Canadian Economy

The service sector has become the engine that drives the growth of the Canadian economy. The service industries do not produce goods; instead they distribute them, finance them, or provide services for business or consumers. Service activities include trade (wholesale and retail), financial services (banks, insurance companies, etc.), business services (accountants, consultants, etc.), leisure services (restaurants and recreation), personal services (dry cleaners, travel agents, etc.), and public services (education, health and government). All together these economic sectors employed almost nine million people in the year 1996.
As services grow, the economy grows; where they locate - be they law firms or fast food outlets - determine the kinds of jobs that are available for Canadians. Since services now contribute such a large proportion of jobs in the Canadian economy even slight changes in the amount or location of service activity or modest shifts in the specialization in services have major economic impacts on many communities.

Characteristics of Markets
While the size of the market, as measured by population, is by far the most important element in a city's attraction for commercial services, such as retail, finance and recreation; two other economic characteristics of markets can modify this attraction: the level of income and the centrality. Centrality is the location advantage enjoyed by a city which serves other nearby cities or surrounding rural areas with goods or services. The commercial activity index is a final summary measure of the varying attraction of urban places as locations for commercial activity. The index compares the actual commercial employment to the employment predicted on the basis of population.

Foreign Trade and Economic Policy
Canada is a multiethnic and multicultural society. As the second largest country of the world in terms of size, it has thirty million inhabitants and comprises 10 provinces and 3 administrative and political territories each of which has its own Parliament and Government. It has rather narrowly specialized and high quality federal and province programs for development of individual branches of the country’s economy. Even though Canada is one of the most heavily indebted countries in the world with net indebtedness amounting to CAD 580 billion, and paying CAD 42 billion annually as interest, such fact is not being over dramatized. Moreover, the size of its population is only five times of that of Slovakia so that the debt might seem endless. However, Canada records regular year-to-year economic growth, the inflation rate oscillates between one to three per cent and the unemployment rate has been brought down to below seven per cent.
The country’s representatives give a great importance to the foreign trade which generates more than 50 per cent of the country’s GDP. Foreign trade is managed by the Minister of International Trade who heads, together with the Minister of Foreign Affairs the dual Ministry of International Trade and International Affairs. Canadian representatives solve many matters in a rather practical and original way as it only fits the Canadian type of economy and society.

Trade, taxes and wages
The most important foreign trade partners of Canada are the US, EU countries and Japan. Approximately 80% of foreign trade covers the exchange of goods and services with the US. Together with Mexico and USA, Canada is a member of the North American Free Trade Agreement (NAFTA). However, Canada has free trade agreements also with Chile and Israel. Currently, negotiations are underway with the aim to seek the signature of a free trade agreement with EFTA countries. Canada can be called a driving force behind such negotiations whose aim is to establish a free trade zone of the Americas.
Income tax is collected by the Federal Government, Provinces and Territories. Combined tax, depending on the place of residence, may vary between 44 to 50 per cent. Citizens are obliged to tax all their income, including that earned abroad. The amount of sales tax for goods and services, comparable with VAT, is 7 per cent Canada-wide. Depending on the decision of the representatives of Provinces, the Province tax may vary between 7 to 12 per cent.
Canada has an elaborated social policy and trade unions have immense power. Roughly 80 per cent of Canadians have such an average income that they can spend on goods and services. The average yearly income is around CAD 30 thousand; approximately 30 per cent of families have income between CAD 30 to 50 thousand, and 20 per cent of families have an income exceeding CAD 70 thousand. It can be said than the Canadians are industrious and they usually have a supplementary job along with their principal job. Elementary education is free of charge, however, studies at the University are not a cheap matter for a family. Tuition fees amount to CAD 4 to 5 thousand per year, and the costs of accommodation in a dormitory and meals amount to approximately CAD 10 thousand pre year. However, Canada has a well elaborated system of scholarships and allowances for university studies.
The services sector, including government services, makes up almost 2/3 of Canadian economic activity. Thereof, the services provided among exporters make about 50% and were the most important growth element in the services sector in past decades.
Most significant manufacturing industries: food and beverages, means of transport, pulp and paper, metal production, wood products, electrical and electronic products, chemical and mineral fuels, research, in particular development and use of fiber optics.
Manufacture maintains its share in GDP well below 20 %. The state to private sector ratio is 5:95 %.
Since 1935, the banking system is under the supervision of the Bank of Canada through the Federal Minister of Finance. All Canadian banks must keep very strict reporting requirements set by the Federal Government.
The banking system is organised through a nation-wide chain of branches of the following 7 major financial institutions:
• Bank of Montreal, Montreal
• Bank of Nova Scotia, Toronto
• Canadian Imperial Bank of Commerce, Toronto
• Canadian Western Bank, Edmonton
• National Bank of Canada, Montreal
• Royal Bank of Canada, Montreal
• Toronto Dominion Bank, Toronto