Canada's Economy

 Driving Questions: What is NAFTA? And how does it impact Canada?

Word of the Day:

NAFTA- NAFTA is the North American Free Trade Agreement. It is an economic trade agreement between Canada, the United States, and Mexico.

Quick Skill Review

Gross Domestic Product is the total amount of final goods and services produced in a country in a year. GDP is a good way to gauge economic growth or decline. Ideally, you hope your country's GDP increases every year; the more it increases, the better your country's economy is doing. Look at the graph below and compare the US and Canada. Which country had the most growth in 2002? What about in 2004? Or 2007? What can you infer about the economy of Canada from this graph?

 

 Attribution: GDP graph from Public Domain

Attribution: car image from paid subscription

Attribution: buying image from paid subscription 

Attribution: Beetle passes from Animation Library

 

 

Before we get into the specifics of Canada's economy, let's do a quick review. 

Based on your Economics Concept Wheel, what can of economy does Canada have?

YES! A mixed market economy!

Now that you know that Canada has a mixed economy similar to the United States you need to know how they make their money. If you had to guess from previous lessons, what do you think helps to make Canada's economy strong?

 

Did you guess any of the following?

Canada has a strong and very diversified economy.

Canada has an abundance of natural resources.

Canada has a well-educated and well-trained workforce.

Canada has a very strategic location in the world, and it has many great ports for trade.

 

All of these help to make Canada's economy one of the strongest in the world.

 

 

There are four major sectors to Canada's economy: service, manufacturing, energy, and agriculture.

Examine the table below to learn more about each.

 

	Service	About 78% of Canadians work in the service sector. These jobs include retail, business , health , education, high tech, and entertainment services. These jobs range from cashiers to teachers to financial specialists to realtors. Think about the definition of GDP. It's the total amount of goods and SERVICES. These services are any job you would pay someone to do for you. A nurse, hair stylist, tutor, or doctor provides a service to you, and you have to pay them for doing that service.
	Manufacturing	Although manufacturing is only about 13% of Canada's GDP today, it is still vital to their economy. One of the largest industries is automobile production. Most of the large American and Japanese car companies have factories in Canada, and Canada produces more vehicles each year than Michigan, which is the heart of the American auto industry. US companies have lower production costs if they manufacture in Canada. This is because of Canada's public healthcare. In the US the company has to provide medical insurance, but in Canada the government provides that. The problem that Canada sees with this arrangement is that many of these factories provide what are called "blue collar" jobs. In other words, they are the factory worker jobs, not the executive or high paying positions.
	Energy	Canada produces a lot of energy, or natural resources that can be used to produce energy. Canada has the third largest oil reserves in the world (the only ones larger are Saudi Arabia and Venezuela). They also produce a lot of natural gas and hydroelectric power. But, most of this energy is produced in the western or northern regions of Canada, no where near the manufacturing center near the Great Lakes and St. Lawrence River. Canadian produces can send these resources to the western US more cheaply than to eastern Canada, so Canada ends up importing some fuel from other countries. Canada also uses nuclear power.
	Agriculture	Canada is a major exporter of agricultural products, especially grains like wheat, oats, and barley. The central part of the country in Saskatchewan, Manitoba, and Alberta you will find a landscape similar to the United State's great plains. This area is perfect for growing grains that can be made into a variety of products. Canada ships a large portion of their crops to the US and Asia.

 

---

And finally, WHAT'S NAFTA?

Canada and the US are great trading partners. In 2009, 73% of Canada's exports went to the US, and 63% of Canada's imports came from the US. One reason why these numbers are so big is because of NAFTA, the North American Free Trade Agreement. This agreement was created in 1992, but didn't go into effect until January 1, 1994. The agreement opened the door for open trade, ending tariffs on various goods and services, and implementing equality between Canada, USA, and Mexico. NAFTA has allowed agricultural goods such as eggs, corn, and meats to be tariff-free and has made it easier for corporations to trade freely and import and export various goods in North America.

 

 

Attribution: Canada video from paid subscription

Attribution: city view from Creative Commons

Attribution: service image from Creative Commons

Attribution: Manufacturing image from Creative Commons

Attribution: Energy image from Creative Commons

Attribution: Agriculture image from Creative Commons

Attribution: NAFTA logo from Creative Commons

 

 

So what do you think?

Do Canadians live a life similar to the citizens of the United States,

or is the lifestyle of Canadians drastically different?

 

 

Attribution: thinking image from paid subscription 

Attribution: Taskbox from Animation Factory