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 …show more content…
currency barriers, different policies have been encouraging globalization and improving Canada’s economy.
There are a wide variety of trade agreements between Canada and other countries that are making it easier for a global market to be efficient. One example of how Canada is currently trying to encourage globalization by freeing trade is with the trade agreement in process of development between India and Canada. The new agreement will eliminate or reduce tariffs on Canadian goods in a variety of sectors. It is believed that the trade agreement would provide a 6 billion dollar increase into Canada’s economy. (Harper, 2012) This new policy would also help Canada’s economy by providing almost 40,000 new jobs in Canada. (Harper, 2012) Creating new policies that make it easier for businesses to work with each other in different countries, and expand their customer base helps to strengthen the global market. The Canadian government is actively encouraging globalization, Minister of International Trade and Minister for the Asia-Pacific Gateway, Ed Fast said “The Harper government is committed to building on these strong ties to create a partnership that will lead to new opportunities and stronger economies in both countries.” (Harper, 2012) The Harper government has, in the last 6 years, concluded nine trade agreements, and has begun improving the trade and investments with large markets such as China, the European Union, Brazil and Japan. (Harper, 2012) Once complete, this agreement will provide great opportunities for Canadian companies to expand their markets into large rich countries. It is a perfect example of how Canada is currently encouraging globalization.
One new policy already in place is the trade agreement between Canada and Jordan. This is another example supporting the argument that Canada is encouraging globalization through freeing trade. On June 29, 2012 the Canadian-Jordan Economic Growth and Prosperity Act became legal. (Canada-Jordan, 2012) This agreement completely eliminated any tariffs. Once again, the gains from this agreement include increased economic activity and gainful employment for people throughout both Canada and Jordan. It was said that this agreement is just one step in Canada’s “job-creating, pro-trade plan to protect and strengthen the prosperity of workers and businesses in every region of Canada.” (Canada-Jordan, 2012) It is clear that one of Canada’s main objectives is to improve the global market with the objective of improving the economy within Canada. Even though this agreement will result in smaller gains than the Canada-India agreement, it would still able it to show the significance that Canada puts on reducing trade barriers and creating and taking part in a global marketplace.
Sometimes even with the reduction of trade barriers, there are other issues that make businesses uncomfortable with conducting their business in other countries. For example, when it comes to intellectual property, businesses need to be very careful about protecting their valuables. Whether it is protecting certain software, or a secret recipe, intangible items can be extremely sensitive when shared and not protected. This has been a huge issue for some companies who aren’t willing to take the risk to expand into other markets for security reasons. This problem is created because intellectual property rights vary between countries; therefore security has been always an issue. In October of 2011 Canada among other countries signed the Anti-Counterfeiting Trade Agreement (ACTA) as a means of setting a global security policy on intellectual property rights. The agreement covers three main areas including: improving international cooperation, establishing best practices for enforcement, and providing a more effective legal framework. (Anti-Counterfeiting, 2012) Canada wants to encourage innovation, in order to do that they need to provide security that people’s ideas won’t be taken away from them. Canada began participating in discussions of this agreement back in 2007, but was not completed and ratified until 2011. (Anti-Counterfeiting, 2012) By putting international standards for enforcing intellectual property Canada, and the other countries involved, are further encouraging globalization. This agreement is an excellent way of making it more viable for business to open new productions in other countries, and to be able to secure the sensitive information they are sharing. It is hoped that this agreement is detailed enough and has enough commitment from other countries to be stronger that the Trade-Related Aspects of Intellectual Property Rights (TRIPS, agreement), which was the WTO agreement on protecting intellectual property rights. In 1995, when this agreement was drafted, the basis was “a strong belief among signatory nations that the protection of intellectual property through patents, trademarks, and copyrights must be an essential element of the international trading system.” (Hill, 2011) Canada has shown through its actions their ambition to increase the globalization of markets by improving the international intellectual property rights, providing security abroad. This is a huge step towards encouraging globalization, and it is clear that a lot of nations agree it is an important one. Creating a more secure global marketplace will open a lot of new international business opportunities.
By reducing barriers to trade and better protecting intellectual property rights Canada is making it more encouraging for Canadian companies to expand their markets globally by investing into other nations.
