Section 1.3 Canada’s Economic Identity

1.3(A) Changes in Canada’s Economic Identity

- Historically, Canada traded primary resources (raw materials from nature – trees, fish, water, animals) to other countries who converted them into other goods

- Primary resource extraction (removal) is often capital intensive (lots of $ investment)

- Primary resource industries are less labour intensive (less workers required)

- Many Canadians still feel that we are “hewers (cutters) of wood and drawers of water”, meaning that we extract and export mainly primary resources

- Resource-based exports fell from 43% to 18% [1]in the past 32 years

- Semi-manufactured and end-product exports increased from 57% to 82% 1

- The trend is more ‘value-added’ i.e. services and manufactured products, in Canada and more advanced technology used in the primary industries

- Use of technology forces wages higher, as more skilled/educated workers are required

- Trade in services is also growing for example engineering, medicine, research

Industry Examples

- The oil-sands (also called ‘tar’ sands) in Alberta are an example of both trends mentioned. We extract or ‘mine’ the raw material (oil sand) using advanced technology and equipment to find and remove the oil sands. Oil sand is processed into crude oil exported to the U.S. and China. Computer mapping and seismic (sound) imaging helps to locate and map oil-sand fields. Large, expensive equipment is used to mine the oil-sand. Advanced technology is used to separate the oil from the sand to make crude oil.

- The Hibernia off-shore oil field also shows technology use in primary industry. Large ‘rigs’ are placed in the ocean and drill 1000s of metres below the ocean to extract oil from the earth’s crust. Sattelite and GIS technology are used to find deposits, and to position the rigs and drills

Primary Industries

- Take raw materials, process them slightly and sell them to manufacturers e.g. agriculture, fishing, trapping, forestry, logging, energy and mining

- E.g. - Forestry companies harvest (or cut down) trees and remove the branches and leaves from the trees to form logs. The logs are then sold to a mill where the bark is removed. The logs are cut into lumber for other products.

Manufacturing

- Includes both processing and fabricating

- Lumber is used to make many products such as tables, chairs, desks etc.

Services

- Not tangible (cannot touch them) products

- Examples include cleaning, accommodation, entertainment, transportation

- Services often performed by experts – doctors, nurses, pilots, mechanics, accountants, teachers, architects, consultants

- Consulting is one of the fastest growing sectors of the service industry

Section 1.4 Advantages and Disadvantages of International Trade

Advantages

- The main reason we trade is to sell things we don’t want or need to obtain things that we want or cannot produce ourselves. Think of the trading exercise we did on the first day of class. If you produce more of one product than you can use, you will trade it to get other products that you could use.

- Trade can be very positive. Trade creates jobs, attracts investment and new technology, offers more choice to consumers, increases competition, lowers prices, improves quality and efficiency of business and leads to technological advances in the marketplace.

- Refer to Fig. 1.19 pg. 22 to see the connections

- Refer to Fig. 1.20 pg. 23 for Canadian import information

- The climate limit what Canadians produce. For example we cannot grow oranges or pineapple, so we must trade some of our surplus (extra) wheat to buy products that we cannot produce.

Disadvantages

- 1) Support of non-democratic systems – e.g. China, Cuba – governments are communist and not democratic

- 2) Support of inequitable production processes – e.g. Coffee – farmers are paid very little for their crop of coffee beans and most do not control the land and cannot grow enough food for their families or earn enough to support themselves

- 3) Cultural Identity Issues – e.g. the U.S. is so powerful that sometimes the exports of movies, food, books and other products will ‘over-power’ local cultures. This can lead to a ‘mono-culture’ (one-culture) that destroys older, smaller and less consumer based cultures e.g. aboriginal cultures in Canada

- 4) Social Welfare Issues – e.g. safety standards, minimum wages, workers rights, health benefits raise the cost of producing goods. Every year many workers die or are injured because of unsafe work conditions. Some countries have lower standards because they want to attract business but workers suffer as a result.

- 5) Environmental Issues – e.g. pollution of air/land/water, climate change, destruction of ecosystems, species extinction

- 6) Political Issues – e.g. colonization, imperialism, wars, genocide, oppression, discrimination, corruption. Thousands of people have been killed for the control of oil, diamonds, gold, farmland and other valuable products. Africa has been colonized by many countries in the past because of the valuable resources – gold, diamonds, agriculture etc. and this has lead to wars and political unrest/instability. In the recent past, many empires have risen to power and then fallen, often through violent methods – e.g. Gingus Khan, Alexander the Great, the Hapsburg Dynasty, the European Empires (British French, Spanish, Dutch, Portugese), World War II empires – (Japanese, Germans, Italians)

[1] As a proportion of total merchandise exports