5

ECONOMIC FACE
 5

OBJECTIVES
• To describe the economic face of Canada
• To describe the creative class and the knowledge-based economy
• To identify Rostow’s economic growth stages and Canada’s economic structure
• To use the core/periphery model as a basis for understanding Canada’s global
economic position and each region’s economic picture
Introduction
Canada has had two dominant economic thrusts

• A reliance on exports has made Canada sensitive to global trade

• Radical shifts in Canada’s industrial structure and labour market
are expected
• Federal and provincial governments believe Canada’s future lies in
a knowledge-based economy

Knowledge-based
economy
 Canada’s Future Economic Face
schwab made a book called 4th industrail revolution

• The world is entering the Fourth Industrial Revolution

(new technologies, robotics, and artificial intelligence)
o Regional strengths in Canada should be exploited
1. started in britian w steam
engine
2. mass production, steel oil
and electricity = lightbulb
3. digital 2nd half of 20th
century,=internet
4. technology more dominant
in daily life = 3d printed arms
and AI -> more innovation

1784 1870 1969 tomorrow

 Industrial Structure
• Primary sector: resource extraction,
(minerals, farming, fishing, and logging

• Secondary sector: construction and

manufacturing (e.g., processing of extracted
resources for commercial sale)

• Tertiary sector: services, ranging from

cashiers to health-care workers, truckers, and
computer programmers
• Quaternary sector: high-end knowledge-
based workers and decision-makers
 Globalization and the Stages of
Economic Growth Model
walt whitman rostow economy epcot
• Rostow’s stages of economic growth globalizatoin

move from resource to industry

more service based

economy depends on industries more

industrialization begins

economic epcot!

all countries start here, agriculture society. some coutries havent changed

What are the shortcomings in this model?

Canada’s Economy
• Spending strategies to stimulate the economy:
defence; infrastructure; financial support to major manufacturers

• Super cycles: extended periods of high global growth

driven by the emergence of large, new economies that are
undergoing the early stages of industrialization.
GDP: total dollar value of all goods and services
produced over a year
 Key to Canada’s Prosperity: Trade
our key trading partner = USA
• Canada’s economic well-being is tied with trade. 80%

• Canada is a nation of resources, and the global market

stimulates prosperity in resource regions.
• Key trade agreement with the US is NAFTA
retooled, trilateral agreement

• SIGNED – USMCA – Oct 1, 2018 usa, mexico and canada to exchange

services tariff free儰
liberalization of trade = no or lower tariffs
free trade agreement = nfta 1994 (went on for 25 yrs) jean cretien was economic policy
PM in canada 1879
remove tarrif = more trade /b/ countries that began the canada industry
sectors that did well: dairy more sales put tariffs on everything
sectors that didnt do well: southern ontario/quebec called the national policy
worried about the homogenization of culture this encouraged ppl to buy from canada
favoured central canada
Key to Canada’s Prosperity: Trade
every minute = $1 billion of trade w usa

• 76% of exports went to the United States in 2015

• Factors contributing to high levels of trade between
Canada and the US:
o Continentalism
o Complimenting economies
o Trade agreements
o North-south transportation system
Manufacturing: Alive or Dead?
• Although exports are significant, manufacturing has
suffered a steady decline over the last decade. Why?
• Canada has higher wages than most other countries
• Automation has displaced workers.hallowingclosure
out: decline of anufactoring work force
of manufatoring plants
• Outsourcing sees jobs move overseas offshore relocation to cheaper places
• Offshore relocation moves jobs out of the country
• A high Canadian dollar (until 2014) made exports more expensive
 Manufacturing: Alive or Dead?,
cont’d
• The Canada-US Auto Pact (1965) helped automaking companies in
boosted manufacturing for over 30 canada
ford, gm, chrysler
years, but two events reduced Canada’s helped intergrate canada to
automobile market
manufacturing advantage: high tarriff on imports so u buy a
domestic car

o NAFTA (1994) brought Mexico into the

North America market
exclusivity on the autopact intervenes on inclusivity of nafta so the auto pact was broken in 2001

o the WTO ruled that the Auto Pact gave

Canada an unfair trade advantage with the
US and so the Auto Pact ended in 2001
 The Wave of the Future: The
Knowledge-based Economy
• A knowledge-based economy offers hope to offset a
decline in manufacturing activities

physical labor = hands on = intellectual (projection for future)

 Information Society and Innovative
Clusters
• The creative class is a socioeconomic class
(as in ‘working class”) identified by Richard
Florida, comprised of creative professionals.
we’re used to skill based workers, working class, blue collar workers
new language is creative class
• The creative class exists, prioritizing
innovation and scientific research
major uni and cities these are where ppl of the creative class will want to live and learn
ex; toronto, vancouver, montreal
innovation clusters

• Where are innovative clusters located?