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 …show more content…
(UNCTAD) points out in its World Investment Report 2007 that, in comparison to its potential, Canada is in fact underperforming.” (Sharpe, 2008) Canada is underperforming in that there is a large gap between Canada’s actual performance and it’s potential. (Sharpe, 2008) It is clear that Canada is trying it’s best to make FDI, but is uneasy about FDI being made into Canada. This is the area where Canada is doing the poorest job on encouraging globalization. However, Canada is still allowing globalization to grow by allowing FDI mainly in the form of mergers and acquisitions; in 2006, mergers and acquisitions accounted for 58% of inflow FDI. (Sharpe, 2008) Another weakness is the limited amount of inflow some countries actually have in Canada; very few countries account for a very large portion. The United States is the largest contributor of inflow in FDI, with 68% of stock in Canada. (Sharpe, 2008) Only three other countries have more than 5% in Canada: the United Kingdom (8.7%), France (6.6%) and Netherlands (5%). (Sharpe, 2008) Perhaps Canada could more actively encourage inflow of FDI to further expand upon its initiatives of supporting and encouraging globalization. Although Canada is allowing an inflow of FDI, they are also putting limitations on it. Regardless, Canada is still taking some steps to encourage an inflow of FDI into Canada.
One major factor that can encourage or discourage globalization is the effect that valuing different currencies has, and the fluctuations of that currency.
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)
The International Monetary Fund is an excellent way to make globalization more sustainable and stable. This is extremely important as discussed in the textbook on page 349, “exchange rates have become much more volatile and less predictable.” (Hill, 2011) This is why the governments of different nations through the International Monetary Fund sometimes intervene, and is sometimes thought of as a managed-float system. (Hill, pg. 349) The IMF has assisted in the following: * Currency crisis, when speculation results in a large depreciation in the value of currency and makes firms spend larger amounts of money on how this effects interest rates * Banking crisis, when people no longer trust the banks and begin to withdraw their funds, and * A foreign debt crisis, when the devaluation of currency and the effect on the interest rates makes a country unable to pay back their international debt. (Hill, pg. 357)
These crises tend to have commonalities among the causes, which include things like: * High inflation rates on relative prices * Increased debt load (on current loans, and new domestic loans) * Price inflation on assets (Hill, pg. 357)
In order to combat these causes the IMF has a variety of policies that include anti-inflationary monetary polices, and reduction in spending allowed by the government. The textbook discusses how in the short run these policies has a negative impact on the demand of international business. However in the long term the IMF believes that it is promoting demand, and stimulating economic growth worldwide. In the long term it is believed that these policies make international business flourish. (Hill, pg. 368) By being a member of the IMF, Canada is encouraging globalization. The country is ensuring that a global marketplace can be more secure, and allows more developing countries to participate through the IMF initiatives. It is extremely valuable in international business to have some attempt of control on the changing of currency. Overall Canada is doing a lot to encourage globalization. By creating agreements and governing bodies with other nations that remove and reduce trade barriers and concerns Canada is helping to make one large global market. This is clear that through such agreements like * The agreement with India that are currently under negotiations * The Canada-Jordan agreement already in place * TRIPS and Anti-counterfeiting trade * Allowing some inflow of FDI * Canada’s contribution to the International Monetary Fund, that
Canada is doing a fairly good job at creating a global marketplace, and strengthening the Canadian economy through the use of globalization. Although there is room for improvement, with the inflow of FDI, Canada is actively trying to expand into other countries as a way of improving the economy at home. The use of policy is an extremely useful tool to encourage and allow globalization to occur. The Canadian government recognizes this and is constantly improving upon, and developing new policies to allow the economy to grow in the most efficient ways.
Works Citied
Anti-counterfeiting trade agreement (ACTA). (07, June 2012). Retrieved from http://www.international.gc.ca/trade-agreements-accords-commerciaux/fo/intellect_property.aspx?lang=en&menu_id=7&menu=&view=d&view=d
Canada-jordan economic growth and prosperity act receives royal assent. (29, June 2012). Retrieved from http://www.international.gc.ca/media_commerce/comm/news-communiques/2012/06/29b.aspx?lang=eng&view=d
Foreign investment policy. (30, November 2011). Retrieved from http://www.ic.gc.ca/eic/site/693.nsf/eng/h_00005.html
Harper government highlights start of fifth round toward trade agreements with India. (23, July 2012). Retrieved from http://www.international.gc.ca/media_commerce/comm/news-communiques/2012/07/27a.aspx?view=d
Hill, C. (2011). International business competing in the global marketplace. (8 ed.). New York: McGraw-Hill/Irwin.
International monetary fund. (05, April 2011). Retrieved from http://www.canadainternational.gc.ca/prmny-mponu/canada_un-canada_onu/overview-survol/agencies-institutions/imf-fmi.aspx?lang=eng&view=d
Sharpe , A. (2008). Accessing canada's ability to compete for foreign direct investment. Informally published manuscript, Study of Living Standards, , Available from Competition Policy Review Panel. Retrieved from http://www.csls.ca/reports/csls2008-4.pdf
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 …show more content…
currency barriers, different policies have been encouraging globalization and improving Canada’s economy.
