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The North American Political Economy
“The study of political economy
focuses on the related set of
economic and political institutions
that control the production,
distribution, consumption of
goods and services.”
Hardwick, Shelley, and Holtgrieve, The
Geography of North America, Upper Saddle
River, NJ, 2008. Page 63.
Political Structure of North America
The United States
 50 states and 1 district
 Capital - Washington, DC
 Dependent Areas: American Samoa,
Baker Island, Guam, Howland Island,
Jarvis Island, Johnston Atoll, Kingman
Reef, Midway Islands, Navassa Island,
Northern Mariana Islands, Palmyra
Atoll, Puerto Rico, Virgin Islands, Wake
 Government Type - Constitution-based
federal republic
 Legal System: federal court system
based on English common law; each
state has its own unique legal system, of
which all but one (Louisiana, which is
still influenced by the Napoleonic Code)
is based on English common law;
judicial review of legislative acts.
The United States Government – Executive Branch
The president is both the chief
of state and head of
President-Barack H. Obama
Vice President-Joseph R.
The Cabinet appointed by the
president with Senate approval
The United States Government – Legislative Branch
Congress consists of the
Senate (100 seats, 2
members are elected from
each state by popular vote
to serve six-year terms;
one-third are elected every
two years) and the House
of Representatives (435
seats; members are directly
elected by popular vote to
serve two-year terms)
The United States Government – Judicial Branch
Includes the
 Supreme Court (nine
justices nominated by
the president and
confirmed with the
advice and consent of
the Senate who are
appointed to serve for
 United States Courts of
 United States District
 State and County
 10 provinces and 3
territories; Alberta, British
Columbia, Manitoba, New
Brunswick, Newfoundland
and Labrador, Northwest
Territories, Nova Scotia,
Nunavut, Ontario, Prince
Edward Island, Quebec,
Saskatchewan, Yukon
 Capital - Ottawa
 Government - a
parliamentary democracy, a
federation, and a
Commonwealth realm
 Legal System -based on
English common law,
except in Quebec, where
civil law system is based on
French law.
Constitution Act, 1982(1)
Whereas Canada is founded upon the principles that recognize the
supremacy of God and the rule of law:
Guarantee of Rights and Freedoms
1. The Canadian Charter of Rights and Freedoms guarantees the rights
and freedoms set out in it subject only to such reasonable limits
prescribed by law as can be demonstrably justified in a free and
democratic society.
Fundamental Freedoms
2. Everyone has the following fundamental freedoms:
(a) freedom of conscience and religion
(b) freedom of thought, belief, opinion and expression, including freedom
of the press and other means of communication.
(c) freedom of peaceful assembly; and
(d) freedom of association.
Canada – Executive Branch
Head of state: Queen
Elizabeth II, represented by
Governor General Michaelle
Head of government: Prime
Minister Stephen Harper
Cabinet: Federal Ministry
chosen by the prime minister
usually from among the
members of his own party
sitting in Parliament.
 monarchy is hereditary;
governor general
appointed by the
monarch on the advice of
the prime minister for a
five-year term
 following legislative
elections, the leader of
the majority party or the
leader of the majority
coalition in the House of
Commons is
automatically designated
prime minister by the
governor general.
Canada – Legislative Branch
Parliament consists of the
Senate (105 seats; members
appointed by the governor
general with the advice of
the prime minister and serve
until reaching 75 years of
age) and the House of
Commons (308 seats elected
by direct, popular vote to
serve a maximum of fiveyear terms)
Canada – Judicial Branch
 Supreme Court of
Canada (judges are
appointed by the prime
minister through the
governor general)
 Federal Court of Canada
Federal Court of Appeal
 Provincial Courts (these
are named variously
Court of Appeal, Court of
Queens Bench, Superior
Court, Supreme Court,
and Court of Justice)
Beverley McLachlin was
appointed the chief
justice of the Supreme
Court of Canada in
2000. She is the first
female chief justice in
the history of the
Supreme Court. She was
appointed to the high
court in 1989.
