Economic Development in Canada

Economic Development in Canada

Economic Development in Canada

Question One: Evolution of Hudson’s Bay Company between 1670 and 1870  

The Hudson’s Bay Company has an undeniable place in Canada’s economic and political history. Incorporated in 1670 in England, the company sought economic encroachment of the northwest path across the Pacific Ocean. The business was stationed at Hudson Bay, which earned it’s the name. This location was appropriate because of its accessibility and proximity to profitable mainland. Its occupancy opened up Canada to fur business tackled by the Hudson’s Bay Company. The same growth has since held Canada’s economy with numerous business franchises in Toronto, including merchandising, minerals, and real estate. Hence, these developments have created employment, production, and distribution of resources across the economy, which earns the country income and generates economic expansion.

The company’s political ties greatly influenced its entry into Canada and expansion across the region. Led by King Charles II of England as its first governor, the company gained entry into Canada through appointment by Prince Rupert. He had the first territory assigned to the company named after him, the Rupert’s Land (Cole, 2018). The political alienation earned the firm a great advantage. While other companies had restricted boundaries, Hudson had no limitation on its economic jurisdiction. The business operations stretched through the mountains, valleys, up to the shows of Hudson Bay. The firm engaged only in the fur trade during the first years of operation and set several stores on the shores of James and Hudson. The company later expanded its operations to interior Canada after its conquest by the British. Hence, the period marked the beginning of great growth of the company and economic change of the country.

The year 1811 marked another season of business change for the company that impacted not only its operations but also the Canadian socio-political and economic development. Beginning late 1790s into 1811, the company saw the need to create more land for animal farming as a way of expanding production and fur harvesting. The firm requested more land form the framers but never had the manpower and means to displace farmers by themselves. However, with assistance from the British colony, the highland farmers were evicted to create more land to rare sheep. The displaced farmers, particularly from Rupert’s land, were resettled at Red River. Lord Selkirk’s land offer appealed to the company due to its agricultural viability and protection (Smith, & Simeone, 2017). First, the move confirmed the authenticity of the company charter that presumed the company’s interest over the local farmers. Secondly, the presence of the colony guaranteed the company protection and allowed it to take advantage of the land fertilities to substitute imported food with cheaper locally produced food for human and the animals. In addition, the accessibility of Rupert’s land to other places enabled the company to access fur from interior Canada and became a substitute home for workers who opted to settle in the region. The 1811 settlement of the company led to the displacement of many local farmers out of their land, and this caused loss of property and life where Lord Selkirk ordered the use of force to vacate hardened locals. Therefore, the actions ruined the indigenous economy of the local farmers but opened Canada to the international fur trade. The local farmers who reared sheep also found a market for their products hence attaining economic empowerment. 

The political protection and goodwill from the colony authority gave the company amicable opportunity to expand its operations. By 1821, the company had opened 76 trading posts in Canada with over 1983 employees. However, the company also began facing turbulences caused by its harried expansion which led to a loss as a result of competing with each other. The situation triggered George Simpson to make substantive orders that suddenly changed operations and raised profits. Simpson’s contribution to the company gave it a different perspective other than the usual fur trade. He engaged all factors of production to ensure that profit realization and futurity of the business was secured. He resorted to several trips across the country to discover means of fully commercializing HBC’s operations. One such discovery is the introduction of canoes at the posts that earned him the name “Birchbark Emperor.” His movement across North America is to date considered the longest canoe trip ever. Economically, his engagements benefited the Canadian economy. He made fur business an impressive economic engagement in the country, which necessitated the rise of other businesses and middlemen in the business (Cole, 2018). The company also expanded its operations through a merger with its bitter rival, North West Company, which was based on Montreal. The merger set ground for a series of other acquisitions by the company that preceded 1821. Though they practiced a disintegrating economy, the company’s growth increased employment and sheep rearing in the country. On the contrary, their expansion also led to the displacement of more local farmers on orders of the British authority.

