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Published byReginald Richardson Modified over 9 years ago
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15.1 - Canada's Foreign Trade Globalization: the trend of growing foreign trade and investment and the spread of international businesses and markets Costs of computing power keep decreasing Costs of long-distance communication keep decreasing Between 2000 and 2010, rich Western countries fell from being responsible for 2/3 of the global GDP to just over ½ By 2020, it’s predicted that this number will fall to 40% Emerging economies will, by then, control more than half the global output
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The Importance of Trade Since the early 1950s, businesses are more likely to buy resources and sell products internationally EX. A business has its: Headquarters in Canada Borrows from Japanese savers Purchases German-made machinery Employs Mexican workers Sells the bulk of its output in the United States Within this international trend, Canada has a heavy reliance on trade
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The Importance of Trade cont’d Canada’s exports = 35% of GDP United States’ exports = 12% of GDP Japan’s exports = 18% of GDP Japan and the USA’s economies are large and diversified which allows them to be less dependent on imports and exports Canada’s reliance on foreign trade is still better than some small industrialized countries, such as Belgium Belgium’s exports = 92% of GDP
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Exports as a Percentage of GDP
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Canada’s Trading Partners Who is Canada’s principle trading partner? The United States In 2010, 73% of Canada’s merchandise exports went to the USA and 63% of its imports came from the USA While Canada’s export to other countries is still modest, it is expanding rapidly e.g. between 1990 – 2010, Canadian exports to India and China more than doubled
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Canada’s Trade Patterns Canada’s merchandise trade is made up of exports and imports of both natural resources and manufactured products In 2010, Canada’s merchandise exports included almost equal portions of raw/processed natural resources (agricultural products, forest products, minerals, metals) and manufactured products (machines, equipment, automobile products)
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Canada’s Trade Patterns Canada also trades services Travel Transportation Commercial & government services
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What is Traded In general, when a country can produce something efficiently, they export it They import products that they cannot produce efficiently Producing something efficiently depends on: Country’s resources Market size Climate Sometimes chance
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What is Traded cont’d Resources: Canada has many rich and plentiful natural resources This is why it is a major exporter of paper, wheat & natural gas Belgium has little natural resources so they are major importers of unprocessed products Bangladesh has a huge pool of labour and little capital resources, so they are major exporters of labour-intensive goods
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What is Traded cont’d Market Size: Recall that the production of some items exhibits increasing returns to scale (costs more per each additional unit of output) These items tend to be produced in settings where businesses can take advantage of increasing returns to scale e.g. cars are produced in countries where people buy cars, not in countries where few people own cars
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What is Traded cont’d Climate: Although we could grow tropical foods in Canada in a greenhouse with its climate controlled, it is actually cheaper to import tropical fruit internationally This is why we can eat “summer fruit” in the winter
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