• Are they spread evenly across country?
Regional Economies
• Each region in Canada has a different economic face
o Varies but ultimately the tertiary sector is highest in each
region

tertiary main structure for canada

 Regional Economies, cont’d
• Canadian Version of the
Core/Periphery Model
o Canada’s six regions are placed in
one of four categories:
characteristics of the core: dominates GDP, 40% of canada, centre of power
economically and politically, very well connected (infastructure), cultural
capital, good weather
• The core (Ontario and Québec)
• Rapidly growing (British Columbia
and Western Canada) growing population
• Slow-growing (Atlantic Canada)outmigration, more ppl leaving than coming
• Resource frontier (Territorial North)
 Regional Economies, cont’d

• Equalization Payments
o Designed to ensure a reasonable
degree of economic equality
o Creates “have” and “have-not”
provinces
o Two core regions (Ontario and
Québec) are “have-not” provinces
o Currently the highest equalization
payments (by far) goes to Québec
 Regional Economies, cont’d
• Debt Loads in Canada
o Sagging economies and low interest rates have
increased government debt
the bigger the debt the more loan
very expensive repayment

o In 2015-16 the net debt by the federal government

reached $619 billion
• Ontario highest indebted province at $296 billion
huge portion of our taxes go off to pay off taxes
thats the problem in canada our deb is so huge and we have to pay
alot of interest
less money for new programs. and new initiatives
Summary
• Canada’s growth is languishing due to the global
economy facing many challenges
• Canada’s economic future depends on:
o the resurgence of the global economy
o a return of the super cycle
o an upsurge in its exports
• Until then, Canada’s economy is trapped in the grey zone
between a recession and a rapidly growing economy
 5

REFLECTION
1. What are the advantages /disadvantages of Canada’s dependence on the US?
2. With expansion of Canada’s service and knowledge-based sectors, how can
technical talent and human capital development be fostered ?
3. In embarking on a “green revolution” with energy efficiency policies, what
effect might this have on core and upward transitional regions of Canada?
4. Discuss the relative importance of continental agreements such as NAFTA for
Canada as new trade agreements that support global trade evolve.
Resources
• CETA: Canada EU free trade Deal lauded by
Harper, Barroso (CBC News, Oct 18, 2013)
• http://www.cbc.ca/news/politics/ceta-canada-eu-free-trade-deal-lauded-by-harper-
barroso-1.2125122

• 1988 Free Trade Agreement Signed (CBC Archives)

• http://www.cbc.ca/archives/categories/economy-business/trade-agreements/canada-
us-free-trade-agreement/free-trade-agreement-signed.html

• CETA: Canada – Europe Trade Agreement

https://www.youtube.com/watch?v=YAIJtKwFCgs
 Resources
• Florida, R. (2012). The Rise of the Creative Class—Revisited. New York, NY: Basic Books. Available
from: http://www.basicbooks.com/full-details?isbn=9780465042487.
• This is a follow-up to The Rise of the Creative Class (2002) in which Florida refines his occupation-al, demographic,
psychological, and economic profile of the Creative Class. He incorporates a decade of research, covers the global effects of the
Creative Class, and explores the factors that shape “quality of place” in cities and suburbs.
• Florida, R. (2017). The New Urban Crisis. New York, NY: Basic Books. Available from:
http://www.basicbooks.com/full-details?isbn=9780465097784.
• The author examines the forces that power the growth of major cities and also generate their challenges:
gentrification, unaffordability, segregation, and inequality.
• Government of Canada (7 Feb 2017). Canada-European Union Comprehensive Econom-ic and Trade
Agreement (CETA). Ottawa, ON: Global Affairs Canada. Available from:
http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-
acc/ceta-aecg/index.aspx?lang=eng.
• This government website provides an overview and chronology of the Canada–European Union (EU)
Comprehensive Economic and Trade Agreement (CETA).
• Government of Canada (5 May 2017). North American Free Trade Agreement. Ottawa, ON: Global
Affairs Canada. Available from: http://www.international.gc.ca/trade-commerce/trade-agreements-
accords-commerciaux/agr-acc/nafta-alena/fta-ale/background-contexte.aspx?lang=eng.
• This government website provides information about the North American Free Trade Agree-ment (fast facts)
and a summary of multilateral trade agreements between Canada, Mexico, and the United States. lity.
Resources
• Natural Resources Canada. The Atlas of Canada - Minerals and Mining. Ottawa, ON:
NRC. Retrieved Aug 1, 2017. Available from: http://atlas.gc.ca/mins/en/index.html.
• This is an interactive map site that enables one to view base metals, precious metals, iron ore,
uranium, coal mines, oil sands mines and top exploration projects in Canada.
• Schwab, K. (2017). The Fourth Industrial Revolution. Danvers, MA: Crown Business.
Available from: http://penguinrandomhouse.ca/books/551710/fourth-industrial-
revolution#9781524758868.
• This book is about the technological revolution, dubbed by Klaus Schwab as the Fourth Industrial
revolution. It emphasizes a future of ubiquitous, mobile supercomputing, artificially-intelligent
robots, self-driving cars, and much more.
• Sinclair, S. and S. Trew, Eds. (2016). The Trans-Pacific Partnership and Canada. A
Citizen’s Guide. Toronto: Lorimer. Available from:
http://www.lorimer.ca/adults/Book/2917/The-TransPacific-Partnership-and-
Canada.html.
• In this book, policy experts assess what the impact of the TPP agreement would be on Canada.
Areas covered include environmental protection, health care and other public services, Canada’s
cultural industries, the labour market, human rights, and rights of multinational corporations to
sue governments for policies and decisions that interfere with their profits.