Major Systematic Barrier to upgrading the CDN Economy
Firm Strategy, Structure and Rivalry
Labor mgmt. relationship are often counter-productive
Many firms continue to maintain their insular focus
Intense local rivalry is absent in many industries
Macro-Economic environment blunts investments
Company strategies often fail to upgrade the home diamond
Canada’s workforce is not well-equipped for upgrading and change
R&D infrastructure is not aligned with requirements for upgrading
Physical infrastructure contains efficiency, especially in transportation
Related & Supporting Industries
Weak related and supporting industries and inadequate cluster development
constrain innovation and new business formation
Canada buyer behavior often work against upgrading
STD & Regulations have not provided strong impetus for industry upgrading
Manufacturing in Canada
4 developments in trade policies and practices in this period affected,
Canadian manufacturers substantially the Canada US auto pact, the GATT the
world competitive environment, particularly the emergence of lesser
developed countries and the bilateral free trade agreement with the US
reached in late 1987 and its expansion in the late 1990s to include Mexico.
With free trade, the volume of manufactured goods imported into Canada has
increased, Canada’s degree of trade exposure is high by international
Ontario and Quebec dominate the manufacturing sector in Canada though the
western provinces are increasing particularly in the area of extracting
With confederation in 1867 came, geographic expansion, construction of the
Canadian Pacific Railway and new settlement bringing population increases,
skills and capital
8 years later Sir John A. MacDonald’s national policy established protective
tariffs to encourage domestic processing of CDN material
Impact of Canadian $ on retail
Canada have always enjoyed cross border shopping Prices in CDA are often higher than those in the US due in part to such
differences as tax structures or the economy of scale enjoyed by retailers in
the larger US market
CDN consumers get even better deals when our dollar is high
A higher dollar also makes travel to the US cheaper proposition for CDNs
All around the strength of the CDN $ determines the purchasing power of
The fluctuating $ can affect prices at home but often there is a lag time as
inventory was purchased when $ was at a different value
Future impact of globalization on CDN retail
Globalization will continue to introduce new retailers to Canada
The internet will further erode Canadian Bricks and mortar stores
POSSIBLE EXAM QUESTIONS
How come Canada is not that competitive in the retail industry?
Almost nothing for Canadian retail store
How does the gov’t intervene in Canada?
2. State provision of goods and services
In Canada this will be done through Crown Corporations
3. Physical policy by tax and subsidies
Why free market economy the market forces determine the allocation of
resources based on the decisions of consumers and business.
Gov’t can intervene to correct what they perceive to be an inefficient allocation of
resources (known as market failure).
Main reason for intervention:
1. To correct market failure when free market no longer allocate goods and
services efficiently, it is called a market failure
2. To redistribute wealth
3. To improve economic performance (the gov’t intervene to tor impact to how
these goods and services are allocated unfortunately the gov’t is not the most
efficient at allocating g&s either
Argument for Protectionism
Ind. fearful of foreign comp.
Those intended to inference the composition of production
Those intended to inference the distribution of income
National Defense argument
Seek to avoid dependence on foreign sources for supplies (such as minerals)
of essential materials. or finish products that might be denied in times of war. Protection of infant ind.
When foreign competition is reduced or eliminated by import barriers,
domestic ind. can develop reapidly.
Protection frequently cannot be removed because the domestic industries
never develop sufficient competitive strength
The evolution of protectionist in Canada, Keynesian ideas and formulas were no
1. Inflation erupted
2. Unemployment rose
3. Critical shortages and rising cost of energy changed the economy and then
became a stagflation
New demand on mining industry
New demand was imposed on the economic system including:
1. Environmental protection
2. Treatment of indigenous pep.
3. Product safety
What the mining industry cares about
1. Custom and sales tax
3. Human resources and productivity
4. Public relations
5. Trade policy
6. Transportation and infrastructure
What Activists care about?
1. Protecting water
2. Reforming mining laws and policies
1. Indigenous peoples land
2. Parks and protected areas
3. Pvt. Properties
3. Promoting and environmental planning and assessment
4. Insuring corp. accountability
Regional Diversities of Disparities
Why is Alberta richer than Ontario?
1. Because of immigration patterns
- assessed to capital, Occupational mobility, and market size
3. Cultural Differences
- spatial mobility: first nation
4. Resources are diff. 5. Historic difference
If you are the gov’t how do u manage regional difference?
1. Industrial incentive program
2. Infrastructure assistant program
3. Social adjustment and rural development programs
Flows of regional development Industrial incentive programs favor capital-
intensive programs in areas where one of the major problems is excess labour.
Example: the mega project.
What is a mixed economy?
1. Moderated capitalism
2. Mostly free market but gov’t regulated competition
3. Some state ownership
4. Gov’t protect indigenous industries such as timber, fishing mining, and
5. Gov’t protect and develop social program
The Goals of NAFTA
1. The gov’t of Canada, U.S, and Mexico resolved to strengthen the special bonds
of friendship and co operation among the nations
2. To create an expanded and secure market for goods and services produced in
3. To reduce distortion to trade.
4. To build on the respective rights and obligation under the GATT general
agreement of trade and tariff and other multi natural and bi natural
instruments of co-operation.
5. To enhance the companies of a firm in global market place.
6. To promote sustainable development
7. To strengthen the development and enforcement laws of regulation
8. TO under each of the preceding in a manner consistent with environmental
protection and conservation.
Auto Industry, Wine
How do they relate to the above industries?
Protectionism for Auto. Privatization for Wine Ind.
If auto and wine mentioned together. Tell them what gov’t do in federal and
Difference between US and Canada in political and ideology
1. In Canada peaceful transition to independence
2. More collectivists
3. More Gov’t involvement 4. More sense of responsibility of social welfare
5. More power not specially reserved to the provinces are allotted to the federal
6. Houses of commons choose a representative democratically
7. Senates are appointed
8. Cooperative Federalism
1. Revolution to independence
2. More individualist
3. Less gov’t involvement