There are a wide variety of trade agreements between Canada and other countries that are making it easier for a global market to be efficient. One example of how Canada is currently trying to encourage globalization by freeing trade is with the trade agreement in process of development between India and Canada. The new agreement will eliminate or reduce tariffs on Canadian goods in a variety of sectors. It is believed that the trade agreement would provide a 6 billion dollar increase into Canada’s economy. (Harper, 2012) This new policy would also help Canada’s economy by providing almost 40,000 new jobs in Canada. (Harper, 2012) Creating new policies that make it easier for businesses to work with each other in different countries, and expand their customer base helps to strengthen the global market. The Canadian government is actively encouraging globalization, Minister of International Trade and Minister for the Asia-Pacific Gateway, Ed Fast said “The Harper government is committed to building on these strong ties to create a partnership that will lead to new opportunities and stronger economies in both countries.” (Harper, 2012) The Harper government has, in the last 6 years, concluded nine trade agreements, and has begun improving the trade and investments with large markets such as China, the European Union, Brazil and Japan. (Harper, 2012) Once complete, this agreement will provide great opportunities for Canadian companies to expand their markets into large rich countries. It is a perfect example of how Canada is currently encouraging globalization.
One new policy already in place is the trade agreement between Canada and Jordan. This is another example supporting the argument that Canada is encouraging globalization through freeing trade. On June 29, 2012 the Canadian-Jordan Economic Growth and Prosperity Act became legal. (Canada-Jordan, 2012) This agreement completely eliminated any tariffs. Once again, the gains from this agreement include increased economic activity and gainful employment for people throughout both Canada and Jordan. It was said that this agreement is just one step in Canada’s “job-creating, pro-trade plan to protect and strengthen the prosperity of workers and businesses in every region of Canada.” (Canada-Jordan, 2012) It is clear that one of Canada’s main objectives is to improve the global market with the objective of improving the economy within Canada. Even though this agreement will result in smaller gains than the Canada-India agreement, it would still able it to show the significance that Canada puts on reducing trade barriers and creating and taking part in a global marketplace.
Sometimes even with the reduction of trade barriers, there are other issues that make businesses uncomfortable with conducting their business in other countries. For example, when it comes to intellectual property, businesses need to be very careful about protecting their valuables. Whether it is protecting certain software, or a secret recipe, intangible items can be extremely sensitive when shared and not protected. This has been a huge issue for some companies who aren’t willing to take the risk to expand into other markets for security reasons. This problem is created because intellectual property rights vary between countries; therefore security has been always an issue. In October of 2011 Canada among other countries signed the Anti-Counterfeiting Trade Agreement (ACTA) as a means of setting a global security policy on intellectual property rights. The agreement covers three main areas including: improving international cooperation, establishing best practices for enforcement, and providing a more effective legal framework. (Anti-Counterfeiting, 2012) Canada wants to encourage innovation, in order to do that they need to provide security that people’s ideas won’t be taken away from them. Canada began participating in discussions of this agreement back in 2007, but was not completed and ratified until 2011. (Anti-Counterfeiting, 2012) By putting international standards for enforcing intellectual property Canada, and the other countries involved, are further encouraging globalization. This agreement is an excellent way of making it more viable for business to open new productions in other countries, and to be able to secure the sensitive information they are sharing. It is hoped that this agreement is detailed enough and has enough commitment from other countries to be stronger that the Trade-Related Aspects of Intellectual Property Rights (TRIPS, agreement), which was the WTO agreement on protecting intellectual property rights. In 1995, when this agreement was drafted, the basis was “a strong belief among signatory nations that the protection of intellectual property through patents, trademarks, and copyrights must be an essential element of the international trading system.” (Hill, 2011) Canada has shown through its actions their ambition to increase the globalization of markets by improving the international intellectual property rights, providing security abroad. This is a huge step towards encouraging globalization, and it is clear that a lot of nations agree it is an important one. Creating a more secure global marketplace will open a lot of new international business opportunities.
By reducing barriers to trade and better protecting intellectual property rights Canada is making it more encouraging for Canadian companies to expand their markets globally by investing into other nations.
