Canada and the Global Economy

Canada and the Global Economy: The Geography of Structural and Technological Change

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    Canada and the Global Economy
    Book Description:

    The contributors explore four central themes: the locational impacts of the openness of the Canadian economy, Canada's relatively simple economic geography in terms of regional variations in resources and urban development, the problems of keeping pace with rapid advances in technology, and the role of government in maintaining a national market and assisting economic development. They outline the essential elements of Canada's contemporary economic geography, highlight the origins and spatial imprint of change in the Canadian economy, and provide an assessment of Canada's participation in significant international patterns of economic change.

    eISBN: 978-0-7735-6356-8
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Contributors
    (pp. vii-viii)
  4. Preface
    (pp. ix-2)
  5. CHAPTER ONE Introduction
    (pp. 3-20)

    This is a singularly appropriate time to examine the structure, performance, and pattern of changes in the Canadian economy, to assess what appear to be current trends, and to account for the sources of uncertainty that it faces. In addition to the worldwide recession, a number of powerful forces have been causing the reorganization of economic activities at the global scale. The application of advanced information technology in all areas of production and consumption, for example, is permitting new forms of industrial organization, and a wide variety of companies and participants in many markets now experience greatly reduced geographic constraints...

  6. PART ONE The Open Economy
    • [PART ONE Introduction]
      (pp. 21-24)

      The institutional conditions that have governed Canadian trade and thence investment, particularly adoption and maintenance of tariffs on manufactured imports, have been pivotal in its economic history. The National Policy origins of this approach to assisting development are now over 100 years old, and significant reductions to the barriers against open trading have been made in a series of steps since the Second World War. By signing the Canada-U.S. Auto Pact, by participating in various tariffreducing agreements under the General Agreement on Tariffs and Trade (GATT), and by seeking the Canada-United States Free Trade Agreement (FTA) and the North American...

    • CHAPTER TWO Foreign Trade in Goods and Services
      (pp. 25-47)

      Since the time that Bristol’s adventurous sailors began fishing on the Grand Banks of Newfoundland in the 1480s - several years before John Cabot’s voyage to North America¹ - the history of Canada has been an almost seamless record of resource exploitation for export, much of it initiated by foreign direct investment. For almost four centuries French and then British trading companies were the main agents exporting resources from their North American colonies to European markets, shipping back manufactured goods in exchange. The next phase, marked by Canada’s emergence as a self-governing dominion a little over a century ago, was...

    • CHAPTER THREE External Shocks: Regional Implications of an Open Staple Economy
      (pp. 48-68)

      Canada is a classic example of a small, open economy. In 1992 exports represented 24.8 per cent of its GDP, while the comparable figures for the United States and Japan were only 10.5 per cent and 10.4 per cent, respectively. More significant perhaps, over four-fifths (85 per cent in 1992) of that trade was carried out with a single, very large, and relatively autarkic nation, the United States. The consequence, and one that is a central theme of this chapter, is that Canada is continually susceptible to external shocks, which are often conveyed through trading relations with its southern neighbour....

    • CHAPTER FOUR Shifts in Canadian Direct Investment Abroad and Foreign Direct Investment in Canada
      (pp. 69-83)

      Over the last 15 years, outflows of Canadian foreign direct investment (FDI) have typically exceeded inflows, suggesting a growing role for Canada as an international investor. Canadian firms currently invest as much abroad as foreign companies invest in Canada, and few analysts expect this position to change appreciably over the long run (Investment Canada 1992; Rugman and Verbeke 1989). Despite a marked slowdown in Canadian outward FDI over the recent recession (late 1990-early 1992), major Canadian manufacturers such as Northern Telecom continue to employ more production workers in the United States than in Canada, domestically owned resource companies such as...

    • CHAPTER FIVE The Canadian Financial System in International Perspective
      (pp. 84-96)

      In the last two decades we have seen a radical transformation in the activities and operation of the international financial system, characterized by a persisting and deepening international debt crisis, deregulation of domestic financial markets across the globe, development of more and variegated financial products, technological innovation, and the increased speed and complexity of capital circulation and integration of financial markets on a world scale. These changes in the international financial system have been necessitated by a set of broader economic and political events that began in the early 1970s. The dismantling (1971-73) of the Bretton Woods system of fixed...

