BBB 4M – Unit 2 Lesson 4 Article
How Has Globalization Influenced Canada's Economy And Cultural Development?
Trev Lau - Milliken Mills High School, York Region District School Board
Globalization allows international companies free access to any country's marketplace. Countries like Canada pursue globalization because they want their businesses to have open access to other countries' marketplaces and be able to sell to more customers. In turn, Canada must open access to their markets. Reducing trade restrictions such as imported taxes (known as tariffs) allows for the transfer of goods, services, and investments to be free across national borders.
Canada, United States and Mexico already have an agreement through NAFTA (North American Free Trade Agreement). The importance of globalization, however, is free trade throughout the world. Goods, services and investments move freely to find the most competitive environment so that customers and investors benefit. This kind of environment depends on several factors such as labour costs, government regulations like environmental controls on manufacturing, and the value of a nation's currency. These factors can either raise or lower the cost of goods and services to consumers.
Economists, politicians, activists and ordinary citizens disagree about whether globalization is a good thing. Some economists believe world free trade is positive because it will force many companies to be competitive, and that will have a beneficial impact on consumers. For example, if a car were to be built more cheaply in Germany than in Canada, producers from Canada will have to lower their prices or customers will ultimately buy German cars.
Supporters of this view are also aware that if Canada were to increase tariffs on imported goods, then exports would drop because other countries would place tariffs on Canadian goods in return. With this, economists believe that the increased competition resulting from world free trade will have a positive effect on the Canadian economy.
But is it? Other economists believe that free trade is negative. It is suggested that this would result in the disruption of workers' rights and huge job losses for Canadians as the country competes for cheaper markets. For instance, a company must pay Canadian workers at least the minimum wage in the country. But if it builds car factories in Mexico, a company may only pay 80 cents an hour. This type of competition puts a great deal of pressure on businesses and governments to lower wages in Canada. Many feel that consumers in Canada that pay more for goods and services benefit because they are ensuring the jobs are secured in the country. Regardless, under a more open economy, industries must become more competitive and governments must be less involved in business.
Globalization can be a force to create growth and opportunities. It has opened markets and linked economies and cultures. The emphasis for the Canadian economy is to reduce the public sector interference in the economy and promote strongly on the private sector and free trade. In other words, globalization supports the principles of good corporate governance. Since Canada is among one of the financial elites in the world, the country relies heavily on competing in the global village.
Ever since the North American Free Trade agreement was established in 1992 while taking affect in 1994, it allowed Canada, United States and Mexico to have access to an expanded market. With tariffs and surtaxes placed on goods, this allowed the three North American countries to trade freely. For Mexico, the NAFTA deal was designed for poor people to not move to the U.S because the economy in Mexico would be stimulated. For Canada this was considered to be a plus for the economy. Jobs were expected to increase, revenues streams flowing into the country expected to soar and the national debt expect to drop significantly. Instead what happened was that many jobs were being lost because foreign companies have moved back to their respective countries. In addition many Canadian companies have moved down to Mexico because labour is cheap.
Since many Canadian industries were not competitive and productive enough to compete again the U.S market and ultimately the world, imports rose, but Canadian exports dropped. Canada had an excess in inventories, and in turn a deficit or trade surplus was created. The federal surplus shrunk each year, tax cuts were hard to produce and there was very few new spendings (transfer payments) to stimulate the economy. In other words, Canada's fiscal policy was affected because there were no tax revenues to allocate to social programs. Since the United States enjoyed the record long expansion through the early-mid 1990s, the economic state soared impressively. In turn, the value of the Canadian dollar dropped significantly, now trading at around a very low 62-cent value. In 1989, the Canadian dollar was worth approximately $1.10. Right now, Canada's goal is to allow people to renew faith in the GNP.
