Regional Economics in Canada | The Canadian Encyclopedia

Distribution of Economic Activity

Canada ’ south economy has traditionally been understood in terms of its geography ( see Regionalism ). Since the arrival of the first colonists, development has been heavily influenced by each region ’ randomness physical attributes. These include their access ( or not ) to waterways, natural resources, cultivated land, wild game, proximity to markets and handiness of engineering to exploit advantages or get the best challenges. In recent years, the economics profession has increasingly besides recognized the importance of human das kapital. As such, a region ’ s economic output is highly related with its population and education levels .

Atlantic Provinces

The four Atlantic provinces ( Newfoundland and Labrador, New Brunswick, Prince Edward Island and Nova Scotia ) have produced below-average per-person ( per head ) contributions to Canada ’ mho economy in recent decades. together they accounted for $ 123 billion, or about 5.5 per penny, of Canada ’ s crying domestic intersection ( GDP ) in 2018. Although this was approximately the same percentage as 20 years ago, the constitution of that numeral has changed dramatically .
Newfoundland and Labrador, once the weakest economic state in the Atlantic region, has benefited in recent years from the development of its covet minerals, hydroelectric capacity and offshore vegetable oil, and is now regarded as an above-average performer in terms of per-capita GDP output. Despite the crushing blockage of the northerly pod fishery in 1992 — the largest industrial layoff in canadian history — fish and fish process remains a major economic activity in the Atlantic region ( see Cod Moratorium of 1992 ). The port of Halifax, and to a lesser extent the ports of Saint John, New Brunswick, and St. John ’ second, Newfoundland, are besides authoritative economic generators .
One of the region ’ sulfur biggest ongoing challenges is a lack of population growth and a quickly aging population. ( See besides Economic History of Atlantic Canada. )

Quebec

Quebec accounted for $ 441.4 billion, or about 20 per cent of Canada ’ sulfur GDP, in 2018. Quebec, which once held the covet economic condition Ontario now holds, declined in proportional terms during the moment half of the twentieth hundred. Three developments played major roles in this tendency. The beginning was the completion of the St. Lawrence Seaway in the early 1950s, which enabled ships to bypass Montreal and thus drastically reduced its importance as a major port .
This was exacerbated by political instability ( see October Crisis, Quebec Referendum 1980 and Quebec Referendum 1995 ) and French-only terminology legislation. Beginning in the 1960s, such political imbalance significantly reduced the bonus of international businesses to locate in the state. The fast pace of development in some early canadian regions besides influenced Quebec ’ s relative worsen. Despite these factors, Quebec ’ s fabrication and agrarian sectors benefited heavily from release trade with the United States .
In the twenty-first century, Quebec has re-emerged as a destination for occupation, and it is home to a booming technical school industry. The state has besides seen a major increase in its use rate since the 1990s. This growth is due in separate to Quebec ’ s subsidized daycare program. Because of this policy, the col between men and women in the work force has narrowed in Quebec more than in any other province. Montreal remains Canada ’ s second largest city and its second business centre. ( See besides Economic History of Central Canada. )

Ontario

Ontario, which has 39 per penny of Canada ’ second population, remains its economic centrifugal. In 2018, the province accounted for $ 859.1 billion or 38 per cent of Canada ’ sulfur GDP. Much of Canada ’ s manufacturing sector — notably industries such as auto-making, food and beverage, fabricated metals and others — is concentrated in Ontario. ( And within Ontario, manufacture is largely concentrated in the south, between Windsor and Oshawa. ) however, in recent years the province has increasingly shifted to a service economy. Service industries made up 76.8 per cent of Ontario ’ s GDP in 2018, with manufacture accountancy for only 12.4 per cent .
much of Ontario ’ s success relates to its cardinal geographic position in Canada, its proximity to the United States market and access to waterways, which ease the import of bleak materials and the cargo of finished goods to other canadian ports and international markets. Two Ontario cities — Ottawa, the nation ’ mho capital, with strong public sector employment, and Toronto, which has emerged as a ball-shaped fiscal capital — have besides been key motors to the province ’ second exploitation. ( See besides Economic History of Central Canada. )

