CHARACTERISTICS OF THE STRUCTURE AND FEATURES OF THE ECONOMY

Modern features of the Canadian economy have developed under the influence of a number of historical-political and historical-economic factors, among which it is necessary to highlight:

1) the large size of the country and the need to stimulate the development of new territories;

2) a wide range of natural resources, which makes it possible to develop almost any sector of the economy;

3) extremely low population density in most parts of the country;

4) raw material orientation, the priority of the so-called factor stage;

5) dependence on foreign capital (in particular, the United States);

6) historically stronger position of the state in the economy than, for example,  in the United States;

7) greater integration into the processes of the international division of labor and international trade.

Based on these factors, the features of Canada’s economic development are revealed. This state, together with other highly developed countries, entered the stage of post-industrial development. In terms of economic development, Canada ranks last in the Group of Seven.  37% of Canada’s GDP is created thanks to the country’s participation in international trade.

Source: World Development Report, 1999/2000. P252–253.

In terms of the value of industrial products, Canada ranks seventh among developed countries, and in terms of foreign trade turnover, it ranks sixth in the world. This country is firmly included in the group of major producers of a number of agricultural and industrial goods in the world.

The Canadian economy is characterized by a high concentration of production,  high power-to-weight ratio.

In the structure of the economy, the importance of the mining industry, energy and agriculture, forestry and woodworking industries is great. These industries are suppliers of  products and raw materials to the world market. Canada accounts for 7% of production and 17% of world commodity exports.  The role of foreign capital is great,  its share is 1/4 of GDP.

Since mid-1994, Canada’s economy has experienced a steady recovery thanks to additional stimulus from fast-growing domestic manufacturing and consumer demand.

At the end of 1994, in terms of economic growth (4.2%), Canada for the first time since 1988 was the leader in the “big seven”. At the same time, inflation rates were at the lowest level for the entire post-war period (0.3%),  in 1999 – 0.6%.

Economic growth of the mid-1990s in Canada received “support” due to the natural increase in incomes of the population and corporations. The increase in corporate profits is supported by the expansion of domestic demand, the dynamic growth of exports, the increase in commodity prices on the world market, the reduction of costs and technical re-equipment, and the rapid growth of labor productivity.

On average, there is an increase in investment in the private sector by 5%. In the mid-second half of the 1990s, Canada’s investment climate improved markedly, as did the macroeconomic climate. This was a consequence of the persistence of persistently low inflation rates while controlling the growth of budget deficits, reducing unit labor costs per unit of output.

The leaders of the investment process of the early 1990s were the “raw materials” industries – oil and gas. In the middle of the second half

In the 90s, investment activity increased in the industries engaged in the production of electronic and electrical equipment; in pharmaceuticals; production of new structural materials; automotive industry; chemical industry and others.

In 1997, Canada reached a deficit-free budget.

Nevertheless, with Canada’s “healthy” economic state, the employment market remains tense.  With Canadian society “aging,” the unemployment rate remains high. In recent years, it has exceeded 9%, in 1999 it began to decrease and reached 8.3%. At the same time, the level of long-term unemployment, according to UN estimates, is  (-0.8%). The employment rate has dropped to 57% and is noticeably behind the American one. 

This situation in the labor market is explained, first of all, by the policy of “reducing the public sector”. The level of hidden unemployment is quite high, approximately in the ratio of 2: 1 to the number of registered.

At the same time, in the late 1990s, Canada ceased to be among the “big seven” countries with the highest unemployment. Experts characterize the state of the Canadian economy in the second half of the 90s as a period of sluggish revival, deep structural adjustment, reorientation to high-tech sectors.

At the end of the twentieth century, Canada had a significant federal debt (70% of the value of GNP, in the 70s it was 20%). There is a huge dependence on the international financial market. Of the total amount of debt, 40% is in the hands of foreign private holders of Canadian securities.