The Economic Structure of the
United States and Canada
Dining in economy class on airlines in
Canada and the United States
Some Economic Similarities
 Post industrial, high tech economies
 Wealthy, literate & affluent developed nations
 Mixed economies, with focus on market-oriented
 World’s largest trading partners (multiple sectoral freetrade agreements dating from the 1960s; NAFTA, 1994,
creates continental multi-sectoral free-trade zone)
Some Economic Differences
 Average tax rates, 37% (Canada)VS 27% (USA)
 USA tends to have a deficit; Canada tends to have a surplus (1% –
 USA operates with trade deficit, Canada has a trade surplus
 Government spending 36% (Canada) VS 31% (USA)
 Healthcare supported by government (70%Canada VS 50% in
 Canada has national goods & services tax of 5%, USA does not
have such a tax
 Services funded primarily by the government in Canada include:
CBC, health care, higher education.
 Per hour, Canadians are 82% as productive as US workers.
 US has more banks (based on English banking model), a
fragmented banking system. Canada has fewer banks, but more are
nationwide and/or international (based on the Scottish model).
Other Differences
 Canada is major exporter, USA is a major importer
 Canada has a larger proportion of small to medium sized
 Canada has a smaller high tech sector than the USA
On some things we can both agree…
The Economic Sectors
 Primary
 Secondary
 Tertiary
 Quaternary
Each of these sectors represent a
different stage of production.
Primary Level Economic Activities
Secondary Level Economic Activities
Tertiary Level Economic Activities
Quaternary Economic Activities
The Economic Base
“…the set of economic activities
upon which the community relies
in order to generate income…”
“…basic employment generates
non-basic employment…”
Hardwick, Shelley, and Holtgrieve, The
Geography of North America, Upper Saddle
River, NJ, 2008. Page 64
Multiplier Effects…
In economics, the multiplier effect refers to the idea that the initial amount of
money spent by the government leads to an even greater increase in national
income. In other words, an initial change in aggregate demand causes a change
in aggregate output for the economy that is a multiple of the initial change.
The multiplier was initially developed by Ralph George Hawtrey in 1931. It is
particularly associated with Keynesian economics; some other schools of
economic thought reject, or downplay the importance of multiplier effects,
particularly in the long run. The multiplier has been used as an argument for
government spending or taxation relief to stimulate aggregate demand.
Percent employed in the various sectors –
General Trends
In Canada
 Agriculture 2%
 Manufacturing 13%
 Construction 6%
 Services 76%
 Other 3%
In the USA
 Farming, forestry, and
fishing 0.7%
 Manufacturing,
transportation, and
crafts 22.9%
 Managerial,
professional, and
technical 34.9%
 Sales and office 25%
 Other services 16.5%
Historical Trends in Urbanization in
North America
Prior to 1800
 Towns along Atlantic seaboard – port cities including
Baltimore, Boston, Philadelphia, NY, Montreal, eventually
Quebec City
 Towns in the agricultural south – plantations largely selfsufficient and isolated, towns located on v\navigable streams
for shipping : Charleston & Savanna
1782 - The Bank of North America,
established by the Continental Congress,
becomes the first chartered bank in the
Period of Frontier Mercantilism - 1840
 urbanization level in the US was 9%
 people worked primarily in agriculture,
fishing, mining, furs and timber (i.e., local
resource based)
 manufactured goods and people were
 urban economic base was commerce
(trade, transportation, banking etc.)
o NY, Philadelphia, Boston, New
Orleans, Baltimore, Cincinnati, Quebec
City, Montreal were leading cities
Rural dominance is still in place until 1840s with the
development of the railroads and the onset of
industrialization. Industrial function of the cities expands
their dominance. Port cites grow in size due to increase in
the number of canals, road s and railways. Urban hierarchy
slowly begins to evolve. In Canada, this development is
slowed due to the lack of available railroads.
Migration pattern emerges, rural to urban and immigration
increases into cities.
