brutal winter day, when a kicking wind swirls snow all around, and you will really begin to understand the appeal of an indoor mall!


The abundance of natural resources in Canada has helped make it a leading industrial exporter. Products from the mining, energy, and forestry industries are major exports for the Canadian economy. Energy production from petroleum, natural gas, and hydroelectricity also account for export income from resource-based industry.

Coal and uranium provide one-third of Canada's electrical power. Hydroelectric facilities are also a source of energy for many Canadians. This energy resource allows Canada to generate electricity without producing harmful emissions that pollute the air. Favorable water conditions have even allowed surplus hydroelectricity to be exported to the United States. The most extensive hydroelectric development occurs in the province of Quebec. Much of the development in the northern part of the province, both existing and proposed, affects the Aboriginal Cree population living there. Numerous agreements, lawsuits, and settlements reflect the ongoing conflict stemming from hydroelectric development in this northern region.

Forests cover more than one-half of the Canadian landscape. They are important to Canada's economy and environment. Softwood lumber, wood pulp, and newsprint lead the list of forest industry exports. The climate-moderating forests act as natural air and water filters, while also producing employment opportunities for Canadians.


As the sixth-largest vehicle producer in the world, Canada's manufacturing industry continues to grow. The automotive parts and motor vehicle sector of this industry make it Canada's largest manufacturing contributor to the GDP (gross domestic product). The United States and Canada rely heavily on each other in the import and export trading segments of this industry.

Continuing advances in information and communication technologies have helped Canada's service industry to grow rapidly. Service industries in Canada's economy account for over two-thirds of the country's total GDP. Occupations in such service industries as accounting, architecture, health, marketing, and transportation, just to name a few, offer visible employment opportunities in Canada. Countries around the world are also benefiting from research and development technologies of the service industries.

Canada's top three trading partners are the United States, Japan, and the United Kingdom. With its abundant natural resources and skilled labor force, Canada enjoys solid economic relationships with these countries, as well as many others throughout the world. Some shadows loom over Canada's economy within the North American continent, however. Softwood lumber disputes and salmon “wars” with the United States add stress to the trading economies of these two countries. NAFTA (North American Free Trade Agreement) trade issues are also a source of challenge between Canada, the United States, and Mexico.


Sometimes another country can produce and sell goods for a lower cost than the industry can bear in one's home country. This “other” country then sells the product to the home country at a lower cost. For example, Canada provides softwood lumber to the United States for a lower price than the lumber can be manufactured there. To make up for this price difference, the United States government requires Canadian producers to pay hefty duties (fees) on softwood lumber that is imported from Canada. This added duty makes the price higher so that consumers are more likely to purchase lumber produced in the United States.

Long-standing disputes between Canada and the United States have occurred, and are still occurring, in the softwood lumber industry. As a result, thousands of jobs have been lost and more are at risk. The U.S. Commerce Department declares that Canadian lumber producers benefit from government subsidies because the Canadian government charges low fees to cut timber on public land. There is also the challenged fact that Canadian lumber is being sold in the United States below its fair market value. Because of these two issues, the imposed duty rates of between $2 and $3 billion (Canadian) per year were put in place to offset financial injuries to the U.S. lumber industry.

The concept of trying to “even the playing field” causes rippling effects for different segments of the softwood lumber industry. Construction workers needing a supply of softwood lumber to build new homes in the United States have to pay more for this product. Still, U.S. lumber producers are demanding even higher duties to offset any financial losses in their companies. Lumber workers in logging communities across Canada are losing jobs because their company's mill cannot afford to pay these duties. Lumber workers in the United States risk further job losses because their companies have difficulty competing with the lower-priced Canadian product.

It is hoped that reform for long-term markets will eventually result from this dispute. A fair yet competitive market for softwood lumber is important to the economies of both Canada and the United States. Seamless trading in the softwood lumber industry is not a practice that will come soon or easily to these two key economic trading partners.


What ownership problems could arise when a natural resource has the ability to move and relocate between two countries? Would both countries have access “rights” to the resource? Canada's natural resources of oil, natural gas, and forests are not able to perform this moving feat, but the natural resource of salmon certainly can—and does.

“Salmon wars” on the West Coast are long-running between Canada and the United States. For years, the two countries have disagreed over who owns this financial resource of the coastal waters and what quantities of salmon can be harvested. Certain salmon species spawn (lay eggs) in Canadian rivers, so Canada believes ownership is theirs, not the fishermen's nets scooping up these species in Washington, Oregon, and Alaska. Fishing companies in the United States, however, believe they have access to the salmon when they are feeding and living in U.S. coastal waters.

Viewpoints of Aboriginal peoples, on both sides of the border, are also being voiced. Historically, the Aboriginal populations had built an entire culture and economy based on the salmon. Some communities would move hundreds of miles to harvest salmon during the summer run. Later, they would trade the fish with other Aboriginal communities in the interior lands. Eventually, the European societies in North America became aware of the abundance of salmon in the treasured waters. New markets opened and demand for salmon was high.

The Aboriginal communities, fishermen, and salmon canneries on both sides of the border soon discovered the once-extensive quantities of salmon were being reduced quickly. If conservation measures were not taken soon, the salmon supply was in danger of being depleted.

Attempts were made to come to an agreement over quotas of how many fish could be harvested by people living in Canada and the United States. Agreeing to stop overfishing the coastal waters would hopefully bring some stability to the salmon population and industry. Disputes and varying forms of treaties have attempted to resolve the situation. A Pacific Salmon Treaty was signed with hopes to remedy the disputes. It aimed to provide conservation policies to protect and rebuild salmon spawning grounds. The treaty also worked to redistribute quotas of salmon species available to be caught for both countries. Following the treaty objectives has been a difficult path. At stake is not only an industry worth hundreds of millions of dollars annually, but also the ways of life for thousands of fishermen, their families, and coastal communities.


In an effort to create a mechanism to resolve disputes and provide “free trade” on the continent of North America, the governments of Canada, the United States, and Mexico created NAFTA.NAFTA went into effect on January 1, 1994. The intent of the international agreement was to eliminate tariffs (fees added to the value) on imported and exported goods between the three countries. An additional purpose of this legislation was to remove certain quotas in order to improve trade among the three partners.

Procession of the NAFTA legislation is occurring gradually over a 5- to 15-year period in order to give each industry time to adjust to this more level playing field. During this time, individual industries are striving to improve efficiency to compete with trading industries among the three countries.

Each country has specific strengths upon which to build and retrain its work force. As jobs were lost in ineffective industries, they were gained in the effective, stronger industries. This has resulted in a “continental” village of producers, rather than each country attempting to produce many things it needs on its own.NAFTA also allows Canada, the United States, and Mexico to discuss environmental effects of the trade agreement.

Will the countries' specializations and trade benefit all parties? Will increased trade improve the economic welfare of Canada, the United States, and Mexico as proposed? The longterm progress of this agreement has widened the outlook of all three countries to include an expanded global village where changes will affect the way people earn a living. These changes will bring both positive and negative influences to the lives of people who reside in North America.Moreover, guarded concern for individual self-reliance of these countries still remains.