Role Of Globalization In Canada

Canadian Policies to Encourage Globalization

Canada strives to have a strong economy: to be productive and provide gainful employment for the citizens. In order to do this Canada has to adapt and change. In the past Canada was largely industrial, and production driven. Nowadays, Canada’s economy depends on a strong service sector and being active in a global market to stay strong; especially when economic conditions within Canada are tough. The Canadian government has been implementing a variety of policies to help encourage globalization in order to keep the economy healthy, and to be part of the global market. By freeing trade, improving international intellectual property rights, boosting an inflow of foreign investments and reducing
However, Canada also encourages foreign direct investments into Canada. Industry Canada describes that “the Canadian economy “encourage(s) foreign companies to invest in Canada and promote an open, rules-based global investment regime.” (Foreign, 2011) Foreign acquisitions in Canada have risen both in value and number since 2003. In 2006 the value of foreign acquisitions in Canada reached $114 billion CAD – the highest value in the last decade. (Sharpe, 2008) Which appears positive, however it has also been said that “Canada performed rather poorly in terms of its long-term average annual growth rate of FDI stock over the period 1990-2006 compared to the U.S. and major country groups.” (Sharpe, 2008) This could be due to the fact that different sectors have different stipulations on the requirements and regulations that do not always make FDI that easiest for other nation’s firms to invest within Canada. This is one area where Canada can improve upon their encouragement of globalization, by removing barriers for other nations to place foreign direct investments into Canada. A lot of jobs could be created, and the Canadian economy further strengthened by doing so. As discussed in a review on Canada’s FDI policies, “the United Nations Commission on Trade and Development
For example, if a Canadian company is making their profits in Yen because of their FDI in Japan, and the value of that currency is always fluctuation, and it can have a large impact on the conversion back to Canadian dollars. Or if a developing country takes on a loan from the United States and the value of their currency drops, or the US dollar increases, the developing country could have a very hard time paying back its loan. The International Monetary Fund, which grew from the Bretton Woods Agreement from 1944, now has 184 members. (International, 2011) This agreement “resulted from the international community's efforts to develop an effective monetary system in order to avoid a repetition of such economic crises as the Great Depression of the 1930s, which ruined millions of people around the world.” (International, 2011) Working closely with the World Bank, the mandate is to try to stabilize currency exchange rates and promote international trade and capital flows to encourage sustainable economic growth. Canada shows its dedication to this issue by being the eighth largest contributor to the International Monetary Fund. (International, 2011) Contributions that are made, pro-rates according to the gross domestic product, and are used to grant loans to members experiencing financial difficulty. (International, 2011)