The increased changes realized by the company triggered industrial adjustments on production and labor. After the acquisition of competitors like the North West Company, HBC continued to experience growth and shortcomings on equal measure. In 1835, the company hired Smith to manage its fur stock and ensure quality categorization. He later rose to become the company’s governor in 1839 and later transferred to Tadoussac in 1841. Smith’s contribution to the company in 1835 reenergized its expansion through the leasing of posts from other companies (Smith, & Simeone, 2017). For example, the Tadoussac post he was later transferred to was leased from the Crown Company in 1835. His commitment bore positive fruit for the company and ushered a formal business structure. The company endorsed several government activities that initiated its entry and influence over the government. Hence, the business developed a give and take relationship with the authorities, which made it a noticeable decision-making organ that influenced government operations.

The years 1863 and 1869-70 marked another breakthrough moment for the business. Coupled with a French invasion, the fur business was once again tampered with. Consequently, the French took control of the posts in their territories, forcing the business to close other posts in areas they deemed unreachable. The political goodwill that was one time its promotional factor hampered its operations based on increased political aggression and the same scenario preceded the period 1869 through the 1870s. Also, the company was hit by the previous denial to renew its operations. By 1870, it was left with posts, particularly within present-day Canada (Cole, 2018). The increasing political suppression in the country was no longer favorable for a competitive business environment. Competitors also moved close to closing the gap between them and HBC, a situation that ushered in the first free trade in the economy. By reducing HBC’s influence in the market, the forces of the market were now allowed to take charge of the market. The result was an expansive and deterministic economic growth through free trade of good and services in the market.

Question Four: The National Policy of 1879

The National Policy was a unilateral political and economic management strategy developed in 1879 by John Macdonald and other senior officers in the prime minister’s office. The policy remained in use even after its initiators influenced the political and economic development of Canada. The policy was in three parts with each component exacting immense economic responsibility and effect. The first part of the policy looked into the construction of the transcontinental railway, formally referred to as the CPR. The second part of the policy instigated an immigration policy aimed at occupying the West, and the third part ensured the protection of the young Canadian industries through high tariffs. The policy provided an impeccable blueprint for the Canadian authority with each part playing a supportive role to others. The prime minister, through his office, aimed at using the policy to create an economic frontier for the nation (Acheson, 1972). After the implementation of the 1867 political framework, the authority believed that a long last political stability would only be a factor of a stable and prosperous economy. Moreover, the political union entered into would be at the best interest of the country if its stakeholders had a new purpose of commitment, which was best shown in a glowing Canadian economy, as desired in the National Policy. Therefore, Macdonald’s engagement through the implementation of the National policy not only geared economic prosperity but also set a new direction for the nation’s economic development under immense effect on the endowment, industrialization, and regionalism of Canadian economy. 


The National Policy, through railway construction and tariff increase, expanded Canadian economy and restored confidence in local people. The prime minister realized that the national policy was necessary to secure the interest of the wealthy Canadians who pursued ways to expand their operations in the market. He in return sought their loyalty and support to him and the party. He intended to use the tariff and the railway to secure free and efficient movement of supplies across the nation. The leader had also presumed that he needed the assistance of the wealthy local businessmen to run a successful authority. Moreover, the enactment of the policy was merely a year into elections, which was an absolute tool of consideration during the elections. Therefore, by granting the manufacturers the hope for growth legitimacy, Macdonald earned their support, which changed economic direction for the country.

The policy also led to the creation of new industries and companies over a short time. The new companies constructed needed endorsement to achieve their goals. Their course of actions resulted in the late 1879 endowments in the protection of everyone’s interest. By blocking imports through high tariffs, the authority reverted the export-dependent economy to promising local textile and Iron Company (Acheson, 1972). The policy created a sense of optimism on the possibilities of economic enlargement never witnessed before. The process steered local wealthy men to jump into production having witnessed the new anticipation possibilities from the New England experience. The growth was further endorsed by the transport and goodwill from the British and American mill companies to supply adequate material on their agreed duty-free terms. The end product was a pro-commercial dominance that fastened growth in the interior and maritime towns. Hence, the policy’s endowment effect created the commercialization and industrial expansion of the Canadian economy.


