Sample Paper on Economic Role of International Trade in Canada’s Future


This essay researches and discusses the economy role of international trade in shaping the Canada’s future. First, it is essential to understand basics about the international trade. According to Johnson (2013), it is the exchange of goods and services at the international level, especially between two or more countries. He further illustrated that international trade is responsible for the emergency the contemporary world economy. This is a situation whereby the global events determine the demand, supply, as well as prices of goods and services. For instance, political change in a country could lead to the rise in prices of certain goods in other nations.

In most countries such as Canada, international trade contributes to a larger share of the economy in terms of gross domestic product (GDP). In 2013, the value of international trade in Canada was worth about 45% of its gross domestic product. Over the years, international trade has played significant contributed to the development and growing of Canadian’s economy. It has also allowed Canada to expand its markets to other nations. More significantly, it has allowed the Canadian market to be more competitive. It is the reason Canadians can pick between a British automobiles, Japanese automobiles, and American automobiles. If you walks into a supermarket and buy a Brazilian coffee, it is because of the international trade.

International trade is grouped into several categories. However, the four major types include intra-industry trade, inter-industry trade, intra-firm trade, and inter-firm trade. Lewis (2015) pointed out that all these four major types of international trade concern the exportation and importation of goods as well as services from one country to another. However, they all differ in the scope and methodology used in the trade. The intra-industry trade deals with the importation of goods similar to those produced in the receiving country. The intra-firm trade is confined to various arms of a multinational firm. In this case, the trade takes place between different types of corporations.

International Trade Agreements

Trade agreements make essential components of international trade. Several such trade agreements have been established in the past. In addition, Canada has subscribed to many international trade agreements over the past. This trend is expected to continue given that international trade agreement is a prerequisite for liberalization of trade at both local and international levels. International trade agreements serve the purpose of regulating and enhancing the trade between two or more countries.

General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) are one of the best-known international trade agreements that have ever been made. Canada was one of the countries that founded the GATT agreement. Almost 50 years later, then GATT gave rise to WTO to handle the structural changes of the world economy. It was also established to address challenges that were beyond the scope of GATT. As a country, Canada is taking the WTO leadership role. Canada is also part of other international trade agreements not mentioned here.

Canada in the 21st Century

In terms of size, Canada is ranked second largest country in the world after Russia. It also has several abundant different types of natural resources. Over the past few years, the Canadian population has steadily continued to become more and more urbanized. This is evidenced by the high rate of rural to urban migration. The 2010 statistics puts the urban population at 81%. Over the past 20 years, Canada has served as the prime target for immigrants and refugees. Canada is a multicultural nation, which has subsequently endowed it with greater economic advantage.

The 2011 economic survey ranked Canadian economy the 11th largest in the world. The Canadian economy is highly integrated with the United States of America, which is its major trade partner. The vast majority of its import comes from the United States. The Canada’s 2012 GDP was estimated to worth $1.77 trillion dollars. Major economic sectors contributing to Canada’s GDP are agriculture (1.8%), industry (28.6%), and services (69.6%) among others. These figures indicate that Canadian economy has significant economic prospect is the country focus on its future.

Economic roles of international trade in Canada’s future

A lot can be said about the economic role of international trade in shaping the Canada’s future. However, the major thing that stands out is that international trade will contribute to greater economic growth and empowerment in Canada. In particular, as concluded by Baier, Bergstrand, and Feng (2014), international trade will spearhead Canada to become a more advanced and greater economy in the world. This is mainly due to its numerous economic opportunities as well as benefits.

According to a recent research by Zhang et al. (2015), 51% of the Canada’s economy is currently being exchanged internationally. This figure is anticipated to reach 60% by the end of 2030. This shows the significant role of international trade in shaping the country’s future economy.

Many nations including Canada are now members of no less than two international trade agreements. In particular, the level of employment, growth, wages, development, as well as income of a country will be, to a greater extent, the result of the world economy through international trade. The following are the specific roles that will be played by international trade in Canada’s economy future.

(a) Canada as a World Trader

The foremost economic role of international trade is that it will make Canada becoming a leading world trader in the future. As the country make steps into the future, she recognizes the role played by international trade especially in opening up its economy. This is why the country is playing a leadership role in World Trade Organization as well as other essential trade agreements that she has joined. There are many benefits of becoming a successful world trader. For instance, becoming world trader will increase Canada’s ability in sustaining its economy potency, which is essential in the international landscape. Through international trade, Canada will successful navigate the world economy.

