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The Country Today
The Country Today
Since the mid 1990s, fiscal management and rising natural resource prices— particularly for fossil fuels—has buoyed the economy, and Canada ranks high in the world’s wealthiest nations.
The following is a very general account of economic activity in Canada. Additional information can be found in the regional introductions. Statistics Canada provides electronic publications for readers seeking detailed information (fees may apply): www.statcan.ca. Another source is the Canadian government’s website http://canada.gc.ca, which provides links to all government publications.
Canada’s great strength lies in its wealth of natural resources—forests, minerals and energy fuels that contribute greatly to its economy. Mining and agriculture are part of the country’s highly diversified economy, whereas energy is among the top-performing sectors, along with transportation and telecommunications.
With nearly 70 percent of Canadians living within 300km/186mi of the US border, it is not surprising that the US is Canada’s largest trading partner. Increased trade contributed to a gross domestic product (GDP) growth rate of 4.3 percent by 2000—the highest of the major industrialized countries. The country has not been able to sustain that rate, averaging 2.6 per cent annually since 2000, but steady growth and strong fiscal management has enabled the federal government to apply some of its budget surpluses to reducing Canada’s large public-sector debt by 7.4 per cent.
Land of Forests
Forests are of prime importance to Canada; trees in one form or another are among the country’s most valuable assets. Over half the total land area is forested, and the forest-products industry exists in every province. Although no longer dominant in British Columbia, which is best known for its sawed lumber, the industry is still important there, and Quebec is a major producer of newsprint . Canada is the world’s largest exporter of the latter commodity, supplying nearly a third of total world consumption.
Despite Canada’s tough climate and terrain, agriculture occupies an important position in the economy, making up 2.3 percent of the country’s GDP. Wheat has long been the leader in agricultural exports from the Prairie provinces, challenged in more recent years by canola, a relatively new oilseed crop. Beef cattle are also raised in the Prairie provinces, whereas dairy products, poultry and hogs are more important in British Columbia, Ontario and Quebec. Potatoes, which have been a mainstay of the Maritime provinces, are of growing significance in the prairie lands. Apples, grapes and several hardy small fruits are harvested in the southernmost areas of the country, especially in Ontario and British Columbia.
Fishing and trapping were for centuries Canada’s primary industries. Today, Canada is still a leading exporter of fish in the world, although the country’s east and west coasts have seen declines in fish stocks in recent years. The Atlantic Coast supplies the vast majority of this resource, while 15 percent of the value is provided by the Pacific salmon fishery. Canada remains one of the largest suppliers of animal pelts in the world. The country’s total exports have increased significantly in recent years; new and emerging markets for Canada’s fur products include China and Greece.
Riches Beneath the Soil
Although in decline in some parts of the country, mining has played an important economic role in every region of Canada; it is a particularly active industry in the Northwest Territories and the Yukon. The country is a leading international producer of metals including nickel (Ontario, Manitoba), zinc (New Brunswick, Northwest Territories, Quebec, Ontario), molybdenum (British Columbia), uranium (Saskatchewan, Ontario), gold (Ontario, Quebec, Northwest Territories, Yukon) and lead (New Brunswick, British Columbia, Northwest Territories). Leading non-metals are potash (Saskatchewan, New Brunswick) and asbestos (Quebec). Iron ore is produced in the Labrador Trough (Quebec and Newfoundland) and in Ontario.
Alberta is the leading province for fossil fuels. Alberta possesses immense reserves awaiting exploitation in its Athabasca oil sands, and shares substantial coal reserves with British Columbia. Although fossil fuel production is almost entirely restricted to western Canada at present, offshore oil developments such as the Hibernia project on the continental shelf off Newfoundland, is changing this imbalance.
Because of Canada’s size, transportation has always been of prime importance. Until about 1850, waterways commanded the country’s economic growth. Since then, wheat farming, mining, and pulp and paper industries have grown largely dependent on rail transport. Even in these industries, movement of goods by water is not insignificant. The network of locks and canals known as the St. Lawrence Seaway significantly boosted Canada’s economy: in particular, the country became an exporter of iron ore after the seaway facilitated exploitation of Labrador and Quebec’s huge deposits. The road network has expanded since World War II with the completion of the Trans-Canada Highway and the opening of the great northern roads—the Alaska and the Dempster highways. Aviation plays an important role, especially in the North.
“Few Englishmen are prepared to find it [Canada] what it is. Advancing quietly; old differences settling down, and being fast forgotten; public feeling and private enterprise alike in a sound and wholesome state; nothing of flush or fever in its system, but health and vigour throbbing in its steady pulse: it is full of hope and promise.”
Charles Dickens, American Notes , 1842
The abundance and power of Canada’s water sources offer exceptional opportunities for generation of hydroelectricity. Almost two-thirds of the country’s electricity comes from this source. Generating stations operate in every province except Prince Edward Island, and Quebec’s massive James Bay Hydroelectric Project, with a capacity of more than 12,000 megawatts, is one of the largest hydroelectric engineering projects in the world. In Labrador a huge generating station is located on the Churchill River. Other examples are in British Columbia on the Peace and Columbia rivers, in Quebec on the Manicouagan and Outardes rivers, in both Ontario and Quebec on the St. Lawrence, in Saskatchewan on the South Saskatchewan, and in Manitoba on the Nelson.
Electricity produced by such projects powers industries engaged in natural resource utilization such as smelting businesses and pulp mills. Plentiful and inexpensive hydroelectricity has attracted other industries, such as the aluminum industry to British Columbia and Quebec. Canada’s energy is transported via high-voltage power lines to southern Canada and surplus electricity is exported to the US.