  7. PART TWO The New Staple Economy
    • [PART TWO Introduction]
      (pp. 97-100)

      Canada has benefited from a sequence of export commodities reflecting highly productive combinations of natural wealth and industrial utility. Thus the Canadian economy, though now one of great diversity, continues its long-term dependence on “staple” export commodities (Innis 1946; Watkins 1977); commodities whose supply or demand has waned have been replaced through exploitation of new resources. Even at late twentieth century, Canada’s export trade relies especially on lumber, wood pulp and paper, crude petroleum, metal ores and concentrates, and wheat. Canada has developed industrial depth, acquired sophisticated human resources, and built a strongly metropolitan form of settlement, but it is...

    • CHAPTER SIX Technological Imperatives in Resource Sectors: Forest Products
      (pp. 101-122)

      Over the past two decades, the Canadian forest product industries have experienced profound changes in competitive conditions. In terms of fibre supply, Canada’s traditional advantage of access to plentiful high-quality, long-fibre, first-growth softwood has been reduced by its exploitation, by technologies that have economically extended use of hardwoods, by establishment of fast-growing plantations in other countries, and by increased self-sufficiency, especially for pulp and paper, in Canada’s major markets. In addition, environmental interests, broadly representing various ‘non-wood’ benefits of the forest related to conservation, recreation, fishing, agriculture, and Aboriginal land title claims, have challenged Canadian industry’s traditional dominance over forest-use...

    • CHAPTER SEVEN Restructuring in the Canadian Mining and Mineral-Processing Industries
      (pp. 123-136)

      Like the forest sector, the Canadian mineral sector has, in the 1990s, finally recognized that its large resource base is not limitless, and that its traditional ways of doing business are no longer adequate to ensure long-term survival and prosperity. As visibly extractive industries in an era of heightened sensitivity to environmental degradation (clearcutting and creating waste heaps with acidic drainage are both ready sources of emotive imagery in the hands of critics); as industries whose hinterland sphere of operations has situated them in the complex political currents of renegotiation of Native land claims; and as sectors whose firms have...

    • CHAPTER EIGHT Redrawing the Canadian Energy Map
      (pp. 137-154)

      Canada is the world’s most energy-intensive industrialized nation. If we define energy intensity as total primary energy requirements¹ divided by GDP, then Canada in 1970 ranked third among OECD countries, after Luxembourg and Belgium (McLachlan and Itani 1991). By 1989, its energy intensity had decreased because of structural changes and improvements in energy efficiency. Its ranking changed to sixth, though it still ranked ahead of major economic powers, such as the United States (13th), the United Kingdom (16th), Germany (17th), France (18th), Italy (21st), and Japan (23rd), and its energy intensity was about 30 per cent higher than that of...

    • CHAPTER NINE Agriculture in a World of Subsidies
      (pp. 155-168)

      Canadian agriculture is in a precarious state. While it is a major contributor to Canada’s wealth (about 9 per cent GDP) and accounts for a significant share of Canada’s international-trade surplus (about 7 per cent), its future is uncertain (Agriculture Canada 1988). Farm incomes and returns on investment are very low. Much of the land area under cultivation is marginal in terms of climate and soils, less productive than prime areas of cultivation south of the U.S. border. The historical development of farm organizations and government assistance has enabled agriculture to thrive much of the time, but recent low prices...

  8. PART THREE Manufacturing and the Impact of Technological Change
    • [PART THREE Introduction]
      (pp. 169-174)

      The locational pattern of secondary manufacturing is one of high concentration in and around the metropolitan centres of Toronto and Montreal (Figure 1), with the most important industrial region, the Golden Horseshoe of southern Ontario, stretching from 50 km east of Toronto to the U.S. border at Niagara. Historically, industrial investments by both Canadian-and foreign- (mainly U.S.-) owned corporations have been encouraged by a variety of means, including tariff protection. The result is a manufacturing sector serving a small market with a highly diversified range of products. A consequence has been short production runs. While this has been a disadvantage...

    • CHAPTER TEN Employment Creation by Small Firms
      (pp. 175-194)

      The contribution of small firms to net employment creation in Canada, which has been substantial and growing since the 1960s, is now pre-eminent (Rothwell and Zegveld 1982, 125–8; CFIB 1983; Thompson 1986; Cléroux 1988; Statistics Canada 1988; and Laroche 1989). Small firms - those employing fewer than 20 in the base year - generated over one million net new jobs 1978-86 (Figure 1), while large firms (over 100 employees) declined, offsetting comparatively small growth by medium firms. It was once thought that large firms grow larger and small firms grow more numerous. During 1978-86, however, small firms grew larger...