The introduction and implementation of the National Policy also had an immense effect on the industrialization of Canada. The policy blocked the importation of good thereby giving the local businesspeople opportunity to set up their own companies. It created a prospect of industrial growth, particularly in the textile and iron industry (Acheson, 1972). Other industries like the transport and financial industries were also subsequently created to support the growing production to substitute imports blocked. The situation caused a sense of industrial necessitation to supply what was no longer imported into the country. The process steered growth among the Canadian manufacturers and economic growth of the country. The growth realized as a result of the national policy remained evident after the completion of the war era. The country had created a wealth of industries under the manufacturing sector. The robust expansion of the manufacturing industry diversified the economy through sustainable growth in all other peripheral sectors. Settlements, too, were expanded in what led to the growth of towns. As the national policy blocked certain already manufactured goods from entering Canada, it gave an exception to capital and financial investment that created the industries in the country. Soon, Canada had the human and financial capacity to stimulate its growth and development. For instance, the Canadian financial institution, Montreal, absorbed American financial investments to help finance and sell the locally produced products, which drove the economy to an international level.


Regionalism remains an influential factor in Canada’s political and economic development. The National Policy of Macdonald created the concept as a contributory outcome of the 1879 National Policy. The regionalism arose as a perspectival ideology built on a common origin of shared culture, economy, and politics. As economies were picking prior to the elections, there arose a unique urge to centralize people based on what they shared (Acheson, 1972). Some companies merged to counter a common competitor just like the politicians formed affiliations based on their shared interests. The regionalism, therefore, became a significant influencer of economic development of Canada. It created a sense of belonging, which encouraged people to work together. The ideology also marked the beginning of corporative in Canadian economies.

The colonial confederations divided Canada along with different socio-economic and geographical parameters. The country was divided along regional quarters to allow for easy economic sorting and governing. However, upon implementation of the National Policy, the regions retrieved into common interest segments that preferred actions and associations on what benefited the majority of its stakeholders. The action formed the basis of economic regionalism that boosted the growth of the Western and Quebec regions. Regionalism also impacted the formation of political movements in Canada. The system created awareness and accommodation of other groups through alliances. Moreover, it became the engine that drove campaigns for economic freedom and inclusions. Intertwine between politics and economics, regionalisms led to a redistribution of economic resources and settlement of businesses in Canada. Some industries wanted to expand in regions that deemed feasible to their operations. Like other factors of economic development, regionalism caused wealth and economic distribution across regional markets.

Question Five: External Factors Affecting Canada’s Economic Development

Canada’s economy has proven responsive like other developed economies through causalities of economic ripples caused by external factors. The 2000 US shut down exemplifies the level of effect the nations receives from the external factors. Some of the issues have been tamed in recent time, but some remain hostile due to the nature of the global market. Like other nations and being an open economy, Canada remains receptive to these economic changes. The factors arise in terms of market influencers, expenses and expansionary procedures to economic growth. Some factors indicate negative and positive effects on the economic development of the nations. Majority of the factors are unavoidable; hence they require the government to put in place strict policies that mitigate or substantially reduces their impact on the nation’s economic development. Such factors include globalization, Free trade, external oil prices, immigration, foreign currency prices, and most recent UK’s Brexit.

Globalization and Free Trade

Trade globalization contributes to the largest share of external factors affecting Canada’s economic development. It encompasses policies, theories, and practical trade engagement in the global market. Canada engages in global trade as an open economy; it imports and exports goods and services at the same time. These conditions of work are met with measures and policies put in place by trading partners to promote or hinder its trading activities. As such, globalization has both positive and negative impacts on Canada’s economic development. The nation’s foreign trade agreements with other nations like the U.S. have enabled it to enlarge its economy through increased export and import (Ahmed, 2016). The existence of free trade supports the circumstance. Canada has over 11 free trade partners under signed agreements that have boosted its economy. For instance, the trade relationship between Canada and the U.S. is estimated at $662.7 billion. However, globalization has negative impacts on Canada, causing the black market trade. Moreover, the nation’ engagement on globalization has exposed it to dark market practices that lead to the loss of billions of dollars annually. While registered global trade enlarges Canada’s economic development, black trade undermines the nation’s development through lost revenues.


