Economics Term Paper on Business Investment in Inventories

Nowadays, Canada is considered to be a country with a stable economy and good perspectives of sustained and long-termed development. At the same time, it is extremely important to provide the sustainable development of the country and further economic progress in order to avoid socio-economic crisis.

On analysing the dynamics of changes within Canadian industries in historical terms (Table 1) and GDP (Table 2), it is necessary to underline that Canadian economy has undergone substantial changes in the last couple of decades. To put it more precisely, the Canadian GDP constantly grows and it practically doubled at market prices since 1987 to 2005 (558.949 in 1987 compared to 1.371.425 in 2005).

Obviously, such a growth is, to a significant extent, predetermined by the development of Canadian industries, especially, mineral fuels, petroleum and oil industries, beverage and tobacco manufacturing, bectrical and appliance manufacturing, motor vehicles and parts manufacturing, other transportation equipment manufacturing, furniture manufacturing, professional, scientific and technical services.

Furthermore, it is also necessary to take several factors that positively influenced the development of Canadian industries mentioned above and the growth of GDP. First of all, it should be said that the process of economic globalisation plays an important role in the development of the Canadian economy since it contributes to Canada’s integration in the world economy and creates new opportunities for Canadian companies to enter new markets, increase its export, and, consequently, strengthen national economy.

In this respect, the active participation of Canada in NAFTA should be pointed out since it involves Canada into free trade with the countries members of this organisation and such a situation produces a positive impact on the development of the Canadian economy at large and stimulated the development of highly technological industries in particular.

Another important factor that influences the progress of Canadian GDP is the development of Canadian industries. Actually, their impact on the GDP of Canada is predetermined by the fact that basic Canadian industries their depend on exports, the degree to which they face competing imports at home and the extent to which the imported inputs are used. Obviously, Canadian companies being highly developed are competitive and are able to gain a larger share of the world market in different industries. In such a situation, the increase of Canadian GDP from 1987 to 2005 is predetermined by the growth of exports, positive trade balance, and development of export-oriented industries.

Thus, the economic development of the Canada, being relatively stable, in recent years, has revealed the substantial potential for the further growth. Basically it is predetermined by the situation in the international trade and active cooperation and trade of Canada with its geographic neighbour, the US, as well as other foreign countries. On the other hand, it makes Canadian Economy and its GDP, as well as its basic industries, quite dependent on the situation in foreign markets and international trade.


1. Canadian Broadcast Corporation, “Economy Expected to Grow 3.2 Percent in 2006: Royal Bank,” found at, retrieved Feb. 14, 2006.
2. Warren, Adrienne. “NAFTA Quarterly,” Scotiabank Group, winter 2005.

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