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Minds on

MINDS ON

How Attractive Are We?

Take a look at the video below, which was published by Canada’s Department of Foreign Affairs and International Trade in 2013:

 

 

What is the state of Canada’s economy right now?  How attractive are we to potential investors? 

Like all world economies, Canada has three main economic goals:

  1. Growth measured by GDP (Gross Domestic Product).
  2. High employment (measured by the unemployment rate).
  3. Price Stability (measured by the inflation rate).

GDP is a widely used measure of economic output. GDP refers to the market value of all goods and services produced by the economy in a given year. By itself, GDP doesn’t necessarily tell us much about the state of the economy, but a change in GDP does. If GDP (after adjusting for inflation) goes up, the economy is growing. If it goes down, the economy is contracting. These expansions and contractions are represented by the business cycle.

Smoothing the Ups and Downs

businessCycle

Long Description

All countries experience these same basic stages of the business cycle. Take a look at this interactive map which depicts the economic status of individual countries around the world (2017). Governments implement policies in order to smooth the ups and downs of the business cycle, in an effort to reach and maintain their economic goals.

This is the discussion icon. Economic Measures 

Find a recent article that talks about how inflation, unemployment, or production levels have affected YOUR community.

Reflect on how this may affect you personally and how will understanding variables like these affect at least one major decision in your future?

Join The Discussion

 
Action.

ACTION

Strong or Weak: Which is Better?

“Strong dollar” and “weak dollar” are terms used to describe the value of the US dollar relative to other currencies on the foreign exchange market.  A strong dollar happens when the US dollar rises to a level that is near historically high exchange rates for the currency in relation to the US dollar.

The exchange rate between the US and Canada has traditionally fluctuated between 0.7292 CAD/USD and 1.0252 CAD/USD.

So if the exchange rate is 0.7400 CAD/USD, it means the the Canadian dollar is strong and the US dollar is weak.

If the exchange rate is 1.25 CAD/USD, it means that the Canadian dollar is weak and the US dollar is strong.

Is a strong Canadian dollar good or bad? The truth is that it’s good for some and it’s bad for some.

Confused yet? You’re not the only one. Check out this video below:

 

Here’s a summary of how different groups of people in Canada are impacted when the dollar is strong or weak:

When the Canadian Dollar is Weak When the Canadian Dollar is Strong
U.S. consumers come to Canada, which benefits some industries, particularly tourism and real estate and ultimately benefits the Canadian economy. It’s cheaper for Canadians to import things like raw materials, machinery, and other goods from the U.S. Canadian industries can take advantage of the opportunity to purchase cheaper U.S. technology to improve productivity.
The Canadian film industry lures film productions north of the border. Canadian consumers benefit from crossing the border to shop.
Canadian companies that export goods to the U.S. benefit. Canadian industries like energy and forestry that conduct most of their sales in U.S. dollars benefit considerably. Canadian vacationers travelling to the U.S. benefit because they get more bang for their buck.
Canadian companies that sell internationally will benefit, because the lower dollar gives Canada a competitive edge in the global market. Canadian businesses looking to expand into the U.S. have more purchasing power for potential acquisitions.
Canadian manufacturers benefit from U.S. foreign direct investment. Canadian sports franchises that sell tickets in Canadian dollars but pay salaries in U.S. dollars benefit.

Consolidation

CONSOLIDATION

Attracting Foreign Investment to Canada

It seems that Canada’s share of “global inward foreign direct investment” has declined over the past few decades. Watch this video from the Conference Board of Canada:

 

In 2016, Canada’s Minister of Foreign Affairs, Chrystia Freeland, spoke to members of the Toronto Region Board of Trade, saying that Canada is in a unique position right now to pitch itself as “the best place for foreign investment.”  While countries like the United States and the United Kingdom are enacting protectionist policies, “We are the country that is most clearly bucking the trend. There is a window open for us and we have to push really, really hard to get through and pull people in,” she was quoted as saying in a Globe and Mail article (Canada Should Seize Opportunity to Attract Foreign Investment: Freeland, Dec. 5, 2016).

Canada’s latest trade pact with the European Union means that we have trade agreements that cover 55% of the world’s economy. “What a magnet that makes us for foreign investment,” said Freeland.

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