Canada is known for its harsh winters, moraine lakes, maple syrup, friendly people, and, let’s be honest, hockey players who aren’t always nice. As a developed nation, Canada is a member of the G7 group and holds the distinction of having the 9th largest economy globally. Canada is a nation of shared prosperity founded on the tenets of peace, order, and sound governance.
Some economic experts believe that Canada is committed to pursuing the common good, but it also acknowledges the limitations placed on individual freedom. Nonetheless, notwithstanding this notion, Canada is not a socialist nation, at least not at present. They are a capitalist economy based on the accumulation of capital and the production of wealth through the wage-work relationship between owners and workers. The economy of Canada is largely reliant on private enterprise and the free market, which encompasses the principles of supply and demand.
As with all modern capitalist countries, Canada does engage in some market regulation, which in this case includes some state-owned enterprises. Indeed, the nation possesses a commendable system of social assistance; however, a significant number of individuals are unaware that the existence of welfare programs does not necessarily imply a socialist ideology. In my opinion, Canada is a mix of capitalism and government control, rather than capitalism and socialism.
Like every other developed country, Canada has experienced a series of transitions, beginning with a raw material-driven economy, progressing to a manufacturing-driven economy, and finally to a service-driven economy. It’s worth noting that, in the present day, most service-driven economies boast a service sector accounting for around 70% of their total gross domestic product. This pattern is also apparent in the Canadian economy in a certain manner.
The Canadian economy is ranked among the top 20 countries on the economic freedom index, and it bears a striking resemblance to the Australian economy. The two economies share many similarities, such as being wealthy, industrialized, experiencing housing bubbles, being heavily dependent on international trade and commodity prices, and being disproportionately dependent on a single trading partner.
In the case of Australia, their dependence lies on China, whereas in Canada, it lies on the United States. The governments of Canada and Australia are putting more effort into diversifying their economies, and they’re more open to the arrival of immigrants to boost their economies.
Canadian Immigration Dream: A fairytale of diversity, inclusivity, and multiculturalism
According to stats provided by Statistique Canada, the number of infants born in Canada is among the lowest in the world, even though the population is ageing and growing. When it comes to the ageing population, Canada is not on par with countries like Japan, Germany, or Italy. Nonetheless, with a population of 17% of the populace exceeding the age of 65, it is not far behind. The average age of the people involved is almost 42 years, which makes things even more difficult.
Let us examine this matter from a laypersons’ perspective. Many older people are using social and other government services without benefiting the economy. You can only tax the wealthy enough, but you cannot also reduce social services benefits because people are used to them and need them for their survival?
There are a limited number of local workers or indigenous individuals who are employed, which is causing Canada to reconsider allowing foreigners to enter the country. However, the present scenario has undergone a significant transformation, as Canada is now more than ever searching for skilled workers from outside its borders to address the shortage of employment. The current Canadian government is looking to intensify the increase in the number of people in the workforce, which will result in an unprecedented increase.
The main issue facing Canada is its low population, which is a result of numerous factors, among them being severe economic policies. To be candid, bringing more immigrants into the country is a decision that is more economically driven than morally driven and has no connection to diversity, inclusivity, or multiculturalism. Canada is only focusing on getting more immigrants because of its economic advantages instead of achieving the ideals of diversity, inclusion, or multiculturalism.
The Canadian dream “hullabaloo” seems more like a tactical manoeuvre used by the Canadian government to entice skilled workers to address its economic drawbacks. The country hopes that every foreigner who settles in its territory will contribute to its economic growth and eventually solve the issue of low fertility.
Canada is home to a substantial foreign-born population, with an estimated 8 million individuals. This equates to more than 21% of the country’s total populace, who have helped make the Canadian economy one of the most secure in recent times. It is a fact that immigrants possess the ability to provide high-quality employment in Canada, and they tend to be in their early years of employment, resulting in their incorporation as a tax-paying population. The majority of them use fewer social services and are more likely to take jobs that the locals are less likely to take.
Not to mention that these very same immigrants are more likely to experience higher fertility rates, and they also bring in foreign cash to boost cash flow. Today’s immigrants from abroad express their gratitude for being granted entry into Canada, citing a dearth of resources in their homeland and possible other factors.
Today, it is evident that the influx of rich immigrants into Canada has resulted in the inflow of foreign funds, which may have been a contributing factor to the escalating cost of housing. Additionally, there are skilled immigrants who bring their professional expertise. The government of Canada doesn’t have a formal agreement with private firms, so if one doesn’t get the contract they need, they may have trouble. However, there are temporary workers who are capable of filling positions that Canadians are unlikely to undertake.
The prospect of pursuing higher education in Canada presents a unique opportunity for foreign students to simultaneously pursue studies and work at prestigious universities and reputable corporations.
Canadian universities also perceive foreign students as a crucial source of revenue, as they contribute a substantial amount of dollars to the country. This is because international students are required to pay higher tuition fees compared to their local counterparts. Education in Canada is a profitable business, so they can afford to spend more money on it.
