Figure 1.--Canada has an important industrial sector, but agriculture and raw material extraction are both very important, especially petroleum. This snapshot was found in England, but taken in Canada. It was sent to relatives in England. The building in the background with plank siding is a good indication that it was North American and not English. Canadian agricultural is centered on grain production from the prairie provinces, but there is also wool production. This snapshot was probably taken in the 1920s. An inscription reads, "Cousin Nancy & Alan in Canada". Notice the great pooch keeping a close eye on on the sheep.

The Canadian and American economies have many similarities with adjacent geographies, similar ethnic mix, and cultural similarities. The largely English legal and political foundation is important, although differences developed after the Revolution (18th century). And Canada has an important French-speaking minority in Quebec. Canada has both important agricultural and industrial components and heart of the economy is the extraction of natural resources, both renewable and non-renewable. Canada in the early-20th century began to build an important industrial sector, largely linked to the United States. American automobile opened subsidiaries in Canada. This industrial development allowed Canada to build one of the largest navies (in terms of vessels) which played a key role in defeating the German U-boat menace in the North Atlantic during World War II. Admiral Dönitz planned to fight the British Royal Navy and eventually the U.S. Navy, but did not even think the Canadians had a navy or could build one. Canada after World War II followed the European welfare state model. A range of entitlements and social benefits were financed by massive deficit spending. The deficits reached such levels that they were adversely affecting the economy (1990s). The Canadian dollar fell way below parity into the 70s in exchange rates. Unintended consequences also caused problem. Generous unemployment benefits were one of the problems. Designed to protect workers from unemployment, they actually raised unemployment rates. Many workers found that they could get by working only a few months out of the year. Conservative governments implemented a range of reforms which lowered unemployment. lowered business tax rates, and sharply reduced deficit spending and debt. The Canadian dollar not only recovered bu exceeded parity with the U.S. Navy. A major reason for this was the strength of raw material exports, especially oil to the United States. The fall in oil prices has severely affected the Canadian economy, especially because much of the Canadian oil is high cost production. This has resulted in a precipitous fall of the Canadian dollar since 2014.

American Connections

The Canadian and American economies have many similarities with adjacent geographies, similar ethnic mix, and cultural similarities. The largely English legal and political foundation is important, although differences developed after the Revolution (18th century). And Canada has an important French-speaking minority in Quebec.Like Mexico, Canada often looks askance at its powerful American neighbor. But in fact being lovated close to the United Srates has played a major role in Cabnad;s economic success.

Chronology

The chronology of Canadian economic history began with with the hunting and trading societies of the Indigenous peoples. There wasxsome farming, but nothing like the agricultural economies of the Amer-Indian peoples og Meso America to the south. Some of the crops developed in Meso-America did reach Canadian tribes. The first Europeans to reach Canada were the Vikings, but the did establish any colonies. The next Europeans (primarily Portuguese) as part of the North Atlatic fishery found the Grand Banks--incredably rich fishing grounds. The French colonized Canada (16th century). The major attraction for the French was fur, an extremly valuable commodity at the time, breaking the Russian domination of the market. Very few French people, especially women, showed any interest in settling Canada. (Unlike the British, the French monarchy and Church sucessfully kept religiou desenters out of Canada, a factir in the small number of French colonists. The small population and limited economy meant that Canada was not one of France's most valuable colonies. In fact after the Seven Years/French and Indian War gave up Canada to retain two small sugar islands (1763). Major changes occurred (19th century). This varied by region. Here the expanding rail system was providing a way to transport mined minerals and agricultural products to world markets. The railroads were not only a major economic development, but central to building the Canadian nation. Europe and America was the most important market and the first rail lines connected Eastern Canada to Atlantic ports. As in America, the Rocky Mountains priove a major barrier. Canada completed its first trans-coninental railroad (1885). The two most important economic developments were in the minining and agricultural sectors. The Canadian economy from the very beginning of European settlement exhibited a reliance on natural resources. Beginning with fur and expanding to timber, minerals and hydrocarbons (oil and gas). This nmeant a reliance on export markets, especially the United States. As in America, European immigrants moved into the Prarie area, hugely expanding agricultural production. As in America, Henry Ford has a massive impact on the econmomy (20th century). American automobile companies moved across the border, turning Canada into an important industrial nation. The North American Free Trade Agreement (NAFTA) basically fused Canada with the American and Mexican economy.

Sectors

Canada as a British colony and then Dominion developed both important agricultural and industrial components and heart of the economy. The strength of the agriculture sector, given Canada's northern latitudes, is rather surprising. (Gulf Stream warmed Western Europe is an exception.) Surprisingly, the Canadaian Prarie farmers report higher yields than farmers in the American states south of the border like Montana, the Dakotas and Wyoming. The reason has to do with Ice Age glacial geology. As in America, agriculure has played an important part in Western economics and history. Fishing, forestry, and minining are also important. The railroads and the Yukob Gold Rush played a huge role in launching the Canadian mining sector. In the 21st century, oil and gas have become enormously important. The extraction of natural resources, both renewable and non-renewable. Canada in the early-20th century began to build an important industrial sector, largely linked to the auto motive industry to the United States. American automobile companies opened subsidiaries in Canada. Canada played an important role in World War I through manpower and agricultural production. Canadian harvests played an important role in feeding the Allies. Because of the industrial development during the early-20th century, Canada played a much more important role in World War II. This industrial development allowed Canada very quickly during World War II to build one of the largest navies (in terms of vessels) which played a key role in defeating the German U-boat menace in the North Atlantic. Admiral Dönitz planned to fight the British Royal Navy and eventually the U.S. Navy, but as Canada did not even have a navy, never imagined that they could build one that could threaten his U-boats. Industry played an important role in developing a modern, diversified economy.

Regions

The railroads played a magor role in conecting a vast country. There are five important regions (Atlantic, Central, Prarie, West Coast, and Northern Territories). The various regional economies were very different and still have substantial differencs. Manufacturing is primarily based in Ontario and Quebec adjcent to the american industrial Midwest. The the four western provinces (the Prarie Provinces and the West Coast) account for most of Canada's production of raw materials. Differences in the regional economies led to variations in living standards, especially severe in the Atlantic provinces. As a result, the Canadiab Giovernment lhas instituted interregional subsidies (equalization payments) which have become a divisive issue in Canadian politics.

Welfare State

Canada after World War II followed the European welfare state model. A range of entitlements and social benefits were financed by massive deficit spending. The deficits reached such levels that they were adversely affecting the economy (1990s). The Canadian dollar fell way below parity into the 70s in exchange rates. Unintended consequences also caused problem. Generous unemployment benefits were one of the problems. Designed to protect workers from unemployment, they actually raised unemployment rates. Many workers found that they could get by working only a few months out of the year. Conservative governments implemented a range of reforms which lowered unemployment. lowered business tax rates, and sharply reduced deficit spending and debt. The Canadian dollar not only recovered bu exceeded parity with the U.S. Navy. A major reason for this was the strength of raw material exports, especially oil to the United States. The fall in oil prices has severely affected the Canadian economy, especially because much of the Canadian oil is high cost production. This has resulted in a precipitous fall of the Canadian dollar since 2014.

Created: 10:38 PM 2/4/2016
Last updated: 10:15 PM 2/6/2024