Canada

Sprawling across the northern half of North America as the world's second-largest country by land mass with nearly 10 million square kilometers, Canada has a diverse economy that ranks in the top 15 of global standings. The annual gross domestic product is approximately US$1 trillion. A federation and constitutional monarchy whose head of state is Queen Elizabeth II, the national capital is at Ottawa, Ontario. There are 10 provinces that range significantly in size and population (Ontario has 13 million, Prince Edward Island 130,000) and three northern territories. Eighty percent of the population lives in cities, with Toronto the largest (pop. 2.5 million, metro area 5.5 million). A member of the G8 group of industrialized nations, Canada is a founding member of the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), and is also a member of the North American Free Trade Agreement (NAFTA) with the United States and Mexico.

Economic History

A nation of approximately 32 million people mostly clustered in cities near the Canada-U.S. border, modern Canada was founded in 1867. Prior to that, the country was first a colonial possession of France, and then of Great Britain. Both powers traded extensively with the aboriginal populations that had lived on the land for thousands of years. As such, the country has always been a source of staple resources, and the region was an important element of both France's and Great Britain's mercantilist empires. Basque fishermen first started coming to Canada in the 1500s. France claimed it as its own and colonized New France, in the area in present-day Quebec, starting in 1608. Furs became a leading export, and the Company of One Hundred Associates, the first business association in Canada, was granted a monopoly on business matters in New France. Meanwhile, in 1670, the British granted the Hudson's Bay Company the rights to trade on all the land that had rivers that flowed into Hudson's Bay. This created a lively imperial competition, especially around the fur trade.

Following the defeat of the French at the Plains of Abraham and the Treaty of Paris in 1763, Britain took possession of the colony. With the independence of Britain's American colonies in 1789, refugees loyal to the British crown flooded northward, precipitating colonial changes and population challenges for the existing French-speaking population. In the 1800s, wheat and timber became leading exports to Great Britain. After an uprising in both the French- and English-speaking colonies in 1837, some local independence was granted. Eventually, the scattered British colonies united to form modern Canada, with complete control over domestic affairs, while Britain retained significant say in Canada's international relations. In the 1867 constitution, the federal government was granted wide-ranging powers over economic concerns, with local matters left to the provinces.

In the 19th century, the federal state utilized its powers as the country expanded westward and was linked by a transcontinental railway, completed in 1885. Immigration and settlement followed, with an emphasis on wheat production. Protectionist policies helped to create infant industry, particularly in Ontario and Quebec where farm implements, steel, railways, and consumer goods became important manufacturing sectors. Banking was also a protected [Page 215]field, and financial services have been a strong area since 1867. An emphasis on building infrastructure (railways, canals, bridges) that was largely government-funded brought the state actively into the economy. A long depression in the 1880s and 1890s was soon eclipsed by a wheat boom that saw the population grow significantly, and the nation's economy improve. By World War I, Canada was a choice destination for British capital and European immigrants, and had developed a solid economy with railways, timber, agriculture, mining, and manufacturing as key sectors. World War I also saw the entry of the federal state into the economy with war mobilization and the creation of new federal regulatory agencies, federally-owned companies, and income taxes.

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