According to certain special indicators of economic development, introduced by UN experts in 2000, Canada occupies a leading position:

1) the competitiveness of products in world markets (according to the International Institute for Management Development in Lausanne) is estimated at 76.47 points out of 100;

2) the level of corruption is 9.2 (the closer it is to 10, the  smaller it is considered, for comparison: in Italy it is 4.6);

3) rating of the country’s innovative position – 9.

The share of public expenditure in GDP is 42.1%. Expenditure on education and health is 13.6 per cent; military spending – 1.3% of GDP in 2000

Structurally, Canada’s economy differs slightly from other developed countries. More than half of its GDP is accounted for by the service sector (66.2% of GDP);  industry – 30.7%; for agriculture – 3.1%.

According to IMF forecasts, Canada at the beginning of the third millennium will have the most significant GDP growth in the “big seven” with inflation rates lower than the average for the group, and the lowest share of the total government budget deficit in GDP. These projections are based on the following grounds:

(a)  A successful policy of “financial recovery”;

b) strengthening the position of Canadian producers in world markets;

c)  improvement of the investment climate.

Sectoral and territorial structure of industry

The sectoral structure of Canada’s industry is a reflection of its raw material specialization. The role of raw materials industries is somewhat decreasing, but remains significant and amounts to more than 1/4 of the value added. In addition, Canada’s industry differs from most developed countries in that it relies entirely on its own raw material and energy base, which far exceeds its own needs and is a source of exports. About 4/5 of the products of the raw materials and energy markets are exported. Canada’s per capita mineral production is significantly higher than in any other developed country.

Canada has well-developed mining and energy, non-ferrous metallurgy and a number of energy-intensive industries that process raw materials for export. Among the manufacturing industries, the following have received significant development: mechanical engineering, woodworking, pulp, paper, food industry. The overall level of industrialization is high.

The mining industry is highly diverse and remains the basic branch of Canada’s economy, accounting for about 20% of exports. Canada ranks first in the world in the extraction of zinc ores (1 million tons per year) and asbestos; the second – on the extraction of nickel ores and potassium salts; the third is for platinoids; the fourth – for copper ore (0.7 million tons per year) and silver; the fifth – for lead ores (0.211 million tons per year) and gold mining; the seventh – in the extraction of iron ore (50.3 million tons per year).

One of the most important features of the industry is its export orientation: more than 4/5 of all products of the extractive industries enter the world market. Canada is the world’s leading exporter of uranium, nickel, copper, zinc, titanium, molybdenum, silver, platinum, asbestos, potassium salts.

The geography of the mining industry in Canada is represented by three main areas.

1. Southern district. Nickel is mined here (reserves amount to 60 million tons), copper (Sudbury deposit); lead and zinc (Sullivan). The Flynn-Flion deposit is known for its copper and zinc reserves. Coal, oil and natural gas are also mined here.

2. Northern district. It is characterized by poor development, sparsely populated and complex climatic conditions. There are mining centers for the extraction of iron ores, copper, gold, nickel, lead, zinc, natural gas and oil. The share of the northern region in the production of the mining industry is about 20%; iron ore mining – 90%; lead, zinc, nickel, copper, uranium – about 50%; for the extraction of gold, silver, asbestos, tungsten – about 10%.

3. Western district. In this area there are oil refineries (Pembina, Redwater, Zama fields in the provinces of Alberta and Saskochewan, Newfoundland). In terms of oil production, Canada is among the top ten countries in the world. It is 121 million tons; gas production – 164 billion cubic meters. m, coal – 72.7 million tons.

In the province of Saskochewan, in addition to  oil, reserves of potassium salts were discovered. Total reserves amount to more than 10 billion tons, with an average potassium oxide content of up to 25–35%. There are also the largest deposits of uranium ores in Canada (the settlement of Uranium City, the places of Key Lane, Cigar Lake with an extraction of 5-6 thousand tons).

For iron ore reserves, it is necessary to allocate the northern part of the province of Quebec. The average iron content in the ore is 55–60%. The main development centers are Schaefferville and Lambrador City. Annual production is about 50 million tons.

