Canada Comparative Economics Outline
Category : Articles
Outline for Paper # 2
1. Introduction: I believe that Canada is the best country according to the measures based on Christian values that I have recently discussed in my first paper. The Canadian economy closely resembles that of its neighbor, the US. Besides having similar patterns of production and living standards, Canada also adopted a market oriented economic system combined private enterprise with government regulation. They do show different Christian Values represented in my paper that the U.S does not have. Canada is a mixed economy.
2. Economic Structure:
a. Short history of Canada:
i. Since World War II, Canada has experienced massive growth in its manufacturing, mining and services, propelling the economy from being a largely agricultural one to becoming one of the most highly industrialized and developed economies in the world.
ii. Canada??™s oil industry is one of the most important elements to their economy along with their manufacturing industry.
b. Social Rules, Norms and institutions:
i. Local government plays a significant role in the everyday lives of Canadians. Canada??™s financial industry??™s is of conservative practices and strong capitalization.
ii. Canada??™s social values are: human rights, democracy, respect for diversity and gender equality. These values are critical to Canada for shaping and creating things such as foreign policies. Canada holds social values at a very high standard. This might cause the government a risk of ambiguity by trying to be ???all things to all the people.??? With Canada??™s size it is not reasonable.
iii. Decision Makers Public and Private: In late 2000, the Bank of Canada adopted a system of eight pre-set dates per year on which it announces its key policy rate. This system is often referred to as the Banks fixed announcement dates, or simply fixed dates.
– This process includes an economic projection based on a model of the Canadian economy; an analysis of the information from monetary and credit aggregates, interest rate credit spreads, and changes in credit access; and information on the interest rate expectations of participants in financial markets. The steps involved in reaching a decision on the setting of the policy rate are also explained.
iv. Production and Consumptions in Canada: They are a significant component of the global energy trade due to its proximity and trade with America. Canada has a lot of sellable energy commodities. Petroleum comprised the largest source of energy consumed, mostly in the transportation sector. Both hydroelectricity and natural gas have been close behind in consumptions. Canada has a privatized oil sector that has seen consolidation and specialization in the wake of the global economic downturn. Production from the conventional offshore reserves off the eastern provinces comes from mature oilfields, with few opportunities to replenish depletion rates. As such, western provinces will comprise an increasing proportion of overall Canadian oil production in the future.
v. Export: crude oil, natural gas, coal and electricity.
vi. Property Rights: The development of property law has generally been gradual. Personal property laws are typically governed by provincial legislation such as the provincial Sale of Goods Acts. Likewise, the common law rules inherited from the United Kingdom are largely still in force. Real property law is likewise a matter of provincial legislation with the incorporation of English common law rules. Intellectual property, as with most common law countries, remains entirely based in federal statute
vii. Political power: The government was structured by the British Parliament. It is a Monarchy with a Head of state being Elizabeth II, the Queen. There is Executive power, Legislative power. Canada is considered by most sources to be a very stable democracy.
viii. Economic Power: Canada has the 10th largest economy in the world, one of the world??™s wealthiest nations. Canada??™s economy is dominated by the service industry, which employs most of their population. They are an important with the primary sector, in logging and oil industries. The automobile industry is sizeable in Canada as well. They are one of the highest countries of economic freedom in the world.
ix. Incentives offered to Canadians: First-time Canadian home buyers who bought a home after January 27, 2009 are eligible for the First-Time Home Buyers Tax credit. The tax credit amount is calculated by multiplying $5000 by the lowest personal tax rate, and is claimed by homeowners within their personal income tax returns. Also, the office of Energy Efficiency offers grants and incentives and other resources to Canadians, including workshops, stats and analysis, awards and many free publications.
c. Description of economic institutions that allocates resources and output:
i. Industrial structure (agriculture): Canada is one of the world??™s largest producers and exporters of Agriculture. Agriculture involves many industries such as fruit, egg, dairy, grains, brewery and many more. Largest agricultural production sectors: grains and oilseeds, red meats, dairy and poultry.
ii. Economic Policy making:
– Domestic: In Canada, commercial banks lend funds to each other for very short periods at the overnight interest rate, a market-determined rate that fluctuates daily. When the Bank lowers the target for the overnight rate, these interest rates fall, firms and households increase their demand for credit, and commercial banks increase their quantity of credit supplied.
– International: They know the need for Canada to invest in its defense and security, international commitments and foreign aid in order to support a strong international role.
iii. Legal Structures: there are four basic types of legal structures for businesses in Canada: Sole proprietorships, Partnerships, Corporations and Co-operatives
iv. Business organizations and governance: Agribusiness is activities of food and fiber production and processing; this would include the production of farm equipment and fertilizers to aid farm production. Also the purchase of raw goods from the farm for further processing. For a typical Canadian business, the decision where to incorporate is simple: the province or territory in which the company will do business.
v. Finance: The ultimate objective of the Bank of Canada is to make the best possible contribution to a well-functioning Canadian economy and to the overall well-being of Canadians.
– Money Supply, price determination, taxation: Central banks choose to focus on maintaining low and relatively stable inflation for two reasons. First, low inflation is beneficial for the operation of the economy. Second, both theory and evidence suggest that monetary policy cannot have a systematic and sustained effect on macroeconomic variables other than the inflation rate. Canadas flexible exchange rate permits us to pursue an independent monetary policy suited to the needs of our own economy and acts as a “shock absorber.”
– Banking, capital markets: Monetary policy in Canada has three main characteristics. With an increase in the amount of credit in the economy, there is an increase in the volume of transactions for goods and services, and thus an increase in the overall demand for money with which to make these transactions. Individual firms and households can satisfy their demand for money by making withdrawals from their accounts at commercial banks, often in the form of bank notes.
– Canadas financial system consists of financial institutions, such as banks and credit unions; the financial markets; and payments systems. It is the channel through which savings become investments, and through which money and financial claims are transferred and settled
vi. Labor allocation/Labor markets:
– Education and training: Education in Canada is for the most part provided publicly, funded and overseen by federal, provincial, and local governments. Education is within provincial jurisdiction and the curriculum is overseen by the province. Education in Canada is generally divided into primary education, followed by secondary education and post secondary.
– The most obvious types are geographical and occupational. The market for unskilled labor would normally be the local area, while that for highly trained professionals would be international.
3. Economic outcomes:
a. Economic Growth, Efficiency:
i. Canada??™s economy is looking like they will be slowing down towards the end of the year due to troubles in Europe and the US and they are taking longer than anticipated to recover. It puts a weigh on Canadian consumers and businesses, making them reluctant to spend and invest. Governments will continue to tighten their deficits.
b. Income levels and poverty; income distribution:
i. Poverty in Canada remains prevalent with some segments of society. Several Canadian provinces are introducing poverty reduction strategies.
ii. In a capitalist economy such as Canadas, people derive their income from wages if they are employed, from interest if they own financial capital and from rent if they own property.
c. Sustainability: The Environment and Sustainable Development Indicators Initiative has produced a set of six indicators to track whether Canadas current economic activities threaten the way of life for future generations.