A broad and rich resource base. Provides exports, raw materials for manufacturing sector and massive cheap energy, notably HEP; large oil and gas reserves. Agriculture and forestry contribute 3% of GDP; mining 4%. Successful manufacturing sector contributes 17% of GDP; notably forestry products, transportation equipment, and chemicals. Free access to huge US and Mexican markets through NAFTA.
Weaknesses
Increasingly uncompetitive; higher taxes, more regulations, lower productivity relative to most competitors. Political uncertainty over future of Federation dents business confidence. High federal and provincial budget deficits; slow recovery from early 1990s recession.
Profile
Canada's enormous resource base has delivered one of the OECD's highest standards of living since 1945. After the mid-1980s, however, its manufactured exports faced increasing competition, while prices for its primary exports fell. From 1980û1988, real growth averaged 3.5% a year. After 1989 it stagnated, while budget deficits rose û forcing restructuring at both the federal and provincial levels. Many of Canada's welfare programs were cut back; the defense budget was sharply reduced. The end result was a sharp drop in inflation from 4% to 1.3%, the lowest in the G7, and a resumption of growth after 1993. Another motivation for the changes was Canada's membership in NAFTA. Its firms have had to become more competitive to maintain exports. Most have been successful, but better productivity and a shift to high-tech have left unemployment at around 10%.