Western Canada

The four western provinces ( Manitoba, Saskatchewan, Alberta and British Columbia ) contributed $ 795.8 billion, or about 36 per cent of the nation ’ s GDP in 2018. The West has seen the fastest growth of all canadian regions. much of the exploitation has been resource -based. Heavy investing in Alberta ’ mho oil sands has significantly boosted employment in the state, peculiarly in the Fort McMurray region and has added billions of dollars in revenues to peasant government coffers. Saskatchewan has been a big beneficiary of excellent cultivated land and the development of its uranium, potash, shale anoint and other resources, which are among the most attractive in the world. A heavy reliance on commodity prices, however, makes these provinces highly vulnerable to depressed universe prices for anoint and other raw resources .
british Columbia, besides rich in natural resources, continues to profit from an exceptionally strong real estate sector. Vancouver is a major Pacific ship hub, and it and Calgary are significant bodied and fiscal centres. ( See besides Economic History of Western Canada. )

Northern Canada

Canada ’ s North is an economic region in its own right. Yukon, Northwest Territories and Nunavut are much overlooked in traditional economic psychoanalysis due their low population density and political pull. however, the North — already an authoritative mine area — is expected to rise in importance in the coming decades due to the melt of the diametric frosting caps, which is expected to one day free up a Northwest passage for international shipping, and besides assailable access to impressive suspect mineral and petroleum wealth .

Regional Income Disparities

The continuing disparity between Atlantic Canada and the more affluent parts of the nation such as Ontario and parts of the West, and the disparity within regions — for example, between Northern and Southern Ontario, or rural and urban Saskatchewan — are Canada ’ sulfur principal regional economic problems .
During the 1980s, personal income per inhabitant ( measured as GDP per caput ) in the four Atlantic provinces ranged between around 60 per cent of the national average in Prince Edward Island, to about 75 per penny of the national average in Nova Scotia. By 2016, per caput income levels in Atlantic Canada had risen to between 75 and 81 per cent of the national average, except in Newfoundland and Labrador, which surpassed the national average .
Per capita income in Quebec has besides remained systematically below the national average, although at levels less extreme point than for Atlantic Canada. In the 1980s, per caput income in Quebec hovered at about 90 per cent of the national average. By 2016, that digit had dropped slenderly to 85 per penny. The Quebec economy has been national to conflicting forces. The dramatic decline in birthrates ( since the 1960s ), the growth of women in the tug wedge, of educational standards, and the emergence of a newly francophone business class have all worked to raise incomes. On the other hand, the long threat of separation from Canada has had an economic price, reflected in the emigration of much of the honest-to-god anglophone business elect in the 1970s and 1980s, and the decay of Montreal as a commercial enterprise kernel .
Ontario ’ sulfur per head income has traditionally been higher than the home average and reached 114 per cent in the recently 1980s. That slipped to 101 per penny in 2016, as the province ’ randomness fabricate base, particularly the car industry, began to slow down and hollow out ( see Recession of 2008–09 in Canada ) .
Income disparities between the Prairie provinces and the rest of Canada are reflected in austere fluctuations in per head income, the leave of addiction upon primary production ( wheat, oil, natural accelerator, potash ) and levels of demand, which are frequently determined by uncontrollable natural and international factors. Saskatchewan ’ south per caput income has fluctuated erratically, from 59 per penny of the national average in 1941, to 87 per cent in 1951. In 2016, it was 117 per penny of the national median. Manitoba ’ sulfur was 92 per penny in 2016. In late decades, Alberta has registered the highest per head incomes in Canada. In 2016, it was 132 per cent of the national average .
british Columbia ’ s per caput income has in recent decades been close to the national average. It was 99 per cent in 2016 .

Impact of Oil and Gas

The income generated in an economically rich region or province ( typically known as a “ have ” state ) may flow to a poor ( “ poor person ” ) region or state in the kind of federal politics transfer payments, such as equalization payments or unemployment benefits, or in interest, dividends and profits accruing to investors outside the region ( see Intergovernmental Finance ) .
high revenues in petroleum -producing provinces have created meaning wealth disparities with non-petroleum producing provinces. The scend of anoint revenues in Alberta in the 1970s upset the traditional regional counterweight in which Ontario was the elder “ have ” province and headman subscriber to federal transfer schemes. In the twenty-first century, Alberta remains Canada ’ s leading manufacturer of anoint and boast, however british Columbia, Saskatchewan, Newfoundland and Labrador, and to a lesser extent Nova Scotia, besides earn tax income from petroleum extraction .
The ball-shaped price of anoint, like all natural resource commodities, can fluctuate wildly, and this caused severe slumps in the 1980s, and in 2014 and 2015 — profoundly affecting revenues in petro-provinces, but not others. hard swings of economic gain, and pain, spread unevenly across regions, are the by-products of Canada ’ s petro-economy ( see Regional Recessions in Canada ) .