Early Industrial Capitalism 1840 - 1885
 in 1870 the urbanization level in the US was 23%
 period of transition from rural to urban economy
 manufacturing begins in the cities (i.e., a move away
from commerce based cities)
 beginning of the Northeastern metropolitan
corridor (Megalopolis), and Great Lakes
B. F. Goodrich Plant – 1870
National Industrial Capitalism 1885 - 1935
 full transition from agricultural- mercantilism to urbanindustrial economy
 increasing integration of N. Am. transportation system
 influx of poor immigrants
 WW-I and its industrial impact
 technological advancements (elevator, radio, car, plane)
 Chicago moves from 5th to 3rd, Los Angeles reaches
 increasing private auto ownership and integration of
national markets
By 1925, Ford assembly lines were
producing a car every 10 seconds.
National transportation systems are complete linking the
South, Southwest and Far West. Agricultural lands from
Texas to British Columbia are opened. Shift towards
industrialization in every sense of the word.
Growth in US concentrated in northeast and in Canada in
southern Ontario. Accelerated western movement, rapid
population increase, heavy immigration, expanding cities.
Cities have at their core, manufacturing and export of
finished products.
Important cities:
Toronto – dominates trade to north and west
Winnipeg – prairie and western interior of Canada
LA – California and west Florida, Appalachia and Carolina
Piedmont all experience growth
By 1920, half of US population was urban. Biggest growth
occurred on West Coast from San Diego to Vancouver.
Florida, Texas, the SW and Colorado and Alberta all
experience growth.
Mature Industrial Capitalism 1935 - 1975
 WW-II provided technological and economic
stimulus for prolonged growth
 PA, OH, IN turnpikes built
 growth of sunbelt (TX, FL, CA, AZ etc.), decline of
 increasing importance of LA, Houston, Dallas,
 Suburbanization
o automobile shaped the process, helped by govt.
policies (GI bill, subsidized housing, freeways) all
contributing to flight from CBD
By 1960s, 25% of world population is urban, with 55% of
US being urban.
Growth & expansion of cities in part due to automobile and
development and use of air travel. New transportation
cities begin to change urban morphology: urban sprawl,
freeway construction, central-city decay, urban renewal, air
pollution, suburban growth, planned industrial centers,
regional shopping centers, all begin to appear on the
Global Capitalism 1975 or post-industrial era
 decline of manufacturing, rise of the service sector
(information, finance, health, etc.)
 "counter-urbanization" observed in 1970s was reversed in
 1990’s rural rebound. Non-metropolitan areas gain
population primarily due to increased migration into these
 Sunbelt cities have fastest growth.
 new work modes (flex hours, telecommuting)
 continuing decline of the inner city (loss of tax base, jobs)
 suburbanization of employment
Changing Urban Morphology & Urban Models
These models attempt to account for the structure of urban places
at specific points in time. Urban structure refers to patterns of
land use in cities, and these models divide the cities into different
zones based on those patterns. These models illustrate changes
and shifts in land use accompanying increasing urbanization.
 Urbanization refers to a process in which an increasing
proportion of an entire population lives in cities and the suburbs of
cities. Historically, it has been closely connected with
Concentric Zonal Model – Ernest Burgess, 1924 (sociologist)
This model was based on the study of Chicago and was the first
model to attempt to explain how and why social groups were
distributed as they were within the city.
This model introduced the concept that socio-economic status
increases with increasing distance from the city center.
Also, Burgess based his ideas on the “bid – rent” curve. The idea
behind bid-rent is that different functions will pay different costs
for land and/or space. The land within the center of town (the
downtown area) will be the most expensive because it will
generate the most profit (from retailing activities). As you move
out from the city center land values will decrease.
This model also assumes that there are no barriers (economic or
physical) to growth and the city is able to continue to grow
outward (on the isotropic plain). Burgess likened the city to an
“organism” that would spread naturally across the landscape.
The original zones –
Zone in transition or inner city
Low-class residential (zone of workingmen’s homes)
Middle class residential – inner suburbs
Better quality middle-class homes – outer suburbs
Commuter zone
This model fits American cities in the early 20th century but does
not work well outside the US.
