CHC2D1-Ms. Whitfield The state of the Canadian economy Canada is one of the wealthiest countries in the world. Most Canadians have a high quality of life. The Government provides a lot of social services: universal health care, employment insurance and retirement pensions. Economy is a more industrial and urban Canada is very much like the United States because of its a) market-oriented economic system, b) patterns of production and c) living systems. After 1945 (the end of World War II) growth in manufacturing, mining, and service sectors. Economy is a more industrial and urban How can you measure the strength of a countrys economy? Gross Domestic Product Definition: the total market values of goods and services produced by workers and capital within a nation's borders during a given period (usually 1 year) Currently Canadas GDP is $1.82 Trillion dollars Also consider: Major economic sectors in Canada: agriculture (2%), manufacturing (13%), construction (6%), services (76%), other (3%) Employment/unemployment and those living below the poverty line Exports and Imports Exchange Rate Canadian economy-statistics Labour force by occupation: Agriculture 2% Manufacturing13% Construction 6% Services76% Other3% Currently there are over 17,966,000 (2015) people working in Canada of total population of approximately 35,749,600 (2015) Unemployment rate and population living below the poverty line. Unemployment rate =measures the number of people in Canada who dont have a job In Canada the number is approximately 6,8% (August 2015) Structure of the Canadian economy Who controls the money in Canada? What is the Bank of Canada? The Bank of Canada is the country's central bank. Its role is "to promote the economic and financial welfare of Canada. What does the bank take care of? 1.Designs and issues bank notes and coins 2. Controls Canadas economic decisions by keeping inflation low, stable and predictable 3.Deals with transactions between Canada and other countries 4. Takes care of the accounts of the Federal government Canada is part of two international trade agreements United States-Canada Free Trade Agreement 1994-North American Free Trade Agreement (NAFTA) includes: Canada, United States and Mexico 80% of Canadian exports go to the United States Canada provides energy, including: oil, gas, uranium, and electrical power to the US. Free Trade Agreements In 1989, the Free Trade Agreement (FTA) was signed between Canada and the US. In 1994, it expanded to include Mexico and it became the North American Free Trade Agreement (NAFTA). Gradually, Canada signed free trade agreements with many other countries. Economists estimated that NAFTA increased the pool of customers available to Canadian businesses to 445 million. Canada provides energy, including: oil, gas, uranium, and electrical power to the US. Powerful Questions : Which groups of people does free trade benefit the most and which groups of people does free trade exploit the most? Major commodities in Canada Agriculture - products: Agriculture - products wheat, barley, oilseed, tobacco, fruits, vegetables; dairy products; forest products; fish Industries: Industries transportation equipment, chemicals, processed and unprocessed minerals, food products, wood and paper products, fish products, petroleum and natural gas Exports Cars and car parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum Canadas export partners: United States, United Kingdom and China Imports machinery and equipment, cars and car parts, crude oil, chemicals, electricity, durable consumer goods Canada imports goods from: the USA, China and Mexico Canadians living in poverty Not all Canadians enjoy the benefits of Canadian prosperity. Poverty exists in communities all across Canada. 9.4% of Canadians live below the poverty line (2013) (3.5 million people; 1.2 million are children). Poverty is increasing amongst youth, unskilled workers, young families and immigrants Poverty line=refers to the minimum amount of financial income in order to pay for the basic needs of life. Causes of poverty in Canada lack of jobs that pay decent wages Workers dont have post-secondary education or specialized training or skills get low-paying jobs or only seasonal and part-time work. Lack of job security Some employers dont recognize workers credentials-so they have to try and get additional training to get better jobs It is a very difficult thing to be poor in a wealthy society. We have really reached a point of crisis and it is time to admit the system is broken, for people to speak up in all classes, all backgrounds and to recognize that poverty is no good for any body. Josephine Grey, living on disability support, 25 May 2007 Ups and Downs of the Canadian economy Canadas economy was pretty solid between In 2008 the Global economic crisis caused Canadians to struggle financially. Many people lost their jobs and a lot of money. But Canadian banks stayed strong and the economy is currently on the upswing. What are some causes of the economic crisis in 2008? Symbols of Economic Crisis The 2008 Financial Crisis What happened? There was a world-wide economic recession. A few weeks before the US election in 2008, a multi-billion dollar bailout was proposed by the Bush administration. Congress and the Bush administration held private meetings Many members of the Treasury Department formerly worked for Goldman Sachs and vice versa. They worked as powerful lobbyists from the inside to deregulate banks The Goldman Sachs solution: use tax dollars to bailout banks like Goldman Sachs The Bush administration created fear to make congress vote immediately the need to act IMMEDIATELY but it was voted down. Even though it was voted down, the Bush administration (Republican) cut a backroom deal with the Democrats. Some called it a financial coup d'tat as $700+ billion of tax dollars was used to bailout this banks The Bush administration did not outline how that money was to be spent and as a result, the CEOs of these banks got millions of dollars in bonuses (Goldman Sachs CEO got $6.8billion for bonuses) and AIG held poolside meetings at luxurious resorts ED Question: Since these banks were private institutions, who rely on the citizens investments to make profits, was the decision to use public money the taxpayers money to bailout these banks justified? Explain why. Source: Michael Moores Capitalism: A Love Story Canada is currently in a recession Oil prices are plunging The mining, quarrying and oil and gas extraction sector (-4.5 per cent) posted a notable decrease, down for a second consecutive quarter. Value of the Canadian dollar is decreasing $1 = $.76 USD Cost of living is higher at the moment-groceries, housing, transportation etc. What is currently causing the Canadian economy to change? GLOBALIZATION is a process that multiplies and strengthens the economic, cultural, and financial connections among many regions of the world. What are some pros & cons of globalization? The Pros & Cons of Globalization Pros: Freedom No borders Variety of products available Provides jobs to people in developing countries good or bad? Brings peoples of the world closer together Cons: Monopolies (the increased power of large multinational corporations in the world economy; the dominance of the U.S. on the world economy) Bad for small & local businesses Hurts local jobs due to the outsourcing of jobs to developing countries Less cultural diversity & more dominance of Western ideas and values Increased environmental damage