Pages 242-265

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 NationCanada 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 EconomyHere 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 DevelopmentThere are 3 stages to Canada’s economic

growth:1. Pre-industrial (primary)2. Industrial (secondary)3. Post-Industrial (tertiary and quaternary)

Pre-IndustrialMost 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 19th century railways were built to connect the regions of Canada.

Canada safeguarded these industries through protective tariffs (taxes on imported goods)

Post-Industrial StageMost 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 CanadaEconomic 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. MixedCanada falls into a mixed economyThink of this as the political spectrum

Command economy would fall on the left.Demand is on the rightMixed is in the middle

GlobalizationKey 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.

Pros DrawbacksFactories are more

productive when owned by TNC’s

More innovativeAdvanced technologyEmployed more

skilled workersConducted more

research and development

Paid better wagesLower 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

StatisticsFrom 1985-2005 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.