Industrial Development Depends on Exports
Industry in Canada, traditionally based on natural resources, is moving to a knowledge-based high-tech industry. Canada has a vast land area rich in natural resources; but much of the permafrost covered land in the north is difficult to develop. A vast market for high tech services just to the south encouraged high tech industry development.
Economic and technological development of Canada has been somewhat along the same lines as its neighbor to the south, the USA. However, it has a population that is only about one-ninth that of US despite having a larger total area. While the US is the largest market in the world, Canada has a comparatively small domestic market and depends on exports for economic prosperity. 80% of the exports go to the USA.
Gross Domestic Product – GDP – of Canada was estimated at nearly $1.5 trillion in 2007. GDP represents the total of goods and services produced in a country and include net exports, i.e., exports minus imports. For Canada, exports accounted for nearly one third of its GDP. Sector wise, the services sector, including wholesale trade and computer services, accounted for 69% of GDP and employed 76% of the labor force.
We will now look at the economic scenario of Canada in brief.
Canadian Economic Scenario
Canada has a vast land area, second only to Russia in the world. However, less than 5% of the land in Canada is arable land. The permafrost-covered land in the north is difficult to develop.
Originally, Canada was a rural economy dominated by agriculture. Wheat, barley, oilseeds, tobacco, fruits and vegetables are the main farm produce. Other products of the sector include dairy and forestry products, and fish. Sectors like manufacturing and services have transformed Canadian economy into a dominantly urban one. However, over 2% of Canada’s GDP is still produced by agriculture.
Agricultural products also feed many industries like food products, wood and paper, and fish products.
In addition to the agriculture-based products mentioned above, other major Canadian industry products include transportation equipment, chemicals, processed and unprocessed minerals, petroleum and natural gas. Canada also generates over 600 billion kWh of electricity, of which over 40 billion kWh is exported.
Canada has large reserves of oil and natural gas, and exports part of its production. Other mineral resources include iron ore, nickel, zinc, copper, gold, lead, molybdenum, potash, diamonds, silver and coal. Abundance of resources, lower cost employees and the nearby huge US market has made Canada an attractive destination for industries.
Industries contributed 28% of Canada’s GDP in 2007.
The Services Sector
Services consist of numerous economic activities that are needed by businesses, the consuming public and the country as a whole. Wholesale and retail, transportation services, financial and legal services, delivery of entertainment in the forms of movies and concerts, government services in such areas as education, health and defense are all examples of what we mean by services.
An evidence of economic development is the predominance of the services sector over agriculture and manufacturing. In Canada, nearly 70% of GDP is contributed by services.
With an educated workforce, lower costs and a nearby vast market for high-tech products and services, Canada is fast becoming a high-tech country. Information and communication technology, biotech, medical devices, automobiles & components and aerospace contribute an increasing proportion of Canada’s GDP.
Small Business in Canada
Considering the importance of small business for employment and other desirable social and economic objectives, government of Canada extends active support to small business. You would find information about small business support programs at the Canada Business and Industry Canada websites.
The canadabusiness.ca website is a government information service for businesses and start-up entrepreneurs in Canada.
The Government of Canada has enacted a Canada Small Business Financing Act (CSBF). The CSBF program enables small businesses obtain long-term loans up to $250,000 for acquiring fixed assets.
Canadian government regulations for business consist of regulations at three government levels – federal, provincial and local.