How did trading change Canada’s

economy?
With a real GDP of $1.64 trillion, Canada has the ninth-largest economy in the world. But it wasn’t
always like this. Canada’s economy significantly shifted after 1920 when the country joined international
trade. International trade has been crucial. The economy is impacted by trade in many different ways,
including as a source of economic development and industrial production, as well as a mechanism for
Canadians to access foreign capital, investment goods, new technology, and an ever-expanding range of
commodities and services.1

Particularly, exports significantly contribute to Canada's economic expansion. As trade-oriented

industries adjusted to changes in the demand for Canadian commodities on a worldwide scale, Canadian
export flows changed over time. The growth of Canadian export markets has been influenced by both
raw materials and manufactured items.

This paper aim is to understand the importance of trading and how can it influence a country’s
economic sustainability. This paper will review the history of the Canadian economy before and after it
joined international trading.

Economic history of Canada 2

Canada was famous for hunters and gatherers since the ancient era. They were making cloth with small
mines of copper and silver ornaments. And even in the ancient era people were benefiting from trades
from among native communities. French and British traders were involved in the development of
international trade that emerged afterward.

Water transport dominated the Canadian economy until the middle of the 19th century. The country's
extensive waterways were essential for the transportation of goods for the major industries of fur,
timber, and fish. Only after this time did mining and agriculture take over as the major industries. Road
and rail were these industries' primary modes of transportation.

History of Trades 1
The British and French came to this land for the fur trade and fisheries. They exchanged tools, weapons,
and other objects manufactured of iron with the local populations. The fur trade was highly demanded
in Europe and helped aid the invasion of inland Canada.

1
(“The Economy of Canada: An Explainer” 2022)
2
(“Economic History of Canada: How Did the Settlers Facilitate Economic Growth? - 3306 Words | Essay Example”
2019)
The fur trade didn't support the settlements of Canada because there were few workers to assist with
fur shipment to Europe. The trade implied that the traders were not likely to travel to western Canada.
(Marr and Donald 217)

These colonial people developed the fishing industry and brought in new technologies to preserve and
store fish. Demand for fish increased so other areas also started developing the fishing industry.

Similar to the fur business, fishing did not permit settlement in the nation, and the majority of fish goods
were exported to the US.

Impact of immigration in Canada 1

With the passage of time, Canada had a growing population of immigrants. As more immigrants arrived,
there was a rapid increase in internal settlement in the country. By the time of 1850s, Canada’s
immigrant population was increased and other ventures became more flexible.

But as a result of immigration, there was increased competition for land which was also promoted by
the forestry industry. Therefore, despite the fact that the majority of the problems faced by immigrants
remained gravely unresolved, the government had to deal with reducing poverty.

The economy of Canada's agricultural sector has shrunk significantly in the 19th century. (Emery and
Kenneth 260) This shift away from subsistence farming allowed farmers to increase their production and
profits, but it also made them more vulnerable to economic fluctuations.

Additionally, the government of Canada's financial policies had made the sector profitable for the
majority of investors. It became clear that the nation was prepared for a well-established financial
services sector when insurance companies began operating. (Emery and Kenneth 260)

Summary of Canada’s imports and exports 3

Canada and its trading partners export and import a wide variety of goods. Huge amounts of money are
being moved in and out of each country as part of the transaction. For instance, studies have indicated
that the United States receives the most energy from Canada.

3
(“Canada and Her Trading Partners - 1477 Words | Report Example” 2019)
 It is significant to note that the economic slowdown
imports and exports experienced by Canada's trading partners has given
100% the US a comparative advantage to overtake Canada
80% as its primary trading partner.
60%
40%
20%
0%
% of Canada export % of Canada import

US UK Japanmn1

Comparative advantage 4

Experts in economics, business advice, and other fields have persisted in debating the dispute
surrounding the comparative advantage gained by countries like Canada. (Mafi-Kreft, 2012).The
potential for Canada's economy to succeed commercially is consequently examined in the examination
of its comparative advantage.

In terms of technology, Canada wants to have a clear advantage. As a result of the awareness that a
major portion of the market is dominated, external economies shift down the cost of production.
(Krugman & Obstfeld, 2009)

Export growth since 200056

Global oil prices started to rise dramatically in the early 2000s, and new developments in extraction
technology made it more financially viable to import oil using unconventional extraction techniques,
such as those utilized in western Canada's oil industry.

4
(“Canada and Her Trading Partners - 1477 Words | Report Example” 2019)
5
(Canada, 2012)
6
(“Statista - the Statistics Portal” 2022)
Significant fluctuations have occurred in the composition of exports, most notably as a result of
variations in the relative profits from the automotive and energy industries. Between 2005 and 2008,
exports of motor cars and their components plummeted precipitously as the proportion of American
auto imports from Canadian producers decreased.

During the early 2000s, export growth was hampered by fewer vehicle shipments to the US, although
energy exports saw an increase in value. These energy exports went almost exclusively to the United
States.

Even while crude oil exports rose following the recession, the drop in oil prices that started in mid-2014
significantly decreased the revenue from energy product exports. China became a member of the WTO
in 2001. A worldwide commodities boom occurred as manufacturing moved to China and other
emerging nations, boosting demand for oil and other main Canadian commodities.

I wanted to make sure that the stated information only referred to Canada’s economy growth so I found
import-export rate growth in the US and Japan.
No special trend can be seen on either graph, import or export. But Japan's oil imports increased in 2010
due to Canada's trade with Japan.

Conclusion

As a result, it is evident that Canada is a country that is well suited for importation as a means of trade.
We discovered that the nation makes full use of its natural resources, and as a result, the majority of its
economy is built on them. The trade enables a nation to obtain resources that it lacks in return for
resources that are abundant. The exchange of resources is entirely based on supply and demand, and
when this relationship changed in 2000, there was an increase in demand for oil, which was primarily
supplied by Canada. As mentioned above, other countries didn’t experience a change in 2000, which
means that the primary suppliers of oil only affected Canada and Saudi Arabia

Despite the fact that some countries are currently experiencing economic stagnation as a result of
globalization, Canada has benefited from it. In terms of acquiring market stability, there has been noted
progress.

Reflection and evaluation

The example of Canada’s trading helped me to understand more about exchange, interactions and
benefits. It showed me how big role can simple trading take into developing a country and what factors
matter to be successful in it.

I also wanted to discuss how China's proposal to Canada in 2010 regarding the import of electronics and
technologies changed the country's economic situation. Furthermore, I wanted to discuss how quickly
Canada recovered from the COVID trading rate drop.
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