Canada’s love-hate relationship with oil
Education may be a lucrative source of income for Canada, but it is not comparable to the sale of oil. Canada is a highly influential country when it comes to the generation and utilization of energy. The country ranks fourth in the world for oil production and sixth for natural gas production. Each year, Canada’s oil and natural gas production adds billions of dollars to the countries GDP and creates thousands of jobs. Canada holds the third-most natural resources in the world, with a value of US$33 trillion.
The country boasts the third-largest documented petroleum reserves and the fourth-largest oil exporter in the world, with Alberta and Saskatchewan dominating its oil production. Despite having such extensive oil reserves, Canada nonetheless relies on the importation of oil for domestic consumption for various reasons. One reason is that the Canadian soil is said to be extremely heavy and pricier to extract, refine, and transport. Another reason may include oil types: Canada produces a lot of heavy crude oil, but there is still a demand for light crude oil.
One factor to consider is the fact that the oil industry is subject to fluctuations based on global commodity prices. Canada generates revenue when prices are high, whereas when they are low, it is not profitable. Businesses experience this issue because if your rivals offer the same or superior product at a lower price, customers may abandon purchasing from you. This is why Canada is more likely to import oil from the United States and Saudi Arabia.
Another disputed explanation for why Canada imports oil is the absence of new pipelines within Canada, which would have increased the availability of domestically produced oil. All of these factors constitute the rationale behind Canada’s decision to investigate alternative energy sources for its future energy requirements, rather than relying on foreign nations. Honestly, this initiative may not be so much about safeguarding the environment as much as it is about making money.
Canada is made up of a number of small regional provinces. Some regions still depend on oil, while others want to move to a green economy. Today, it is evident that many countries are more receptive to the notion of substituting fossil fuels with alternative energy sources that are less costly and more dependable.
At present, there is no definite response or direction. The need to diversify the economy is another reason for avoiding oil dependence. The majority of Canadian oil exports are directed towards the United States. Canada’s situation can be compared to a common idea about how economies develop called the staple thesis.
The Staple theory, based on Canada as a model, asserts that the transfer of natural resources from Canada to other advanced nations has a substantial impact on both the economic and political frameworks. For an example, different staples like oil, minerals, forestry, fishing, etc impact the rates of settlements as well as federal provincial conflicts.
The staple thesis is generally credited to Canadian economists Harold Innis, Melville Watkins, and W. A. Mackintosh.
The Canadian economy, according to some scholars, has the potential to evolve and diversify, while others argue that it may forever be dependent on its natural assets as a remote region. Mainly, Canada is dependent on larger nations for its essential resources, and its proximity to larger markets makes it less inclined to explore its fate.
In conclusion, it is important to emphasize that Canada’s economy lacks the same level of diversification among different sectors as those found in the top-ranked countries, which is why it ranks 32nd on the economic diversity complexity index. However, it is still very diverse, even more than Australia. It’s not entirely accurate to refer to Canada as a nation dependent on oil, given its abundance of thriving industries, including real estate, construction, financial and insurance services, logging, automobiles, and numerous others.
Looking into the Canadian Economy in more detail
Canada is the world’s largest maple syrup exporter. It accounts for more than 75% of the world’s production. However, unlike some people think, Canada’s famous sweet syrup doesn’t directly affect the Canadian economy. Instead, it is more about its national identity. This is attributed to the fact that it accounts for approximately 0.02 to 0.03% of its total gross domestic product.
The industry, however, continues to have a significant impact on the local economy, particularly in regions like Quebec, where thousands of jobs are dependent on the industry. Moreover, the region of Quebec is renowned for importing seasonal labourers from outside to ensure the smooth functioning of its economy.
In addition to the maple syrup industry, Canada boasts the longest coastline in the world. The country is a major exporter of marine products, with lobsters being its most prominent seafood export. On a less significant subject, I frequently encounter comments from individuals from abroad, predominantly Americans, who express their willingness to relocate to Canada in the event of adverse circumstances in their country. Some Americans believe that Canada could be a viable destination for relocating if something goes wrong in the US. They may have a valid point.
Canada relies more on the United States for its trade and economic growth. Canada’s position as a major consumer powerhouse in the US is a blessing because over half of its total exports go to America. As the old saying goes, when the US economy experiences a cold, the Canadian economy will sneeze.
This is the case, except for the financial sector. It is important to keep in mind that the majority of the Canadian population is located close to the US border. This is the reason why I believe Canada benefits from having a neighbour like the United States, which has the highest levels of military expenditure in the world.
Canada is also doing a smart job when it comes to the minimum wage. I’m saying this because, in fact, there’s no unified minimum wage in the country. Rather, the provinces and territories are granted complete authority to determine the amount of income that individuals are entitled to as a minimum wage. Canada has one of the highest per-capita incomes in the world. This implies that the total income measures the average income earned per individual in a specific area (city, region, country, etc.) during a specified year.