Sector Theory – Homer Hoyt, 1939 (economist)
Developed based in the study of 142 major American cities but
used Chicago as the major model. Argues that there are distinct
zones within the city but these will radiate/expand outward from
the CBD along major transportation lines. Accepts that there
exists a socio-economic status gradient and that bid-rent functions
do define land use.
The city is split along transportation lines, with one half of the
city dedicated to manufacturing and lower-class residential and
the other half containing predominantly residential with zones of
lower to higher class housing.
Growth occurs along transportation routes as a result of multiplier
effect development.
Examples – Calgary, Canada :San Francisco, CA
Multiple-Nuclei Model – Chauncy Harris & Edward Ullman,
1945 (geographers)
This model differs from the other two as it accounts for more than
one city center or CBD. Allows for the development of secondary
city centers that are specialized, such as industrial suburbs and
secondary CBDs to serve specific outlying populations.
Like Hoyt, argues that growth takes place through multiplier
effect development as certain types of activities attract other
activities. (Airports attract hotels for example). Incompatible
activities repel one another (such as heavy manufacturing and
high income residential),%20lakecounty,%20illinois.html
This model accounts for a greater freedom of movement by the
population through the use of private cars and improved roads.
This increase in movement allows for increase in the
specialization of activities.
Finally, although the city continues to have a primary CBD, the
importance of this CBD is declining and the city is becoming
more decentralized.
All of these models assume a city with a well diversified economy
and viable growth.
An extension of Multiple Nuclei
Axial and circumferential highways represent an extension of the
transportation system. Transportation corridors connect the axial
system with all parts of the city. This freeway/beltway network
provides "easy and fast access" to all parts of the city by private car,
although increasing congestion makes "easy and fast access" a very
relative concept. Epicentres (suburban and regional shopping malls
and big box development) rival the traditional core. Often they are
bigger in terms of retail space and number of functions. There is still a
zone of decline (stagnation). Middle class residential areas (MC) have
expanded significantly.
Cars, which are relatively inexpensive for the individual, have facilitated the
growth of middle class suburbs but there are other factors that have
contributed to the spread and expansion of these suburbs:
an increase in housing demand, first from returning veterans following
WWII, then the baby boomers. This demand was easier to accommodate
in "greenfield" suburban development;
more flexible mortgage lending terms such as lower down payment
requirements which made home ownership accessible to more
rising incomes relative to costs. More people could afford to own a single
detached family home;
the entry of more married women into the workforce also increased
new building technology that facilitated tract building in suburban areas at
affordable prices. Suburban building developed into an almost "cookie
cutter" approach; and,
the strengthening of the "North American Dream" - to own one's own
house on a plot of land in the suburbs.
The Evolving Urban Realm
What has emerged as cities have evolved is a number of large self-sufficient
sectors, each focused on a downtown independent of the traditional downtown
and the central city. The entire metropolitan area becomes reorganized into a
set of independent urban realms. Each urban realm is anchored by a major
mixed use downtown core.
The various realms are connected by major traffic arterials, often freeways
and circumferential links circle the entire realm. The automobile is the major
form of transportation. Public transportation (buses, subways) are difficult to
introduce because there is no particular focus of employment and services there are many such areas scattered throughout the city. Residential
development is generally very low density. In circumstances such as this,
ridership on public transportation is so low that fares do not even come close
to covering the cost. These cities are designed to accommodate the
The Changing Urban System of North
 Decentralization of Industry
o Rust Belt
o Technological Inertia
 The impact of changes in transportation and
infrastructure from suburbanization to telecommuting.
 Development of “ethnoburbs” as more minorities move
to the suburbs.
 Increasing stagnation of rural areas and areas remote
from metropolitan areas without amenities.
Beyond Cities and Nations
On January 1, 1994, the North American Free Trade Agreement
between the United States, Canada, and Mexico (NAFTA)
entered into force.