Through the use of international trade liaisons, Canada will continue its positive records of economic benefits. It will also enable the country to open its economy to the rest of the world. The country will expand its trade partners and market opportunities. For instance, through international trade, Canada will access almost every market in the world by the year 2030. This will enable it to sell goods and services at the global level and increase its economic growth. On the other hand, this trend will open Canadian economy to the rest of the world. The primary benefit of becoming a leading world trader is the country’s prosperity and economic accomplishment. Standards of living with significant increase in Canada. Indeed, as concluded by Sands (2015), the future prosperity and economic progress of Canada depends on its international trade with other countries.

(b) International Cash Flows

International trade will play significant roles in expanding the Canada’s cash flow at the global level. In today’s world economy, the most necessity of economic success is openness to the global market. It is through the international trade that Canada will gain openness to the global market thus benefiting from expansive cash flows. In particular, the international trade will shape Canada’s economic future by influencing the magnitude and frequency of international cash flows. These two elements of cash flow, magnitude, and frequency, are what make the difference between new and old economies that are successful.

However, while going into the future, Canada clearly understands that the contemporary international trade pattern is quite dynamic. In particular, the contemporary international trade flows is quite different from the traditional approaches that were being used few decades ago. By a large extent, in the contemporary state, the international trade is dominated mostly by multinational corporations. Moving ahead, it is expected that the large multinational corporations will continue playing significant roles in defining the scope and magnitude of the international trade. Stanford (2012) asserted that the Canada economy will be shaped by the activities of multinational corporations participating in the international trade. Essentially, there will be numerous large multinational corporations in Canada significantly contributing to its economy prowess.

According to a recent research by Bento (2009), the international trade accruing from multinational corporations in Canada will account for more than two third of its gross domestic products by the end of 2030. Furthermore, this will represent a 5% growth in the economy of Canada. Consequently, Canada will experience a significant increment in intra-firm international trade. The intra-firm specifically will contribute to more than 50% of the international trade activities in Canada. This will lead to greater economic benefit of increased productivity, capital flows, technology, disposal income, as well as the competitiveness of the country’s industries. Furthermore, it will contribute to high growth of vertical specialization in international trade in Canada.

(c) Economic Competitiveness

Another significant economic role of international trade in Canada’s future is the competitiveness. This has been one of the most crucial elements of international trade in the 21st country. In the near future, Canada will benefit from the greater economic competitiveness that has resulted from its advancement in the international trade. Competitive advantage will play a great role in shaping the Canadian economy. The country will benefit from numerous advantages of economic competitiveness such as improved earnings, quality product, lean management, production efficiency, as well as high profitability. All these aspects of international trade will make the Canadian economy more competitive in the global market.

Rivera-Batiz and Oliva (2003) proposed that the new content of economic competitiveness in Canada will be highly linked and attributed to productivity, human capital, as well as innovation. In essence, the international trade will significantly shape the country’s innovation, productivity, as well as human capital. For instance, its continued participation in the international trade will open Canadian economy to the global competitive market. This will make it learn of other markets and subsequently redefine its aspects of production and innovation. Besides, Canada will continue bring new and advanced goods from other countries into its market thus improving its economy as well as standards of living. Direct importation of goods and service will significantly contribute to the competitiveness of Canadian economy through continuous learning.

(d) Global Interdependence

It is evident that international contributes to greater global interdependence. Canada will be one of the greatest beneficiaries of this global interdependence as she up-scales its international trade. The benefit of international trade is that it brings people as well as countries together. People now learn from one another and do business at the greater horizon. Global interdependence will bring some of the most significant opportunities as well as unique challenges in Canada. Canadians have learned through experience that no nation can independently succeed in its economic endeavor. Besides, global interdependence will make Canadian politics more efficient at the international level in the future. It is rational to believe that global interdependence will subsequently contribute to changes in Canadian politics for reaping from international economic opportunities.

At its best, the global interdependence reflects a better economic future for Canada through the process of making right choices in the highly competitive economy. It will lead the country to make best choices concerning priority, interest, choices, as well as economic future of the nation. Through debates occurring at the international level, the country’s leadership will be in a better position of making the right decision concerning the economy. They will make decisions that enhance speedy economic growth, prosperity, as well as the national success. Canada will use its leadership position in the international trade to spearhead its economic growth and prosperity through the design and development of relevant policies. Through global interdependence, Canada will continue implementing good governance and leadership, which is essential for economic growth.