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 …show more content…
(UNCTAD) points out in its World Investment Report 2007 that, in comparison to its potential, Canada is in fact underperforming.” (Sharpe, 2008) Canada is underperforming in that there is a large gap between Canada’s actual performance and it’s potential. (Sharpe, 2008) It is clear that Canada is trying it’s best to make FDI, but is uneasy about FDI being made into Canada. This is the area where Canada is doing the poorest job on encouraging globalization. However, Canada is still allowing globalization to grow by allowing FDI mainly in the form of mergers and acquisitions; in 2006, mergers and acquisitions accounted for 58% of inflow FDI. (Sharpe, 2008) Another weakness is the limited amount of inflow some countries actually have in Canada; very few countries account for a very large portion. The United States is the largest contributor of inflow in FDI, with 68% of stock in Canada. (Sharpe, 2008) Only three other countries have more than 5% in Canada: the United Kingdom (8.7%), France (6.6%) and Netherlands (5%). (Sharpe, 2008) Perhaps Canada could more actively encourage inflow of FDI to further expand upon its initiatives of supporting and encouraging globalization. Although Canada is allowing an inflow of FDI, they are also putting limitations on it. Regardless, Canada is still taking some steps to encourage an inflow of FDI into Canada.
One major factor that can encourage or discourage globalization is the effect that valuing different currencies has, and the fluctuations of that currency.
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)
The International Monetary Fund is an excellent way to make globalization more sustainable and stable. This is extremely important as discussed in the textbook on page 349, “exchange rates have become much more volatile and less predictable.” (Hill, 2011) This is why the governments of different nations through the International Monetary Fund sometimes intervene, and is sometimes thought of as a managed-float system. (Hill, pg. 349) The IMF has assisted in the following: * Currency crisis, when speculation results in a large depreciation in the value of currency and makes firms spend larger amounts of money on how this effects interest rates * Banking crisis, when people no longer trust the banks and begin to withdraw their funds, and * A foreign debt crisis, when the devaluation of currency and the effect on the interest rates makes a country unable to pay back their international debt. (Hill, pg. 357)
These crises tend to have commonalities among the causes, which include things like: * High inflation rates on relative prices * Increased debt load (on current loans, and new domestic loans) * Price inflation on assets (Hill, pg. 357)
In order to combat these causes the IMF has a variety of policies that include anti-inflationary monetary polices, and reduction in spending allowed by the government. The textbook discusses how in the short run these policies has a negative impact on the demand of international business. However in the long term the IMF believes that it is promoting demand, and stimulating economic growth worldwide. In the long term it is believed that these policies make international business flourish. (Hill, pg. 368) By being a member of the IMF, Canada is encouraging globalization. The country is ensuring that a global marketplace can be more secure, and allows more developing countries to participate through the IMF initiatives. It is extremely valuable in international business to have some attempt of control on the changing of currency. Overall Canada is doing a lot to encourage globalization. By creating agreements and governing bodies with other nations that remove and reduce trade barriers and concerns Canada is helping to make one large global market. This is clear that through such agreements like * The agreement with India that are currently under negotiations * The Canada-Jordan agreement already in place * TRIPS and Anti-counterfeiting trade * Allowing some inflow of FDI * Canada’s contribution to the International Monetary Fund, that
Canada is doing a fairly good job at creating a global marketplace, and strengthening the Canadian economy through the use of globalization. Although there is room for improvement, with the inflow of FDI, Canada is actively trying to expand into other countries as a way of improving the economy at home. The use of policy is an extremely useful tool to encourage and allow globalization to occur. The Canadian government recognizes this and is constantly improving upon, and developing new policies to allow the economy to grow in the most efficient ways.
Works Citied
Anti-counterfeiting trade agreement (ACTA). (07, June 2012). Retrieved from http://www.international.gc.ca/trade-agreements-accords-commerciaux/fo/intellect_property.aspx?lang=en&menu_id=7&menu=&view=d&view=d
Canada-jordan economic growth and prosperity act receives royal assent. (29, June 2012). Retrieved from http://www.international.gc.ca/media_commerce/comm/news-communiques/2012/06/29b.aspx?lang=eng&view=d
Foreign investment policy. (30, November 2011). Retrieved from http://www.ic.gc.ca/eic/site/693.nsf/eng/h_00005.html
Harper government highlights start of fifth round toward trade agreements with India. (23, July 2012). Retrieved from http://www.international.gc.ca/media_commerce/comm/news-communiques/2012/07/27a.aspx?view=d
Hill, C. (2011). International business competing in the global marketplace. (8 ed.). New York: McGraw-Hill/Irwin.
International monetary fund. (05, April 2011). Retrieved from http://www.canadainternational.gc.ca/prmny-mponu/canada_un-canada_onu/overview-survol/agencies-institutions/imf-fmi.aspx?lang=eng&view=d
Sharpe , A. (2008). Accessing canada's ability to compete for foreign direct investment. Informally published manuscript, Study of Living Standards, , Available from Competition Policy Review Panel. Retrieved from http://www.csls.ca/reports/csls2008-4.pdf