Canada’s Economic Development and Problems

Abstract

THE OUTSTANDING FEATURE of the economic climate in Canada is the way in which the country's economy is growing. One of the most important measures of economic growth is the rate of expenditure on physical investment-the annual outlays on new construction and new machinery and equipment which give a pretty fair idea how much a country is adding to its productive capacity. In every postwar year capital expenditures in Canada have been rising, not only in terms of dollars but also in terms of real physical quantities. Beginning in 1946 with what then seemed a pretty fair figure of $1,700 million, which was then equal to 14% of the gross national product, the rate of capital expenditures rose rapidly, and by 1948 it was equivalent to 20% of the gross national product. Though the increase was gradual after 1948, the rise continued, and in 1952 we in Canada spent over $5 billion for capital purposes, which was equivalent to 22.8% of the gross national product. There are strong indications that investment expenditures will remain at a very high level in 1953, perhaps just as high as in 1952. When for five consecutive years a country devotes more than one fifth of its national production to capital expansion, there can be no doubt that it is growing rapidly. There are few countries in the world that have a correspondingly high rate of investment, and I doubt if there are any that have maintained such a rate throughout the past five years. The rate of investment in the United States, which has, of course, been high, has not been so high as in Canada. American figures are compiled on a somewhat different basis from Canadian figures. But it looks as though the U. S. ratio of capital expenditures to gross national product (comparable with the Canadian proportion of nearly 23%o) would be around 18%6, and certainly less than 20%. Another basic measure of growth is the physical quantity of national production. In physical terms, Canadian output appears to have doubled from 1939 to 1952, while in the United States there has been an increase of just under 90%* Over the same period Canada's population has increased by 28%, to about 14?2 million. Some of this increase, however, represents the entry of Newfoundland into Canada. If we leave this factor out of account, the net rise in population from 1939 to 1952 is 25%. The U. S. increase over these years is 20%. These facts are perhaps sufficient to emphasize the rapid growth of the Canadian economy. To them might be added another piece of evidence, that Canada is adding considerably to her population by immigration and not losing very much through emigration. Admittedly we need additional population in Canada. Nevertheless, it is a real index of economic expansion (in a world where defensive national policies are highly developed) to find that some 350,000 immigrants came to Canada in the last two years. Perhaps it is even more significant to observe that in recent years the loss of Canadians to the United States has been comparatively small in marked contrast to all our previous experience. Canada indeed has been luring some immigrants from the United States.