    • CHAPTER ELEVEN Organizational Restructuring of U.S.-based Manufacturing Subsidiaries and Plant Closure
      (pp. 195-214)

      One of the unifying themes in Canadian economic geography is the “restructuring” of nearly every aspect of the Canadian space economy. The advent of the North American Free Trade Agreement (NAFTA) will be a significant factor in the industrial restructuring of Ontario's heartland economy. The full effect of the agreement on individual regions and labour markets is still conjectural. It appears that southern Ontario stands the greatest risk of employment losses because of its large secondary manufacturing sector and continued dependence on foreign-owned subsidiaries for employment in key manufacturing industries. However, Watson (1987, 251) argues that tariff protection mat actually...

    • CHAPTER TWELVE Restructuring in Mature Manufacturing Industries: The Case of Canadian Clothing
      (pp. 215-229)

      The growth of manufacturing in low-wage, developing countries has presented a continuing competitive threat to labour-intensive industries in high-wage, industrialized nations. Clothing production represents a case in point. Throughout much of the period since the Second World War clothing producers in the high-wage economies have been viewed as an endangered species. While garment production has experienced dynamic change throughout this period, fears of extinction have not been realized. Innovative strategies of adaptation and accommodation have enabled producers to survive and at times thrive. However, the recent implementation of the North American Free Trade Agreement (NAFTA) poses challenges to Canadian garment...

    • CHAPTER THIRTEEN Restructuring in a Continental Production System
      (pp. 230-254)

      The automobile industry is of prime importance within the Canadian economy because of its size and because it is the backbone for many other Canadian manufacturing sectors, including steel, rubber, plastics, aluminum, and glass. Nearly one in every seven Canadian manufacturing jobs depends directly on it (Taskforce 1983, 1), including more than 160,000 in the industry itself.¹ The major contribution of motor vehicles and parts to Canada’s international trade - nearly one-quarter of all merchandise exports imports - is explained by one specific aspect of the historical development of the industry. After the signing of the Canada-United States Automotive Products...

    • CHAPTER FOURTEEN High-Tech Canada
      (pp. 255-272)

      As markets demand products embodying advanced technologies, so the success of firms, industries, and regions reflects how well they embrace the new.¹ We can see this most clearly in the shifts in the terms of trade in favour of higher-value goods and services based on new technologies. Viewed in this way, competitive advantage, which is necessary for economic growth, requires generation and expansion of technologically innovative activities. The distinctive features of this model in the late twentieth century are its global range of application and the speed with which advances are being made in a variety of technologies. The pervasive...

    • CHAPTER FIFTEEN Capital, Technological Change, and Regional Growth
      (pp. 273-294)

      In economic doctrines of all stripes, one of the seemingly eternal verities is that capital plays a crucial role in determining the path of growth and change in industrial economies.¹ Contemporary work in geography, regional science, and regional economic planning has reinforced this view, attesting to the key influence of investment – and investors - on the economic vitality of localities and regions. However, until comparatively recently, both our theoretical apparatus for understanding the role of capital in regional development and our collected body of empirical evidence to illuminate this process were rather limited (Gertler 1984b; 1987a). The Canadian geographical literature,...

  9. PART FOUR Services and the Spatial Organization of the Economy
    • [PART FOUR Introduction]
      (pp. 295-298)

      Service industries now employ 72 per cent of the Canadian workforce, having been the sector of greatest employment growth for the past century. There has, however, been a growth spurt since about 1960, when services employed 55 per cent, and in this respect Canada has followed a pattern quite similar to that of all industrial countries. While services were responsible for 77 per cent of net new jobs during the 1970s and 1980s, according to Coffey (this volume, chap. 18), service output was only 60 per cent of GDP in 1984, compared with 56 per cent in 1961.

      Services are...

    • CHAPTER SIXTEEN The Role of Transportation in the Canadian Economy
      (pp. 299-315)
      A.C. LEA and NIGEL M. WATERS

      Transportation plays a vital role in the economy and society of Canada – more so than in almost any other country in the world. Canada is a geographically large country with a dispersed population and a primarily resource-based economy.¹ Freight transportation is vital for moving unprocessed resources from remote hinterlands to the industrial heartland of the country and to international markets. Inter-city passenger transportation is critical for moving people people between major urban centres and agglomerations. This vital importance was recognized before, during, and after Confederation.

      The opening remarks in the study of Canadian railways by Trout and Trout (1871) emphasize...