The forest fund is of great importance in the Canadian economy. The forested area of the country is 447 million hectares; Industrial forests occupy 245 million hectares. the Total timber reserves of industrial forests are 20 billion cubic meters. m. The share of ripe and overripe forest in Canada is higher than in the United States. The estimated cutting is estimated at  260 million cubic meters. m per year. In terms of the total size of timber exports, the country ranks fifth in the world, and in terms of harvesting per capita – the first. About 4 thousand enterprises operate in the logging industry.

In terms of lumber production, Canada ranks third in the world, and per capita – the first. There are about 1.3 thousand sawmills.

In the production of fiberboard, Canada ranks fourth in the world, in chipboard – the third, in the production of cellulose – the second, paper – the third.

The world specialization of Canada is the production of newsprint.

Forestry accounts for 3.4% of GDP and employs 7% of the workforce.

The geography of forestry is represented by one main area – British Columbia.

Power engineering. By total amount of energy produced at the end

1990s. Canada is among the top five countries in the world (520 billion kW – fifth place); in terms of production per capita (19.6 thousand kWh) it ranks third (after Norway and Iceland); in terms of world consumption – on the seventh; in terms of consumption per capita – on the second (after the United States).

At the same time, 61% of the electricity produced is generated at hydroelectric power plants. Hydropower in Canada is represented by three complexes:

(1) Churchill;

2) Churchill Falls (5.2 million kW);

3) James Bay (10.3 million kW), there are three stages.

TPPs produce 22% of electricity. The main ones are in the Toronto and Vancouver areas.

Nuclear power plants produce 17% of electricity. The number of operating reactors with a capacity of 14,874 MW is 21. The largest nuclear power plants are located in the provinces of Ontario, Quebec, New Brunswick.

Canada is engaged in uranium mining and the production of uranium concentrates. Own consumption is 1.8 thousand tons, the rest is exported.

Manufacturing. Canada’s manufacturing industry has the following distinctive features:

1) accelerated development of mechanical engineering, electrical engineering with the intensive development of non-ferrous metallurgy, woodworking and pulp and paper industries, as well as metallurgy, chemistry; hyperdevelopment of the primary sector of the economy;

2)  high concentration of production and capital;

3) record growth in recent years of private investment in knowledge-intensive industries and mechanical engineering;

4) development of labor-saving technologies;

5) the territorial structure depends on the uneven settlement of the developed part of the territory of the country.

Engineering. Mechanical engineering accounts for less than 30% of value added and the number of people employed in manufacturing, which is lower than in other developed countries.

The leading role in the structure of Canadian mechanical engineering is occupied by the production of vehicles: cars, diesel locomotives, ships and snowmobiles. Transportation engineering, which is dominated by American capital, is based in the province of Ontario.

In general mechanical engineering, there are 1620 companies, of which about 200 are controlled by foreign capital. In the automotive industry, the “big three” American corporations control 95% of car production and more than 30% of the assembly market.

Branches of large foreign companies in Canada produce cars of the following brands: Chrysler, General Motors, Ford Motors, Honda, Toyota, Sutzuki.  Annually Canada produces 2.5 million cars and 0.5 million snowmobiles.

60 companies are employed in shipbuilding, but only 4 of them provide 50% of production and employment.

Agricultural engineering, production of power equipment, equipment for mining and forestry industries are developed.

Machine tool building is poorly developed.

The main centers of mechanical engineering are Toronto, Montreal, Windsor, Hamilton, Ottawa, Halifax, Vancouver.

Metallurgy. Ferrous metallurgy is in the hands of national capital. In terms of steel smelting (15 million tons per year), Canada ranks 9th in the world, in terms of iron smelting (9 million tons) – twelfth. The industry’s leading centres are located in Hamilton, which accounts for 50% of the industry’s total output, in the Lake District and in Sydney  on the Atlantic coast.

In non-ferrous metallurgy, the positions of American and British capital are strong. Most businesses run on local raw materials.  Imported raw materials are used in the production of aluminum.