Currently, Canada's external balance has improved substantially from a deficit of $28 billion dollars in 1993 to a surplus of $19 billion in 2000. This, in turn has resulted in a sharp decline in foreign indebtedness from 44 percent of GDP in 1993 to 23 percent in 2000. This is decline is considered to be significant because reducing the amount of money that Canada pays to international creditors gives the country greater flexibility to manage the country's own affairs and keep interest rates low. This is certainly welcomed in today's uncertain global environment. Canada's unemployment rate has decreased from 7.9% to 7.7% and while employment rate continues to grow, Canadians are beginning to see their disposable income increase in amount. In addition to seeing disposable income increase, tax cuts have been made in Paul Martin's Budget of 2000. Contingency Reserves has $3 billion in total commitment. Overall, the current state of Canada's economic situation has been steady in relation to globalization.
So how has globalization affected Canada's cultural development? Negatively speaking, over the years until now, many economists feel Canada's culture has been Americanized now that Canada's biggest trading partner is the U.S and that Canada's market base industries is quite small in comparison.
So how many of you can honestly say that you watch many Canadian program channels each week. I bet most of you do not watch it because for one, there is very little Canadian programs to watch and secondly Canadian broadcasters like CTV show mostly American programs. This is a prime example of how Canadians are being overtaken by the U.S Market.
Another negative aspect of how globalization affects Canada's cultural development is brain drain. Opportunities are considered to be greater in U.S and because of its strong dollar; the weak Canadian dollar has given many people very little faith in the GNP. If the brain drain were to increase in size, Canada would be losing a lot of human resources for the economy and in turn have a shortage of this.
One major aspect of how globalization affects Canada's cultural development is through the rigourous developments of technology and infrastructure. Since Canada has been allowed to expand its market freely in the globalize economy, Canada has one of the biggest technological markets in the world. Technology has made Canada into a very powerful and respected G-7 country. In terms of cultural development, technology enhances the quality of lives and it allows people to interconnect. In other words, the progressive technological advancements in Canada have brought cultural stability within the Canadian society.
Assignment 2
Consumer Choices and Attitudes
How do you feel consumer choices and attitudes affect Canadian business decisions? How does the consumer benefit from these decisions? Are there any disadvantages that occur as result of these decisions? Write your opinion in paragraph format.
Assignment 3
Complete the following assignment and submit your work at the end of class.
The Fair Trade Federation has seven basic principles. Locate those principles and create an electronic poster that records those principles and illustrates what those principles mean. Refer to the rubric on the next page to get an idea of what your poster needs to look like.
Rubric
Fair Trade PosterCategories / Level 1
(50 - 59%) / Level 2
(60 - 69%) / Level 3
(70 - 79%) / Level 4
(80 - 100%)
Knowledge / - demonstrates limited understanding of the principles of how consumer choice and consumer attitudes are reflected in fair trade principles. / - demonstrates some understanding of the principles of how consumer choice and consumer attitudes are reflected in fair trade principles. / - demonstrates considerable understanding of the principles of how consumer choice and consumer attitudes are reflected in fair trade principles. / - the principles of consumer choice and consumer attitudes as reflected in the fair trade principles are adeptly illustrated in the poster.
Communication / - the way is which the poster is displayed and space used enhances the viewers understanding to a limited degree. / - the way is which the poster is displayed and space used enhances the viewers understanding to some degree. / - the way is which the poster is displayed and space used enhances the viewers understanding to a considerable degree. / - the way is which the poster is displayed and space used enhances the viewers understanding to a superior degree.
Thinking / - the originality of the design and the way it presents the fair trade theme is limited in its success. / - the originality of the design and the way it presents the fair trade theme is somewhat successful. / - the originality of the design and the way it presents the fair trade theme shows considerable thought. / - the originality of the design and the way it presents the fair trade theme achieve a superior level of performance.
Application / - the elements of a successful poster (e.g., clear title, correct spelling and grammar) are achieved to a limited degree. / - the elements of a successful poster (e.g., clear title, correct spelling and grammar) are achieved to some degree. / - the elements of a successful poster (e.g., clear title, correct spelling and grammar) are achieved. / - the elements of a successful poster (e.g., clear title, correct spelling and grammar) come together in a way gives the viewer an enhanced perspective of fair trade.