Download The Evolution of the Canadian Economy

The Evolution of the Canadian
Economy
Free Trade Vs Protectionism
The Great Depression
Wartime Economy
Free Trade and NAFTA
Free Trade Vs Protectionism




The state of the economy at any time affects all
Canadians
The role of free trade and government intervention
have had dramatic impact on our economy
19th century Canadian trade policy alternated
between more and less trade with the U.S.
Protectionism (1878) came with the National
Policy
Free Trade Vs Protectionism





Tariff protection allowed Canadian
businesses to prosper, but left the
Canadian hinterland with an economic
burden
Tariffs inflated prices for Canadian
products
Western farmers could not afford to buy
cheaper American products and were
forced to purchase more expensive
Canadian ones, as well as pay
transportation costs for delivery
Farmer banded together and lobbied the
government for freer trade with the U.S.
PM Laurier negotiated a deal to reduce
tariffs on many products – some to
satisfy the needs of farmers.
Free Trade Vs Protectionism
Laurier came under fire by
the official opposition and
lobbying groups opposed to
free trade
 In the following election he
lost to Robert Borden (from
Nova Scotia) – the free
trade deal was beaten

The Great Depression



October 29, 1929 – “Black Tuesday”
Caused by a massive sell-off of corporate stock causing
the value to plummet (remember – supply and demand?)
Unemployment was rampant and the nation was plagued
by poverty
The Great Depression
Then Liberal PM William Lyon Mackenzie
King adopted a laissez-faire (do nothing)
attitude towards the problem
 The Liberals were defeated by the
Conservatives as a result led by R.B.
Bennett
 He introduced ineffective legislation to
solve the problem

The Great Depression
Bennett later adopted the practice of
Keynesian economics – create jobs and
lower interest rates
 The liberals returned to power in 1935 and
appointed the Rowell-Sirois commission to
investigate the Canadian economy which
after much debate resulted in a national
unemployment insurance program

Wartime Economy

1.
2.
3.
4.
5.
6.


To protect the economy during WWII the federal
government did the following:
Froze wages
Froze prices
Implemented a mandatory savings plan
Food rationing
Victory Bonds
Introduced personal and corporate income tax
These interventions paid off by keeping inflation in
check and allowed the economy to grow
This resulted in a higher standard of living
Free Trade




Canada and U.S. ultimately reached a free trade
deal in October of 1987 title the Free Trade
Agreement
Advocates argued: access to huge U.S. market,
improve trade relations
Opposition: lead to commercial union, threaten
Canadian cultural and political sovereignty,
weaken our economy
The Liberals and Conservatives ironically
switched sides on the issue
Free Trade
1994 the FTA was expanded to include
Mexico and became the North American
Free Trade Agreement (NAFTA)
 The largest free trade zone in the world

Case Study 12
1.
2.
3.
Please read, and record vocabulary words
from, chapter 10.
What is protectionism? What was the
argument against this movement?
How did The Great Depression impact
Canada? What was the government
response? What brought the Canadian
economy out of the depression?
Case Study 12
4. According to Keynesian economics government
should intervene in business to maintain the
development of an economy. Should
government intervene, or should big business be
totally free without any intervention? Why?
5. What is the FTA? NAFTA? Please fully explain
each.
6. Respond to the connections block on page 118.
7. Respond to the caption question for figure 10.5
on page 126.