Manufacturing and the New Economy
Canada’s manufacturing industry, traditionally based on resource-processing (forest products, minerals, food and beverages, for example), has largely shifted into secondary manufacturing. A significant petrochemical industry exists in Alberta, Manitoba, Ontario and Quebec. Automobile and auto parts manufacturing and electrical and electronics industries are based mainly in Ontario and Quebec. British Columbia’s Vancouver and Ontario’s Toronto are centres for telecommunications, pharmaceuticals and biotechnology as well as film and video production. In Atlantic Canada commercial medicine, environmental industries and information technologies (the latter most notably in New Brunswick) complement traditional industries.
Information and Communications Technologies
On a per capita basis, Canada is next only to the United States in the number of personal computers, with 669 per 1,000 inhabitants in 2005. Long considered one of the best-wired countries, Canada boasts comprehensive and inexpensive telecommunications services —no doubt a contributing factor to the nation’s top ranking in worldwide Internet use per capita. Canada’s long-distance telephone services were deregulated in 1992. Deregulation of the local telephone market in 1998 resulted in alternative carriers and resellers entering the market with new competitive services, although downturns in the worldwide telecommunications industry in 2001 led to consolidation and layoffs within Canada. Several Canadian companies are world leaders in the telecommunications equipment market.
Investment and Banking
In the past decade, Canada’s economy has sustained steady growth. By 2007 inflation was at 2.2 percent and the unemployment rate was at 6.1 percent. The S&P/TSX Composite Index , which accounts for 95 percent of all equity trading in Canada, reached record levels in mid-2000, but fell back sharply in 2001. Since then, steady growth in energy and manufacturing stocks has pushed it well past the 2000 levels.
Consumers have been quick to adopt new technologies and services introduced by Canadian financial institutions. In 2004 Canada ranked first in debit card usage, with 88.2 transactions per inhabitant. Use of the Internet for banking continues to grow: while only 8 percent of Canadians used it in 1999, 58 percent used it for banking by 2005.
Canada is a federal state with 10 provinces and three territories. Each province has its own elected legislature controlling regional affairs. Canada’s three territories—the Yukon, the Northwest Territories (which is only one territory despite its name) and newly created Nunavut (1999)—have elected legislative assemblies to govern their respective territories. Nunavut, in addition, has a number of joint resource-management bodies composed of Inuit, federal and territorial government appointees who play important decision-making roles. The central government in Ottawa, the federal capital, assumes responsibility for such matters as defence, foreign affairs, transportation, trade, commerce, money and banking, and criminal law.
Though officially part of the Commonwealth, Canada functions in actuality as an independent nation. The Canadian head of state is the British monarch. Her authority is exercised by the governor general, who was at one time appointed by the monarch but today is chosen by the elected representatives of the Canadian people. However, the governor general is little more than a figurehead as actual power lies in the hands of the Canadian prime minister, the leader of the majority party in Canadian Parliament. This latter institution consists of an elected legislature called the House of Commons and an appointed Senate, members of which are chosen by the governing party. The prime minister rules through a cabinet drawn from elected representatives (and sometimes from members of the Senate), and must submit his or her government for re-election after a maximum of five years, or if he or she is defeated in the House of Commons.
After World War II Canada was catapulted to global leadership as a founding country in the United Nations and as a member of the North Atlantic Treaty Organization (NATO). The country retains diplomatic missions in over 150 countries and has earned respect as an international peacekeeper. In addition, Canada is a regular participant in international conferences, including the yearly economic summit of the eight major industrialized democracies, known as the G8. In 1994, Canada, Mexico and the US implemented the North American Free Trade Agreement (NAFTA), a pact designed to increase trade and investment among the three countries largely by eliminating tariffs and other barriers. This has contributed to a sharp increase in Canadian exports in recent years.
This immense country is inhabited by a relatively small number of people: just under 32 million in 2006, compared to more than 300 million in the US. Overall population density is only 3.5 persons per sq km compared to 246 per sq km in the United Kingdom. Canada’s inhabitants are largely concentrated in a band about 160km/100mi wide immediately north of the Canadian/US border. The regional distribution is approximately as follows: British Columbia, Rockies, Yukon 13 percent; the Prairie provinces 17 percent; Ontario 38 percent; Quebec 24 percent; the Atlantic provinces 8 percent; Northwest Territories 0.2 percent. Although 62 percent of the population lives in Ontario and Quebec, mainly between Quebec City and Windsor, Canada is strongly characterized by regional distinctions.
Food and Drink
Food in Canada has many regional specialties. Staples of the Plains Indians, such as buffalo stew with bannock (bread), still provide sustenance for Canada’s First Nations people today. British Columbia is famous for its seafood, especially king crab and salmon.
The country produces a variety of fruit, such as apples, peaches, cherries, and its own wine in the Okanagan Valley in British Columbia and from Niagara in Ontario to Quebec’s Eastern Townships. In the Prairies the beef is excellent, along with fresh lake fish in the north, wild rice, berries of all types, and the heritage of many immigrant cultures—cabbage rolls, pierogies (dumplings) and borscht, for example.
Quebec’s French heritage provides it with a fine culinary tradition, and many restaurants serve traditional French-Canadian cuisine—pork dishes, meat pie (tourtière) , soups, thick stews (ragout) and a generous quantity of maple syrup. Quebec’s Beauce region is well known for its maple products: sugar pie, maple syrup, ice cream and taffy. The Atlantic provinces are another great seafood region, especially oysters, lobster, scallops, and mussels. In Newfoundland screech, a heady dark rum, or one of the country’s fine beers is popular with meals. New Brunswick is famous for fiddleheads, the new shoots of ferns available fresh in May and June, and for dulse, an edible seaweed. Moose meat and fresh lake fish are available in the Northwest Territories, as is Arctic char, a delicacy similar to trout and salmon in taste.