All remaining duties and quantitative restrictions were eliminated,
as scheduled, on January 1, 2008.
NAFTA created the world's largest free trade area, which now
links 444 million people producing $17 trillion worth of goods
and services.
The Government of Canada, the Government of the United
Mexican States and the Government of the United States of
America, resolved to:
STRENGTHEN the special bonds of friendship and
cooperation among their nations;
CONTRIBUTE to the harmonious development and
expansion of world trade and provide a catalyst to broader
international cooperation;
CREATE an expanded and secure market for the goods and
services produced in their territories;
REDUCE distortions to trade;
ESTABLISH clear and mutually advantageous rules
governing their trade;
ENSURE a predictable commercial framework for business
planning and investment;
BUILD on their respective rights and obligations under the
General Agreement on Tariffs and Trade and other
multilateral and bilateral instruments of cooperation;
ENHANCE the competitiveness of their firms in global
FOSTER creativity and innovation, and promote trade in
goods and services that are the subject of intellectual property
CREATE new employment opportunities and improve
working conditions and living standards in their respective
UNDERTAKE each of the preceding in a manner consistent
with environmental protection and conservation;
PRESERVE their flexibility to safeguard the public welfare;
PROMOTE sustainable development;
STRENGTHEN the development and enforcement of
environmental laws and regulations; and
PROTECT, enhance and enforce basic workers' rights;
The objectives of this Agreement, as elaborated more specifically
through its principles and rules, including national treatment, mostfavored-nation treatment and transparency, are to:
a) eliminate barriers to trade in, and facilitate the cross-border
movement of, goods and services between the territories of the
b) promote conditions of fair competition in the free trade area;
c) increase substantially investment opportunities in the territories
of the Parties;
d) provide adequate and effective protection and enforcement of
intellectual property rights in each Party's territory;
e) create effective procedures for the implementation and
application of this Agreement, for its joint administration and for
the resolution of disputes; and
f) establish a framework for further trilateral, regional and multilateral
cooperation to expand and enhance the benefits of this Agreement
 Canada’s exports to its NAFTA partners increased by 173 percent in
value from pre-NAFTA levels. Exports to the United States grew
from USD116.8 billion to USD316.8 billion, while exports to Mexico
reached USD3.9 billion.
 U.S. exports to Mexico and Canada grew by 157 percent, from USD
142 .0 billion (USD 41.6 billion to Mexico and USD 100.4 billion to
Canada) to USD 364.5 billion (USD 134.2 and USD 230.3 billion,
 Mexican exports to the U.S. grew by 392 percent, reaching
USD212.3 billion. Exports to Canada also grew substantially from
USD1.5 to USD5.2 billion, an increase of almost 237 percent.
Openning the door to more free trade agreements in North America
 Canada has free trade agreements with Israel, Chile, and Costa
Rica, and has concluded free trade agreement negotiations
with the members countries of the European Free Trade
Association (EFTA: Iceland, Liechtenstein, Norway and
Switzerland). Canada is currently in the process of negotiating
free trade agreements with four countries in Central America
(El Salvador, Guatemala, Honduras and Nicaragua),
Singapore, Korea, and has recently launched free trade
agreement negotiations with the Andean Community countries
of Colombia and Peru, the Dominican Republic and the
Caribbean Community (CARICOM).
 The United States has free trade agreements with Jordan,
Chile, Singapore, Australia, Morocco, Bahrain, the Dominican
Republic and five countries in Central America (CAFTA-DR:
Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.
Costa Rica has not yet ratified the agreement). The United
States has recently signed free trade agreements with Peru,
Colombia, Panama, and Korea, and is currently negotiating a
free trade agreement with Malaysia. The U.S.-Oman Free
Trade Agreement will enter into force upon Oman’s
completion of its domestic procedures.
 Mexico has concluded free trade agreements with Chile, the
European Union, the European Free Trade Association, Israel,
Bolivia, Colombia, Nicaragua, the Central America Northern
Triangle (El Salvador, Guatemala, and Honduras), Costa Rica,
Uruguay and Japan.