Pages Chapter 12: Canada and the Global Economy

Key Terms Economy Pre-industrial society Industrial stage Post-industrial stage Globalization Transnational corporations Capitalism Demand economy Command economy Mixed economy GDP Free trade Protectionism Fair Trade

Canada: An Industrialized Nation Canada can be described as encompassing many places. To get the “big picture” you must consider Canada’s role within the world economy. There are also many differences within Canada which make things complicated. This chapter looks to the past for the context and toward the future for possible changes

Canada Within the World Economy Here is how we categorize our countries: 1. More developed country (one that is technologically advanced and wealthy) 2. Less developed country (one that is at a relatively early stage in the process of economic development).

Stages of Economic Development There are 3 stages to Canada’s economic growth: 1. Pre-industrial (primary) 2. Industrial (secondary) 3. Post-Industrial (tertiary and quaternary)

Pre-Industrial Most workers are involved in primary industry (agriculture, collecting and using natural resources). After European contact most of Canada’s economy was pre- industrial INDUSTRIAL STAGE: Secondary activities dominate the economy: processing raw materials (mining and agriculture) Tertiary activities start to become more important (provide services ie) insurance, banking, and retailing. During the 19 th century railways were built to connect the regions of Canada. Canada safeguarded these industries through protective tariffs (taxes on imported goods)

Post-Industrial Stage Most people work in tertiary and quaternary activities. Quaternary activities are based on knowledge and information (research and development). Post-Industrialzation and globalization require easy interaction among economies and highly efficient transportation and communication systems. Protective tariffs are reduced are eliminated (1970s). See page 245 of your text to see how Canada’s economy is post-industrial

Economic Divisions within Canada Economic development is uneven. Different regions are at different stages of development. This is often referred to as Regional Disparity. Heartland vs. Hinterland (point of view on regional disparity). Heartland refers to a centre of dense population and economic power. Ex) Tertiary and Quaternary Dominate Hinterland refers to one that is distant from the heartland and has les economic activity (geographic regions). Ex) Primary and Secondary activities dominate

How Does Canada’s Economy Work? Canada’s economy is very complex. Here are some KEY CONCEPTS that will help you understand: Consumer-based economy (what we buy and prices) Demand economy (government doesn’t intervene) Command Economy or Planned economy (central government decides what is produced. Gov’t owns everything, everyone's needs are met; wants are less important. (communist or socialist)

Demand Vs. Mixed Canada falls into a mixed economy Think of this as the political spectrum Command economy would fall on the left. Demand is on the right Mixed is in the middle

Globalization Key Question: How does being a part of a global economy help and harm Canadian society and its economy? Globalization brings increased foreign investment. TNC’s may set up factories, but may also buy up more Canadian businesses.

ProsDrawbacks Factories are more productive when owned by TNC’s More innovative Advanced technology Employed more skilled workers Conducted more research and development Paid better wages Lower prices Too much power in the hands of TNC’S Weaken countries, influence national governments Less sovereignty, especially in smaller countries Smaller businesses cannot survive (ex. Wal- Mart, Home Depot) Poor treatment of workers Low wages Child labour Weak environmental policies TNC’S have no stake in society just want $ Commitment to society is weakened can pick up and move at any time Could lead to greater inequality, instability, and conflict

Foreign Investment in Canada

Statistics From almost 4,000 foreign owned companies set up facilities in Canada. In 2005 alone, there were 554 foreign takeovers or new businesses set up in Canada. Foreign investment is crucial in the survival of the Canadian economy.

Assignment Define all key terms in chapter 13.