External immigration contributes significantly to Canada’s economic development. The nation has taken a significant shift concerning the impact of immigrants in the country. However, the disparity of the effects of immigrants depends on their entry, contribution, and legality. Legal immigrants contribute to almost 20% of the Canadian labor market (Ahmed, 2016). Hence, the group has a positive impact on the economy by increasing public income through earned labor. There is a group of uncontrolled illegal immigrants; thus, its entry and activities in the nation cost the government resources used to process their documents and even deportation. At various border confinement centers, the government expense on their detention is increasing daily; hence reducing the country’s economic development.

External Oil Prices

Global oil prices have a certain effect on the price of local oil prices. The price changes are passed on to the nation’s economic development through a cut in terms of earned revenues caused by low prices. For instance, the 2014 global decline in oil prices spilled over to Canada’s production prices. As a major source of income, a reduction in prices reduces the ultimate production income and national income; hence lesser revenue to fund economic development (Ferley, Hogue, & Janzen, 2014). In addition, the regional repulsive price actions steered from the US cause an outlier price to fall below the OPEC prices. The result implies lower sustainable prices to meet government expenditure. Alternatively, it would imply cutting down of government expenditures, which reduces its economic development. Therefore, global oil prices have an immense impact on the development of Canada’s economy as an oil producing nation.

Foreign Currency Prices

Foreign currency changes have also shown recent impacts on the economic development of Canada. Through direct impact on import and export prices, global foreign currencies like the US dollar and UK’s sterling pound determines the prices of goods and services sold into the country and exported to other nations. Britain is the largest European exporter to Canada and importer of Canadian goods and services. The UK’s recent currency rate changes caused by Brexit caused rippled effects to Canada’s economy on the price paid for goods imported and exported (McMeeking, 2016). A fall in sterling pound value means low prices for Canadian goods and services. The same situation applies to the U.S. dollar every time it experiences a market shake, which is passed over to Canada through low prices of its goods. Therefore, the currency changes give an unstable prediction of Canada’s economic development.

The Brexit

The Brexit is the latest external effect on Canada’s economic development. Based on historical economic ties between the two countries, Brexit possesses an undeniable influence on its own economic growth. Being the export destination for Canadian exports, the UK’s move about the European Union affects its economic ties with Canada (McMeeking, 2016). The reaction in their economic engagement impacts foreign direct income earned by Canada, and this translates to the ultimate national income and GDP of Canada. If the reduction of the Brexit causes of export to the UK, there will be a decrease in foreign income to Canada. Nonetheless, it is in the interest of Canada to ensure that their economic ties with the UK are retained if not increased. However, the country is already feeling the effects of the currency value against the UK sterling pound due to the pending exit. The currency value change has caused lower prices for Canadian goods and services.


Acheson, T. W. (1972). The National Policy and the Industrialization of the Maritimes, 1880-1910. Acadiensis, 1(2), 3-28.

Ahmed, S. (2016). Immigration, Employment and Social Expenditures in Canadian Public Policy: Redistributive or Regulatory?. Retrieved from http://www.universitypublications.net/hssr/0602/pdf/U6K969.pdf  

Cole, J. (2018). The Material Culture of Hudson’s Bay Company Servants at Edmonton House in the Early 19th Century. Retrieved from https://era.library.ualberta.ca/items/9a67acaa-8563-4998-97cc-7776de1f164d/view/1f1f1c3c-37b3-4a5d-be4b-79138b6ebfaa/Cole_John_201809_MA.pdf  

Ferley, P., Hogue, R., & Janzen, N. (2014). Impact of Lower Oil Prices on the Canadian Economic Outlook: An Update.  Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwi2pNiE_tbhAhUlyYUKHWKDClcQFjAAegQIAhAC&url=http%3A%2F%2Fwww.rbc.com%2Feconomics%2Feconomic-reports%2Fpdf%2Fother-reports%2Fopi.pdf&usg=AOvVaw0LlklSgNKV8GQ4tYtQRBVT [Accessed on April 17, 2019]

McMeeking, K. P. (2016). Brexit: why uncertainty is bad for economies. Retrieved from https://ore.exeter.ac.uk/repository/bitstream/handle/10871/25436/Brexit.docx?sequence=1  

Smith, A., & Simeone, D. (2017). Learning to use the past: the development of a rhetorical history strategy by the London headquarters of the Hudson’s Bay Company. Management & Organizational History, 12(4), 334-356.  


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