Smelting of non-ferrous metals has reached large volumes. In terms of production of copper concentrates, Canada ranks third in the world (780 thousand tons, after the USA and Chile); in the smelting of refined copper – the fourth (550 thousand tons, after the USA, Chile and Japan).

Canada has a leading position in the world market in the production of primary aluminum – the second place (after the United States); in the smelting of aluminum from secondary raw materials is also the second position in the world (after the United States).

Aluminum production is represented by factories in Arvid, Kitimat, Be Como, Ile Maligne, Granby.

On the territory of Canada, the world’s largest centers of non-ferrous metallurgy are located. These include: Sudbury, Thompson, Sullivan, Port Colborne, Kitimat, Arvida.

Oil refining is developed in Canada. Its main centers are located in Montreal, Sarnia, Vancouver, Edmonton.

The chemical industry is represented by plants for the production of basic chemicals, fertilizers, synthetic rubber.

In the second half of the 1990s, Canada occupied the fourth position in the world in the production of mineral fertilizers; eighth – for the production of sulfuric acid and synthetic rubber; the ninth – in the production of plastics.

In the largest chemical companies, American and British capital predominates. The main centers of the industry: Montreal, Toronto, Niagara Falls.

The food, clothing and textile industries are well developed in Canada, with centres in Montreal, Toronto and Quebec. They work to meet the needs of the domestic market and are purely “Canadian” sectors of the economy.

Agriculture. Canada has a highly developed agriculture and agro-industrial complex. The state ranks second in the world in food exports.

The industry is characterized by the following distinctive features:

– high marketability;

– high level of mechanization;

– high level of specialization of production;

– high level of concentration of production;

– high labor productivity.

The main modern trends in the development of agriculture in Canada include the following:

1) the average size of farms (with an area of 242 hectares and above) is growing;

2) the number of tenants and partial owners is increasing;

3) farms become specialized enterprises;

4) there is a geographical movement of agriculture and production to the western regions.

The total area of agricultural land is 73 million hectares. in terms of land per capita, Canada is inferior to Australia, Argentina and half the size of the United States and Russia. Arable land occupies 3/5 of the area of farmland.

Canada also has distinctive structural features of agriculture. They are as follows:

1) insignificant predominance of animal husbandry over intensively developing crop production;

2) the presence of traditionally extensive industries (grain farming, pasture cattle breeding). Intensification prevails only in the suburban areas of the east and far west;

3) increase in the share of production of fodder crops (rapeseed, corn).

The share of agriculture in the structure of GDP, characteristic of developed countries,  is 3%. The degree of employment is also typical for this group of countries – 4%. Per capita in Canada there are 2.5 hectares of farmland and 1.54 hectares of arable land (this is significantly more than the world average).

Crop. The main sub-sector of crop production in Canada is grain farming. It is developed in the steppe provinces. In Canada, there are areas of the “wheat economy”. These include:

1) Manitoba – produces 1/10 of the country’s agricultural output;

2) Saskatchewan – in the structure of production gives 1/5 of the volume of agricultural products; 2/3 of the harvest of all Canadian wheat;

3) the province of Alberta – supplies the Canadian market  with 1/3 of the national harvest of wheat.

The total grain harvest at the end of the twentieth century amounted to 49.693 million tons, including wheat – 25.4 million tons,  barley – 13.0  million tons,  oats –

  2.9 million  tons, rye – 0.3 million tons, corn – 7.3 million tons.

Canada is the world’s leader in the production of crop products per capita. It produces 1919 kg of grain per person, second only to Australia. At the same time, the grain yield is 27 c / ha.

Prince Edward Island specializes in the production of seed potatoes, in fruit growing – Lake District, Nova Scotia (Annapolis Valley), British Columbia (Onakagan Valley). The Atlantic provinces specialize in horticulture.

On the farms of Canada, 1/3 of the volume of oilseed flax and 1/5 of the rapeseed produced in the world are grown.