Causes of Regional Income Disparity

Labour and Wages
Differences in per caput income between regions may exist at any time because of variations in employment, engage rates, investment income or income from government transfer schemes. In Canada, where approximately 70 per penny of personal income is derived from wages and from other labor income, employment and engage rates are by far the most crucial factors .
The uneven distribution of jobs ( compared to population ) in Canada is measured by variations in the proportion of the local population of working age ( 15–64 years ) ; the share of that population in the parturiency force ; and the unemployment rate. The proportion of the population of working age has traditionally been lower in Atlantic Canada than elsewhere, partially as a resultant role of emigration. Labour-force participation rates have besides remained low while unemployment rates have remained high in Atlantic Canada.

regional differences in engage rates may result from differences in labor productivity and in industrial social organization. The traditionally high level of per caput income in BC largely reflects high wages. however, because of influences such as unionization, tug mobility, sociable legislation and the weight of public service employment, a home drift towards engage equalization exists. wage rates in Quebec and Ontario, for example, were approximately equivalent during the 1990s .
Geographic Advantages
regional disparities in use and wages can be partially attributed to comparative advantages of location. The foremost areas to develop, because of natural or historical advantages, will frequently continue growing as markets, institutions and infrastructures are created. The St. Lawrence River valley was first developed because of its alone transportation system advantage and agricultural electric potential. By building canals, roads and other infrastructure, settlers enhanced this initial natural advantage. Before Confederation, the unite population of Quebec and Ontario were already well larger than that of the Maritimes .
Canada ’ s internal grocery store is little by populace standards ; one plant or agency much serves the entire state. The center of that grocery store is situated in Southern Ontario and southwestern Quebec. Industries in the Maritimes and the Prairie Provinces are ailing located for serving the canadian market. advanced industry and offices much require services, skills and infrastructure lone found in large cities. Atlantic Canada possesses no major urban city. Halifax is a humble city by global standards. In the Prairies, the lack of waterways confounds the difficulty of reaching major markets and constitutes a particular handicap to industrial development ( see Industry in Canada ) .
Foreign Economic Links
The arise of the United States as Canada ’ mho headman trade partner and generator of foreign investment since the Second World War has benefited some regions more than others. Southern Ontario benefits not entirely from its access to the Great Lakes but besides by its proximity to the major industrial zones of the american Midwest, of which it has in many ways become an extension — the development of an automobile industry in Windsor, across the river from Detroit, is an obvious model. american investment is heavily concentrated in Ontario, and Toronto is the center for most US-controlled head offices. The integration of Canada into the north american economy has contributed to the isolation of Atlantic Canada, whose economy traditionally had strong links with Britain. In more recent decades the growth of the Pacific Rim economies ( Japan, China, California ) has benefited British Columbia and, to some extent, Alberta .
Human Capital
The homo component is the most elusive in regional growth. migration, for model, has a decisive affect on the quality of human resources in a region. Low-income regions in Canada are much locked into a cycle of refuse because the most dynamic and educate people of working senesce emigrate .
The resources of British Columbia and Alberta avail account for their growth. BC ’ mho high gear wages and productivity are the leave partially of its forest resources, but besides of its advantageous localization and skilled labour impel, and Vancouver ’ second role as an emerging city. The Atlantic Provinces are held back not only by the miss of competitive, low-cost, natural resources, but by disadvantages of location and a history of emigration. Natural resource exploitation entirely — despite its shorter-term benefits — rarely constitutes a sufficient basis for long-run, sustained economic growth. In Canada, as in other develop nations, it is today the placement of manufacture and of service industries that largely determines the egress and perseverance of regional income disparities .