(e) Capital Flows

Another essential economic role of international trade in Canada is increased capital flow. The frequency and magnitude of international capital flow determine how successful a country is in the global economy. By increasing its participating in the international trade, Canada will subsequently benefit from increased capital inflow. Increased capital flow into the country empowers the economic growth through the availability of equipment, machinery, technology as well as the required set of skills. The international trade will shape the Canadian future economy through liberalization of the capital account, availability of digital technologies, as well as the development of new financial instruments. These elements of capital flow will help Canada create a well-integrated capital market. Large volumes of capital flows and trade liberalization will continuously generate advancement in the Canadian economy.

Importance of International Trade in Canadian Economy

International trade plays significant roles in the Canadian economy. The real importance of international trade in the economy of Canada has been a permanent fixture in its long-term economic history. Historically, Canada has been an exporting nation to many countries of the world. Over years, its greatest export destination has been the neighboring United States of America. This trend continues even to date where it is the leader exporter of natural oil to the United States of America.

The successful participation in the international is one of the primary reasons why Canada is currently enjoying numerous employment opportunities as well as high standards of living. As noted by Lewis (2015), Canada is currently enjoying numerous employment opportunities that are far much in excess of its economic potential. The new 21st century international trade has significantly accelerated the global competitiveness of the Canadian economy. As a result, the economy has not only become more competitive but also opportunistic. Furthermore, the international trade has subsequently elevated the need of Canadian economy to maintain a high competitive advantage for its export goods. This has resulted in the steady growth of the economy as well as advanced specializations. Nowadays, Canadian products are recognized worldwide for high quality.

The international trade has also helped Canada capture the benefits of virtually large consumer base as well as domestic market. This has subsequently helped combat the Canadian’s small population size. Through international trade, the country is now focusing on large global markets and consumer bases thereby surpassing its domestic market challenges. Essentially, the country has been effectively using international trade as a strategic tool for benefiting from larger global markets. On the other hand, the country has been using this tool to get missing resources, technology, as well as services from other countries. Another importance of international trade is that it has helped empower Canadian businesses to accomplish longer and extensive outreach. Doing business at the global level has subsequently opened Canada to many infinite opportunities that enhances the domestic enterprises.


International trade was, is, and remains the lifeblood as well as the heartbeat of the Canadian economy. This country will continue to gain numerous economic benefits from the international trade. International trade has been identified as the engine that will fuel Canada to greater economic prosperity in the future. In fact, over the past two decades, international trade has significantly empowered Canada to step up its economic theory. At 34 million people, the current Canadian population alone is not enough to make substantial changes in the global economy. It is apparently a relatively small consumer market that is much limited to improve the world’s standards of living significantly. It is only through international trade that Canada will positively face the global economic challenges.

As concluded by Zhang et al. (2015), the economic affluence as well as the economic prosperity of Canada is directly attributed to its participation in the international trade. To enjoy its full economic benefits, Canada will participate fully in the international trade. For instance, the international trade will help Canada in enhancing its economic outreach. It will also help Canada ensure enough foreign markets for its export goods. The success of Canada in international trade will result in new and excellent employment opportunities within and beyond its boundaries. In essence, if these efforts are taken seriously then the international trade will afford Canada one of the best and highest standards of living in the entire world.

Following these arguments, it is not an exaggeration to conclude that Canada owes its past, present, as well as the future economy to the international trade. While concluding this research, it is essential to note that Canada, as a country, was established because of international trade. Its past is a true reflective narrative of the significant economic consequences of international trade. Likewise, its future is will be based on its ability to compete successfully in the global economic market. International trade will define the economic appetite of Canada thus leading to greater benefits and prosperity. Lastly, through the international trade, Canada will witness electrifying changes and development in its economy.


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Bento, J. P. C. (2009). Economic integration, international trade and the role of foreign direct investment: The case of Portuguese manufacturing. Berlin: Lit.

Johnson, H. G. (2013). International Trade and Economic Growth (Collected Works of Harry Johnson): Studies in Pure Theory. Routledge.

Lewis, W. A. (2015). The evolution of the international economic order. Princeton University Press.

Rivera-Batiz, L. A., & Oliva, M.-A. (2003). International trade: Theory, strategies, and evidence. Oxford: Oxford Univ. Press.

Sands, G. (2015). New economy jobs and economic health, prosperity in Canada’s mid-size urban areas. Habitat International45, 15-19.

Stanford, J. (2012). A Cure for Dutch Disease: Active Sector Strategies for Canada’s Economy. Canadian Centre for Policy Alternatives.

Zhang, L., Du, Z., Hsiao, C., & Yin, H. (2015). The Macroeconomic Effects of the Canada–US Free Trade Agreement on Canada: A Counterfactual Analysis.The World Economy38(5), 878-892.