  Animal husbandry. In recent years, the role of the most intensive areas in animal husbandry has increased – poultry farming, dairy farming and stall fattening of cattle. In the structure of agriculture, it accounts for 60% of the cost of agricultural production.

At the end of the twentieth century, Canada had quite high rates of livestock intensity:

1) milk yield per 1 cow – 6089 l. This is significantly higher than in European countries specializing in dairy  cattle breeding, excluding the Netherlands;

2) the density of livestock per 100 hectares is: large

  horned – 17 heads, pigs – 26, birds – 1069.

According to 2000 data, the number of cows is 13.34 million heads, pigs – 12.11 million, chickens – 139 million, sheep – 628 thousand.

Animal husbandry in Canada is distinguished by high rates of production of the industry per capita:

1) milk production is 270 kg per year (for comparison in the USA – 261);

2) meat production is 108 kg per year (for comparison in the USA – 129).

In Canada, the geographical specialization of agricultural production is pronounced. There are three main agricultural areas:

1) steppe provinces – pasture beef cattle breeding, meat-wool sheep breeding;

2) central district – Priozerye – diversified animal husbandry with a predominance of dairy farming;

3)  the south of British Columbia – an area of dairy farming, beef cattle breeding.

Fishing is represented in the northern provinces, on the coast of the Atlantic and Pacific oceans. Inland fisheries are less developed. The catch of fish in the late 90s. is 0.901 million tons.

Canada’s service sector is in a very dynamic development. It employs 74% of the economically active population. The growth rate of GDP in the service sector in the late 90s was 3.4%.

The following branches of non-material production are developing particularly successfully:

1) wholesale trade;

2) business services for the business sector;

3) hotel industry;

4) public catering;

5) telecommunications.

The revival in the industry is associated with the weakening of state regulation in this area.

Traditional branches of the service sector of Canada are the banking system, the education system, tourism, telecommunications.

Canada’s banking system developed after the Second World War and continues to improve.  It is based on commercial banks, which concentrate in their hands about 40% of all the financial resources of the credit system.

The financial activities of Canadian banks are at the forefront of the world’s banks, with the Royal Bank second only to the three largest US banks in terms of assets. The monopoly position remains in the other three oldest and largest banks:

1) Bank of Montreol;

(2) Royal Bank of Canada;

3) “Canadien Imperial Bank of Commerce”.

Together with commercial banks in the country there is a system of credit unions, savings banks, insurance companies, trust companies.

Tourism also traditionally shapes Canada’s balance of payments. The volume of income from tourism in 1999 amounted to 8.93 billion dollars. More than 150,000 Canadians are employed in the service. The annual flow of tourists is about 10-15 million people, mainly autotourists. From foreign countries, the largest flow comes from the UK, Germany, Japan, the Netherlands.

Transport. Due to the vastness of the territory and the uneven settlement of the population, Canada has always had to pay great attention to the development of the regional transport system.

Current trends in the development of transport in Canada are manifested in the following:

– the role of railway transport is decreasing;

– road, air and pipeline transport is rapidly developing;

– the significant role of inland water transport on the Great Lakes and the St. Helena River is preserved. Laurentius;

– the share of maritime transport remains insignificant.

In terms of the length of railways (90 thousand km), Canada is second only to the United States, and in terms of their density (9 km / 1000 sq. km) does not occupy a leading position.

In connection with the development of oil refining and gas processing, pipeline transport is developing. The length of oil pipelines is 50 thousand km. According to this indicator, Canada ranks 3rd in the world. In terms of the length of gas pipelines (95 thousand km), the country also has the third position in the world.

Maritime transport is in development. Vancouver became one of the largest international ports in Canada, the trade turnover of which at the end of the twentieth century amounted to 67.633 million tons, including oil and petroleum products – 2.976 million tons. Among the less significant ports can be called  Montreal, Quebec, Halifax.

There are 269 airports in the country. Montreal is of international importance, gander is transit. In 1999, passenger traffic was 34.79 million passengers per mile.