Regional Economic Policies

Since Confederation, canadian economic policy has been influenced by regional considerations. National policies have important repercussions at the regional level, intentional and unintentional, often creating tensions between the provinces and the federal government ( see Federal-Provincial Relations ) and among provinces .
Trade
historically, Canada ’ s protective duty structure, a bequest of Prime Minister John A. Macdonald ’ s National Policy, designed to encourage canadian industrialization, primarily benefited the manufacturing areas of Quebec and Ontario, providing them with a captive domestic commercialize. Canada ’ s duty policies were historically a source of grievance in Atlantic Canada and the West, where consumers felt they were subsidizing the protected industries of Central Canada, stifling the development of their own regions. however, with the sign of the Canada-US Free Trade Agreement in 1989 and the north american english Free Trade Agreement in 1993, combined with the tariff-reducing effects of GATT negotiations during the 1980s and 1990s, Canada ’ s tariff structure ceased to be a major regional issue ( see Free Trade ) .
Transport Subsidies
The Maritime Freight Act ( 1927 ) provided for subsidies to reduce freight rates for rail shipments moving from points east of Lévis, Quebec, to the rest of Canada. The subsidy was subsequently raised and extended to commercial truck. Freight rates on grain shipments out of the Prairies were kept artificially low from the call on of the hundred by the Crow ’ s Nest Pass Agreement. Prairie pale yellow farmers are assisted in the transmit and market of their output by multiple subsidy schemes and by the Winnipeg -based canadian Wheat Board. however, since the 1980s the federal politics has phased out most enchant subsidies .
Energy
The regional impacts of federal energy policy have often been a reference of controversy. Before the 1972–74 oil crisis, energy policy favoured the oil-producing provinces because of the alleged Borden Line ( 1961 ), which divided Canada into two oil-marketing zones at the Ontario/Quebec border. West of the course no imported oil could be refined or sold ; foreign anoint and its by-products were limited to the market east of it. The then more expensive westerly vegetable oil was ensured a captive commercialize, including Ontario. But the expansion of the Montreal- and Atlantic-based oil-refining and petrochemical industry was hampered by artificial restriction of its market at the Quebec and Ontario borders. From 1973 until the mid-1980s, the National Energy Program tended to favour oil-consuming provinces by keeping internal oil prices below external levels and by redistributing a significant share of western vegetable oil royalties. late in 1984, the politics of Prime Minister Brian Mulroney allowed domestic anoint prices to match world prices. domestic oil prices have since joined world levels. ( See besides Oil and Gas Policy in Canada, 1947–80. )
Transfers and Regional Development
Canada ’ s relatively generous system of transfer payment programs, comprising transfers both to early governments and to individuals ( unemployment benefits, kin allowances, pensions ), typically accounts for about half the federal budget. Transfer payments reduce regional income disparity .
particular federal regional development programs ( RDPs ) targeted at low-income regions have existed since the 1960s, initially aimed at press down rural regions but broadened since. The federal government operates the pursuit agencies and offices : Atlantic Canada Opportunities Agency, Canada Economic Development for Quebec Regions, Federal Economic Development Agency for Southern Ontario, Federal Economic Development Agency for Northern Ontario, Canadian Northern Economic Development Agency and Western Economic Diversification Canada. These agencies are active in promoting industry via varying financial-support measures for local anesthetic firms and entrepreneurs, arsenic well as inheriting many of the programs of former federal departments .
RDPs encompass a broad range of policies, including grants, particular depreciation allowances and loans to encourage the placement of firms in intend areas. union departments and agencies have besides entered into general development agreements with the provinces, which can include infrastructure programs, mineral exploration, industrial restructure incentives, rural development schemes, etc. The impact of RDPs has been most clearly felt in smaller regions, specially in the more depress zones of Atlantic Canada. however, the general consensus among economists is that area-directed RDPs, such as those practised during the 1970s and 1980s, have not profoundly altered the design of regional development in Canada.

Other Disparities
Problems and policies alike to those on a regional or national degree may be found within regions and within about every state. Within Ontario, disparities in per head income and employment levels between the industrialized south and the less develop north are frequently deoxyadenosine monophosphate substantial as they are between provinces or regions. In Quebec, per head income and employment levels in the Gaspé region have systematically remained below those of the greater Montreal area. In Nova Scotia, Halifax is reasonably golden while Cape Breton is economically depressed .
In most provinces, but possibly most significantly in the West, a visible economic watershed besides exists between many Indigenous and non-Indigenous Canadians. The interrogate of local economic development for autochthonal communities has emerged as a major offspring in many provinces ( see Economic Conditions of Indigenous Peoples in Canada ). Most provinces have developed their own regional policies and objectives, frequently independently of the federal politics .