CANADA'S ECONOMY

Canada`s economic dependency on the United States

Abstract

The dependency of the Canadian economy in the U.S is discussed in the paper. The reality shows that 85% of the trade Canada has been with its US neighbor, which results in an indirect form of dependence due to the un-diverse market portfolio. This can affect the Canadian economy badly if the US decides to halt trade with Canada to exert political pressure, or if their economy declines. Suitable alternatives are discussed to reduce this dependency and insure a prosperous economy for Canada which is not dependant on the US economy.

Table of Contents

Introduction1

Canada1

Dependence on the US1

Potential consequences of this dependency2

Potential alternatives2

European Union Markets3

Taxation3

Immigration3

Conclusion4

References5

Canada`s economic dependency on the United States

Introduction

This statement cannot be answered by a simple yes or no because this relates to a picture which is not black and white. Canada and the US share deep ties when it comes to trade and cooperation, which has been aiding both of them in many ways. It is a fact that trade from Canada is focused on the US to a much greater extend because of the NAFTA, which can make the country dependant on the US.

Canada

Canada has one of the greatest GDP in the world, being one of the richest nations on the planet. This help it boasts one of the best standards of living for its citizens. Being the owner of the world's leading economies, Canada is also the member of the famous “G7”. Although it is facing pressure from competitive countries like India and China due to their pool of population, Canada is still one of the elite economies in the world.

Dependence on the US

Against the believe that Canada`s economy depend completely on trade with the US, the countries share strong and extensive trade. Both the countries enjoy lucrative trade agreements, with 85% of Canadian exports going into America. The trade is such that billions of dollars cross over the border daily. Aside from trade, 80% of the FDI (Foreign direct investment) in Canada is from America. Almost all products sold in America are available in the Canadian economy due to the presences of almost all of America`s large chain stores and corporations (Randall, 2008).

Due to this co-dependence between the two countries, there is dependence on a mutual level. Canada like the US is politically dependant on America, and protectionism hurts the Canadian economy, resulting in the adaption of ...