Introduction
It seems reasonable to state that both the United States and Canada are among the most developed countries in the world. They have walked a long path on their way to economic prosperity and significant socio-political indicators that imply a decent level of life for the citizens. It might also be said that the mentioned countries follow a little bit different approaches to the economy’s organization. This is evident from a considerable extent of research within the scope of the theme, as well as from the primary data from recognized and reliable institutions such as the World Bank. Given the rationale above, a thorough and coherent comparison of the US and Canada in terms of their Gross Domestic Products (GDPs) may be a relevant option to undertake. It will not be surprising that the related economic indicators will be different, but assumptions and suggestions that will be made founding on the mentioned comparison could contribute to a clear understanding of the variety of efficient approaches to countries’ economic strategies. Below, a consistent investigation of the US’s and Canada’s GDPs and the related indicators, as well as their exhaustive comparison, will be provided. Here, an important note should be made – to ensure the reliability of the final assumptions regarding the countries’ economies, empirical data before 2020 will be used as the pandemic’s fluctuations can blur a picture.
Canada’s GDP
Canada is the second-largest country in the world, which occupies 16th place in the world in terms of income per capita and 10th in the size of GDP. It is part of the seven most developed countries for the UN. The Canadian Federation is a member of the British Commonwealth and has impressive reserves of oil, aluminum, copper, iron, nickel, gold, uranium, and zinc. It should be emphasized that the country’s annual GDP growth is 2.2-4% (The World Bank, 2021). Its dynamics are determined by the volume of extraction of minerals and timber, and engineering products. Under the influence of unfavorable dynamics of oil prices in 2015, the country’s GDP decreased by 13.5%. The stable functioning of the farm ensures the low growth rates of the indicator. In 2018, the value of GDP per capita was $ 46,261. Over the year, this indicator increased by 2.29% (The World Bank, 2021). In 2019-2021 The Ministry of Finance of the country predicted a GDP growth of 2% in 2019, by 2.5% – in 2020. As for the national income per capita, in 2019, it should have increased by 1.9%, and in 2020 – by 1.9%. – by 2.2% (The World Bank, 2021). In 2019, Canada launched a state program for the use of labor resources from foreign countries. Within its framework, the country provided a quota of 1 million 80 thousand places for entry. Thus, Canada should be perceived as one of the strongest in the world.
The US’s GDP
Neither the crisis in the eurozone, the difficult situation in developing countries, nor trade wars have been able to stop the growth of the American economy. The growth cycle was twice the average since World War II. However, compared to the previous growth cycle, the average increase in GDP has decreased. In the 1990s, over ten years, the average annual growth of American GDP was 3.9%, and now the indicator is growing at an average yearly rate of 2.3%. In the first quarter of 2019, the US economy grew 3.1% year on year (The World Bank, 2021). Then according to The World Bank (2021), at the end of 2018, US GDP grew by 2.9%. Analysts had expected US GDP growth to slow this year to 2.5%. Experts are confident that tensions in trade with China will continue for several more years, but the impact of the trade conflict on US GDP growth will be negligible (Wu, 2016). Hence, there are clear pieces of evidence that the US has achieved convincing results in its economic development.
Critical Comparison
At this point, there is an opportunity to provide a comparison between the US and Canada within the scope of the theme given. It seems rational to claim that the United States has a considerably open economy, fostering a great extent of business investments, as well as foreign direct investments (Wu, 2016). An important point here is that this country is the dominant political power for now and is capable of maintaining a substantial external national debt as the provider of the main reserve currency. The American state of the art in the framework of technologies is among the best in the world (Wu, 2016). In turn, Canada possesses an advanced energy extraction industry and is the third among countries with proven oil reserves. Then, Canada also demonstrates significant manufacturing and service sector indicators (Pickren, 2019). It should be stressed that this country’s exports are mostly directed to the United States, which is justified by the free-trade relations between them. Such a state of affairs implies that the Canadian economy has been developing in parallel with the American one. This is visible in the GDPs rates of these two countries which are similar in terms of annual growth.
The mentioned similar GDPs rates are mostly because the US and Canada have been mainly adhering to the policy of reindustrialization which means a constant advancement and re-establishment of industries. In the United States, the main directions of reindustrialization are the implementation of the energy strategy to increase accessibility and the cost of energy carriers (primarily for the industry) and the stimulation of the so-called onshoring, that is, the return to the homeland of the capacity of the manufacturing industry previously rendered abroad (Wu, 2016). The movement of industrial production in the United States is stimulated by restrictions in the form of an increase in import tax and, along with this, the introduction of rewards – actual benefits at energy prices for industries within the country. Canada, possessing the developed manufacturing industry in traditional sectors, also has a developed industry of services and a pronounced raw component (Pickren, 2019). The main measures of the reindustrialization of Canada are an increase in industry productivity due to attracting investments in the modernization of the industry (including reduced investment taxes). It is also the availability of a qualified workforce, with the simultaneous development of traditional industries and improving the energy efficiency of the industry (Pickren, 2019). High GDP growth rates confirm that the approach of reindustrialization brings many benefits to the US and Canada.
Conclusion
To conclude, the above research provides a thorough analysis of Canada and the US in the framework of their GDPs rates and the underlying aspects and compares them. It was found that both countries have notable annual GDPs growth, which means consistent economic development. Then, it was stated that Canada had been noticeably advancing its economy in parallel to the United States, given the free trade relationships. Finally, the GDPs structures showed that these countries adhere to the approach of reindustrialization and focus on sectors that can visibly improve their economic affairs. The chosen strategy seems to be beneficial for the US and Canada, so they could follow it further.
References
Pickren, G. (2019). The frontiers of North America’s fossil fuel boom: BP, Tar Sands, and the reindustrialization of the Calumet Region. Journal of Political Ecology 26(1), 38–56.
The World Bank. (2021). GDP, PPP (current international $). Web.
Wu, S. (2016). U.S. reindustrialization strategy, innovation, and regional policy for manufacturing development in China. Quarterly Journal of Chinese Studies, 4(3), 69–79.