Feudal Era: Business dominated by aristocracy and the church, mainly agrarian.
Mercantile Era: Is the economic doctrine that says government control of foreign trade is of paramount
importance for ensuring the prosperity and security of a state.
Industrial Era: Business dominated by vested interests – Capitalism & Nationalism. Governments begin
to regulate working conditions.
Technological Era: Business dominated by multinational corporations with greater demand for free
trade. Outsourcing was very popular to decrease input costs.
Information Era: Globalization. Greater social demands for government intervention.
Socialism: An ideology based on the ownership of the means of production and distribution by the
Democratic Socialism: Accepts elements of capitalism, however, desires that government play an
interventionist role in the management of the economy and markets.
Classical Conservatism: believes in a strong government; the top has no responsibility to the bottom.
Neo-Conservatism: Governments should not be spending money on social security, no minimum wage,
healthcare. Less taxation and less government spending.
Liberalism: Liberals emphasize free private enterprise, individual property rights, laissez-faire economic
Neo-Liberalism: concerned into the development of the free-market. No protection of class or social
order or institutions. Deregulation, to allow market forces to act as a self-regulating mechanism
Capitalism: Economic decisions are made by market forces. Focuses on an open system of: pricing,
profits/losses and private property ownership. Communism: Workers will have direct input into economic management. Everyone will contribute based
on ability and receive based upon need.
Mixed Economy: Mostly free markets but government regulated competition and some state ownership
(Canada protects timber, fishing, mining industries).
Early Canadian Economy:
- Canada has always been a trading nation where government has played a strong role.
- After Confederation tariffs barriers created (National Policy).
• Certain Industries drove Canada’s early development
– Financial Industry (Banking & Insurance)
- Government most beneficial when it facilitates, not intervenes
What is government’s role in the Canadian economy?
• Law Maker
• Trade Negotiator/Deal Maker
• Deliverer of Service Definition or Competitiveness:
Increased productive capacity achieved by:
• Superior technology
• Continuous skill-enhancing training
• Concern with social equity and environmental preservation
Porter’s Diamond 1. Factor conditions distinguish between
– Basic factors – passive, undifferentiated base abilities available to most competitors
– Advanced factors - involve higher levels of knowledge and lead to more competitive
– Reliance on general factors makes an economy vulnerable
2. Demand conditions:
– Scale economies a static advantage
– Quality of demand in the domestic market more important
1. Wealthier nation – consumers less price-sensitive, more interested in quality
products, higher levels of customer service
2. Independent buyers lead to increased concern about quality
– Competition in domestic market important
3. Related and supporting industries require a network of suppliers
– Working relationship creates both advanced and specialized factor conditions
– Complementary industries can develop symbiotic relationship
4. Strategy – Structure – Rivalry
– No one managerial style is best
– Stress is on organizational goals.
– The roles of banks and capital markets are important
– Stress is on the importance of domestic rivalry
– Strong opposition to the creation of monopolies, cartels or national champions • Government is not integral to the diamond
– Role is a facilitator
– Encourage companies to raise performance
– Assist in creating special factors
– Stimulate early demand for advance products
– Stimulate local rivalry – Anti-trust rules
Stern's Diamond of Sustainable Growth Chapter 2:
John A. Macdonald and other delegates created the 72 resolutions that lead to the British
America Act in 1867 establishing a confederation of provinces but with a strong central
government to avoid US problems
Constitution Act 1982: Section 92 and 93 on Canada’s Constitution distributes exclusive
legislative powers to the provinces over regional interests.
Unitary State: a country that is government constitutionally as one single unit. Ex. France, Britain.
Federalism: defined as the method of dividing powers so that the general or central regional
governments are each within their sphere coordinate and independent. Ex. Canada, USA.
Problems of Federalism:
Conflicts in fiscal policy.
Federalism can protect the status quo or move to change them.
Federalism can act as a barrier to change
Conflicts in ideology
Supreme Court of Canada is not in the Constitution, it’s the main referee with the province and federal
government. There is no court of appeal.
- Prior to 1871, different currencies were used in the 4 provinces of British North America.
-Demand began to grow for government issued paper money because banks notes were mistrusted.
The Bank Act 1871: The Issues
- Currency Issues: There was no national currency.
- Economics Issues: Access to money was somewhat limited; credit.
- Bank Issues: No regulation, very unstable.
- Major function of banks: bank notes: you deposited 10,000 silver dollars because you