Three pillars of the economy

The modern Canadian economy stands on three main pillars, with the service sector by far the largest:

Services (~75 % of jobs) — health care, education, finance, retail, communications, transport, government, tourism. This is where the majority of Canadians work.
Manufacturing — paper, high-tech equipment, aerospace technology, automobiles, machinery, food products, clothing. The auto sector is a key Ontario employer.
Natural resources — forestry, fishing, agriculture, mining, oil and gas. Spread across Canada's vast territory.

Trading with the world

Canada exports more than it consumes at home — trade is essential to its prosperity. The United States is by far Canada's largest trading partner: roughly three-quarters of Canadian exports go there.

CUSMA (formerly NAFTA) — free trade with the United States and Mexico.
CETA — Comprehensive Economic and Trade Agreement with the European Union.
WTO — Canada is a founding member of the World Trade Organization (originally GATT, signed after the Second World War to open up restrictive Depression-era trade policies).

Strengths across the country

Atlantic provinces — fisheries (cod, lobster, scallops), offshore oil and gas, forestry, agriculture (PEI potatoes).
Central Canada (Ontario, Québec) — the country's industrial heartland. Together they produce more than three-quarters of Canadian manufactured goods.
Québec — pulp and paper, hydroelectricity (Canada's largest producer), aerospace, pharmaceuticals.
Ontario — automobile manufacturing, finance (the Toronto Stock Exchange), agriculture, the Niagara wine and fruit region.
Prairie provinces (Manitoba, Saskatchewan, Alberta) — wheat, oilseeds, oil and gas, Alberta oil sands.
British Columbia — forestry (Canada's most valuable), mining, the Port of Vancouver (Asia-Pacific gateway), Okanagan Valley orchards and wines.
Northern territories — gold, diamonds, lead, copper, zinc, oil and gas.

The fur trade and the first companies

Canada's earliest companies were formed during the French and British colonial regimes and competed for the fur trade. The Hudson's Bay Company — staffed by French, British and Indigenous employees — came to dominate the trade across the northwest, from Fort Garry (Winnipeg) and Fort Edmonton to Fort Langley (near Vancouver) and Fort Victoria. Many of these trading posts later grew into Canadian cities.

Canada's first financial institutions opened in the late 18th and early 19th centuries. The Montreal Stock Exchange opened in 1832. For centuries the economy was based mainly on farming and on exporting natural resources — fur, fish and timber — moved by roads, lakes, rivers and canals.

A railway from sea to sea (1885)

British Columbia joined Confederation in 1871 after Ottawa promised to build a railway to the West Coast. On 7 November 1885, Donald Smith (Lord Strathcona), the Scottish-born director of the Canadian Pacific Railway, drove the last spike at Craigellachie in British Columbia — a powerful symbol of national unity from sea to sea.

Sir Wilfrid Laurier and Western settlement

Canada's economy grew quickly during the boom of the 1890s and early 1900s. One million British and one million Americans immigrated to Canada at this time. Sir Wilfrid Laurier — the first French-Canadian Prime Minister since Confederation, whose portrait is on the $5 bill — actively encouraged immigration to the West. The new railway made it possible for 170,000 Ukrainians, 115,000 Poles and tens of thousands of Germans, French, Norwegians and Swedes to settle the prairies before 1914 and build a thriving agricultural sector.

The Great Depression and the Bank of Canada

The "Roaring Twenties" were boom years of business prosperity and low unemployment. The stock-market crash of 1929 ended the boom and ushered in the Great Depression — the "Dirty Thirties". By 1933 unemployment had reached 27 % and many businesses failed. Farmers in the West were hit hardest by collapsing grain prices and a terrible drought.

The hardship of the Depression created growing demand for a social safety net — minimum wages, a standard work week, and public programs to protect workers and families.

Postwar trade and prosperity

Post-1945 Canada enjoyed record prosperity and material progress. Restrictive Depression-era trade policies were opened up by treaties such as the General Agreement on Tariffs and Trade (GATT) — now the World Trade Organization (WTO). The discovery of oil in Alberta in 1947 launched Canada's modern energy industry. By 1951, for the first time, a majority of Canadians could afford adequate food, shelter and clothing.

Between 1945 and 1970 Canada drew closer to the United States and other trading partners and enjoyed one of the strongest economies among industrialised nations. Today Canadians enjoy one of the world's highest standards of living — sustained by hard work and by trade, particularly with the United States.

The social safety net

As prosperity grew, Canada built a broad system of social protection funded through taxes. Key programs include:

Old Age Security — first introduced in 1927 to support seniors.
Employment Insurance — created by the federal government in 1940 (originally called "unemployment insurance").
Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) — public pension plans introduced in 1965.
The Canada Health Act — sets common elements and a basic standard of coverage for publicly funded health care, delivered by the provinces and territories.
Publicly funded education — provided by the provinces and territories.

Currency, banks and small business

The Canadian dollar (CAD) is the national currency. The Bank of Canada is the central bank and the only institution authorised to issue Canadian banknotes.

Small businesses are an engine of the Canadian economy and employ a large share of workers. Most of Canada's largest companies started small and grew thanks to free trade and an open economy. Entrepreneurship and hard work are central Canadian values.

Economy

Canada's Economy