Although it is common to boast about one’s disposable income, it is uncommon to discuss discretionary income, which refers to the remaining funds after all the essential expenses have been repaid. Disposable income is not a reliable measure of wealth, as it fails to account for the cost of living and the average expenditures of individuals.
This is how most developed countries are creating a poor group of people who work hard and appear wealthy. It’s a situation where people think their job is providing more money, but in fact, their living expenses account for 80% of their total earnings. This is the true narrative of residing in Canada. If we’re all being honest, I’d call it the “real Canadian dream.”
This phenomenon is not exclusive to Canada, as it is observed in so many developed nations, where the calculation and reporting of discretionary income data is conducted in an inaccurate and inadequate manner. Canada is one of the top 25 countries in the world, but it is not as expensive as Switzerland or Norway. Consumer goods are comparatively expensive, but the cost largely depends on the location of one’s residence in the country. The cost of child care in Canada is highest when you consider the average income of a couple.
Furthermore, it should be noted that Canada has one of the highest levels of household debt compared to income levels. These debts are predominantly utilized to settle mortgages, resulting in a high cost of housing. Canadian household debt has also increased above 183% as a percentage of disposable income. The housing market in certain parts of Canada is seeing a notable rise, with cities like Vancouver and Toronto leading the way.
The Canadian manufacturing industry is not particularly practical when it comes to expanding. High wages do not permit the possibility of competition with nations possessing a low-wage workforce. It’s cheaper to import cheap stuff than to have a big manufacturing operation. This is resulting in the gradual decline or dependence of the existing manufacturing industry on government subsidies.
In addition to this, Canada has a functioning single player health system. Despite being marketed as a free healthcare system, it should have been referred to as a publicly funded healthcare system. The health care budget in Canada accounts for close to 12% of the country’s gross domestic product. Even though certain Americans are quick to highlight the shortcomings of Canada’s health care system, the majority of its populace can receive exceptional healthcare services under the Canadian health system.
Although agriculture may not be the most flourishing sector in Canada, it nevertheless represents 1.6% of the overall economy. You can understand this, as you can put a lot of blame on the country’s harsh weather. This has led to a rise in the availability of foreign food at a lower cost than those made in the country. Certain agricultural sectors, such as dairy and poultry, are protected by the government against the competition triggered by lower import prices and to maintain some food self-sufficiency.
Canada may not be known for its traditional food, but Poutine is a standout. Kraft dinners with macaroni and cheese are also a popular choice among locals and foreigners who live in Canada. Canada has the most doughnut shops per-capita in the world. Because of this, they consume the highest number of doughnuts per capita in the world, thanks to the significant contribution of Tim Hortons.
Canada is also ranked as the second-largest country in the world in terms of its total area. Despite iconic destinations ranging from Niagara Falls to the Canadian Rockies and boasting the largest number of inland lakes in the world, the economy is only 1% dominated by tourism. Hopefully, it will have the potential to expand further in the future.
As a result of its early colonial past, Canada possesses two recognized official languages, namely French and English. The widespread adoption of two languages in Canada leads to the simultaneous utilization of public services, such as bilingual signage, forms, advertising, and so forth, resulting in a substantial financial loss. According to a 2012 study, bilingualism is estimated to cost approximately $2.4 billion, with $868 million spent by the provinces (and the rest spent by Ottawa).
In contrast, Canadian students are not required to take a lifelong loan that they will have to repay in 10 years when it comes to paying for school, as they are in the United States. Canada, on the other hand, boasts a thriving educated community. Despite the absence of ‘white-collar employment opportunities,’ the country boasts one of the highest tertiary education attainment indexes.
Conclusion
Despite its immense wealth, Canada’s present challenge is the insufficient availability of skilled labourers. Many Canadian workers who have graduated from universities have decided to move to the southern regions, where they can get better earnings, a bigger audience, and a cooler climate.
For the moment, let us disregard the importance of natural resources, as the most significant asset of a nation is its people. I believe that Canada ought to make investments in its population, not solely by providing them with handout, but also by instilling a culture of entrepreneurship and ingenuity.
Canada must take additional measures to encourage its citizens, both educated and uneducated, to embrace taking risks, thereby enabling them to take control of their destiny instead of waiting for the unknown to occur. Besides that, I believe that Canada is an extremely desirable place to live, and a significant number of people from other countries still consider it to be a great place to live, one that can offer them better living conditions.
Sources
The Fraser Institute. (2018, April 17). Bilingualism has a fresh face. Fraser Institute https://www.fraserinstitute.org/article/bilingualism-has-a-fresh-face
Johnston, M. (2023, October 4). The Economy of Canada: An Explainer. Investopedia
Staff, H. (1995, December 1). WORLD BANK STUDY Australia and Canada emerge as the richest countries. The Herald
Photo by Guillaume Jaillet on Unsplash
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