    • CHAPTER SEVENTEEN The Canadian Market and Activities Oriented to Consumers
      (pp. 316-334)

      While the Canadian economy as a whole continues to rely heavily on trade with foreign markets, a growing number of workers and locations are only indirectly affected by this activity. As in most modern economies, the share of jobs in primary industries and manufacturing has declined over the years: most Canadians now work for the domestic market, and much of their output derives from trade and service activities. This chapter examines the size, spatial distribution, and patterns of change in the Canadian market and then looks at the sectors that directly linked to it: retail, wholesale, consumer services, and finance....

    • CHAPTER EIGHTEEN The Role and Location of Service Activities in the Canadian Space Economy
      (pp. 335-351)

      One of the major economic phenomena marking the twentieth century has been the growth of service activities in developed countries, where provision of services has displaced production of goods as the principal form of economic activity. In most advanced economies, services now account for well over 50 per cent of both total employment and total economic output, measured as either gross national product (GNP) or gross domestic product (GDP). Using either employment or output measures, Canada ranks as one of the world's most highly "tertiarized” economies. In 1991, employment in service industries constituted 72.7 per cent of total Canadian employment....

    • CHAPTER NINETEEN Quaternary Places in Canada
      (pp. 352-374)

      Geography has a rich literature and tradition of explaining the location of economic activities in the primary, secondary, and tertiary sectors and providing an understanding of the influence of these activities on the evolution of places with which they have been closely associated. In the 1970s, as the service sector grew in complexity, interest developed in explaining office location, especially offices located in large towers clustered in major urban places, which provide a multitude of simple and complex services (see Coffey, this volume, chap. 18). Most office clusters locate in the central cores of cities, though others are in suburban...

  10. PART FIVE Political Economic Questions
    • [PART FIVE Introduction]
      (pp. 375-379)

      It has been argued throughout this book that the “openness” of the Canadian economy helps explain its locational development. The concept of openness has changed in significance over time; it also takes on different meanings for different sectors, as illustrated by the reliance of Canada on access to foreign markets to absorb its massive exports of resources while historically it placed tariffs on imports of highly manufactured goods in order to assist the development of secondary industry. The locational legacy of the policy of protection but with open borders to investment capital has been quite striking. Central Canada, especially southern...

    • CHAPTER TWENTY Canada’s Public Space Economy
      (pp. 380-406)

      The 30 years between 1956 and 1986 witnessed a significant broadening of the scope and scale of governmental intervention in the economic affairs of individuals, businesses, and regions in Canada. To a much greater extent than is commonly appreciated, the structure and spatial organization of Canada’s economy are shaped by its public institutions. In 1986 the public sector accounted for about 30 per cent of all employment and owned about 40 per cent of the nation’s non-residential capital

      stocks, and governments spent more than one-quarter of gross domestic product (GDP) on production of public goods and services. The sheer magnitude...

    • CHAPTER TWENTY-ONE Socio-spatial Restructuring of Canadian Labour Markets
      (pp. 407-432)

      Recent changes in the Canadian economy have transformed the composition and regional structure of the Canadian labour market. This restructuring is related to the history of Fordism in Canada, which is labelled “permeable Fordism” by Drache and Glasbeek (1992) and by Jenson and Mahon (1993) because of the level of foreign ownership, the dominance of international unions, the open, resource based economy, and sectoral and occupational labour-market segmentation (Donner 1991; Norcliffe 1994). These characteristics have been reinforced by Canada’s federal structure which allowed for increased intervention by Ottawa in labour-market operations during the height of the Fordist period (1945-75), while...

    • CHAPTER TWENTY-TWO Technological Change and Innovation: Policy Issues
      (pp. 433-444)

      Recent and fundamental advances in science and technology (S&T) have weakened the long-standing relationship between national economic prosperity and natural resources. Now nations may prosper on the basis of their knowledge and intellectual capability in science and technology, particularly as these bear on management, organization, and production. The basis of trade between regions and nations and the wealth to be derived from it have also changed and increasingly reside in the quantity and richness of human skills and intellectual resources.

      Canada is distinctive among members of the G7 in its continued reliance on its natural resources. In a recent analysis,...

    • CHAPTER TWENTY-THREE Conclusion: Canada’s Emerging Economic Geography
      (pp. 445-452)

      The focus of this book is on a short period in the evolution of Canada’s economic geography. As a team of geographers, we have described and analysed the intriguing ways in which it has grown and been moulded by myriad influences, but we have done so only for recent decades. In a historical sense, the restricted time frame of our view must have limited our perception of change and influenced our results, but we have proceeded knowing that this is a period of considerable Canadian economic growth, the Canadian population of 18.2 million in 1961 having become half as large...

  11. Index
    (pp. 453-458)