Macroeconomic course

VIET NAM NATIONAL UNIVERSITY IN HO CHI MINH CITY
University of Natural Science
ITEC
Keuka College
Year 2012
Macroeconomic
Research
The reasons why Canada’s economy develops lower
compare with its potential.
Team: Big Five
Team members:Hứa Bảo Duy
Nguyễn Trần Quấc Anh
Lê Tấn Anh
Phan Tuấn Vũ
Nguyễn Công Duy

Ma c r o e c o n o m i c R e s e a r c h
Page 1
Table of Contents
I. Introduction....................................................................................................................... 2
1. Background ..................................................................................................................... 2
2. Problem Statement .......................................................................................................... 4
3. Scope a Limitation .......................................................................................................... 5
II. Lite rature Review ............................................................................................................. 8
III. Methodology ...................................................................................................................... 9
The immigration effective for economics........................................................................... 9
General view of Immigration.............................................................................................. 9
IV. Analysis ............................................................................................................................ 10
1. Immigrant...................................................................................................................... 10
1.1 General view of Immigration ................................................................................ 10
1.2 The immigration effective for economics ............................................................. 11
1.3 Affect for society .................................................................................................. 13
2. Lack of labor force ........................................................................................................ 15
2.1 Effective by economic downturn .......................................................................... 15
2.2 Labor force in important jobs................................................................................ 16
3. Conclusion .................................................................................................................... 17

Page 2
I. Introduction
1. Background
Canada is in the North of America, it is the second largest country in the world, and is
also a member of the G8 nations. In the past, Canada was a colony of France, after that
Britain defeated France at the Battle of the Plains of Abraham in 1759, and Canada became a
colony of Britain. Therefore, Canada is divided in two areas, one uses French as the main
language, and the others use English. Canada is a strong resource rich country like as wood,
animal, fish, oil, etc. The economic history of Canada was dominated by waterways because
Canada has a lot of rivers and canals. On the other hand, the fur-trade in Canada developed
strongly by significant demand on fur increase, so hunting was a popular industry in that
time. At the moment, Canada is the 9th largest economy, and is one of the richest countries in
the world. Canada’s industry focuses in making energy products and a huge part in services
like as tourism, communication. Most of the businesses are privately owned, although the
government does play a major role in the health-care system and operates many services
including transportation and utility companies. The Canadian economy is diverse and highly
developed. It is very similar to the American economy, even though smaller in size.
Moreover, Canada has a high standard of life that is the main reason attracted a lot of people
in around the world go to there in order to live, or set up their business. According to
Statistics Canada, in 2006, Canada’s population is over 33 million while Canada had more
than 6 million immigrants of total population and a huge numbers of them came from Asia
(from Statistics Canada)1.
1Immigrant population by place of birth, by province and territory (2006 Census) . (2007, 12 11). Retrieved 08
14, 2012, from Statistic Canada: http://www.statcan.gc.ca/tables -tableaux/sum-som/l01/cst01/demo34a-eng.htm

With an abundance of natural resources, Canada has a unique advantage in order to
develop strongly. Energy resources are more than 50 percent of Canada’s total resource
wealth, and the others are timber and mineral resources. Some of the metallic minerals
Canada produces include gold, nickel, uranium, bismuth, zinc, cobalt, and cadmium. Potash,
diamonds, and cement constitute the country’s nonmetallic mineral production. Coal also
forms a substantial portion of Canada’s mineral assets. Therefore, Canada is one of the
world’s few exporters of energy, but their development has been highly controversial due to
the destructive environmental impact of extracting oil from them. On the other hand, Canada
is also strong in service sector. Tourism, financial services, internet, telecommunications, and
aeronautics are on the top of the list of services industry; those services have garnered a
considerable portion of the Foreign Direct Investment that flows into Canada. The U.S is the
Canada’s most important trade partner followed by Japan and the European Union. For
example, Canada exported more than 1,984,000 million dollars from 2006 to 2011, and
average export per year between 200,000 million and 350,000 million dollars. In addition, the
numbers of import of Canada from the U.S is more than 1,592,000 million dollar in the same
years (Imports, exports and trade balance of goods, 2012)2. Clearly, Canada’s growth
Page 3
depends heavily on the economic well-being of the U.S.
2Imports, exports and trade balance of goods. (2012, 05 10). Retrieved 08 14, 2012, from Statistics Canada:
http://www.statcan.gc.ca/tables -tableaux/sum-som/l01/cst01/gblec02a-eng.htm

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2. Problem Statement
Although Canada has a strong economy, but they also has faced with problems impact
in their economic action during many decades until now like as shortage of labor force, old
population, black market, and immigrant. Firstly, shortage of labor force causes inefficiency
in production actions, even though Canada is rich in natural resources. Lack of labor leads
production of manufactories lower followed by amount of products for market and exporting
in decrease. Next, old population is becoming burden of Canada economy. With high average
of age, Canada will face lack of labor be said in above, and they will bear an enormous of
cost for social benefit when the government do not find out other labor resources in order to
replace them yet, while the birth rate does not increase. Thirdly, a big black market also
donates in Canada economic difficulties. The government loss an enormous of income from
tax that causes the government cannot invest in their project in order to develop economy and
the others. Finally, immigrant problem always is interested so much. Immigrant in Canada
increase every years, but that thing is opposite of labor resource, while the labor force still
does not go up. The immigrants have many problems in order to donate in Canada economy
such as lack of enthusiastic, low of skills, or in the age of retirement. Furthermore, crime rate
increases leads to unbelief of foreign investor from other countries. With the reasons above, it
causes a lot of difficulty for Canada development, and Canada’s economy cannot develop
equal their potential.
Object: The reasons causes the Canada’s economy has been developing lower than its
potential, and wealthy of resources.
Research question: How did immigration and lack of labor force make Canada’s
economic development lower than its potential?

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3. Scope a Limitation
In general view, Canada’s economy growth is affected by several factors and stand
out from these factors is the Canada’s population problem, which is the reason why Canada
needs a large amount of labor force to contribute to the country’s economy. Based on the
number of data statistic in 2006, the percent of 0 -14 years group is 17.3 % 3, the 15 – 64
years group is 69% 4, and the 65+ years group is 13.2 3. However, the numbers changed in
2011, 16.3% for the first group 3, 69.3% for the second 3, and 14.4% for the last group 5.
Therefore, we can conclude that the Canada’s labor force is aging. This leads to the opening
Canadian immigration policy. In 2001, there were estimated 738,600 immigrants in
Vancouver 6, which is the highest number in 15 years since 1986. Vancouver’s immigrant
population has increased at a faster speed than British Columbia’s and Canada’s. Which such
a large amount of labor force, Vancouver thought it will help the economy grow more stable
but it was wrong. The marked increase of immigrants not only increases the Vancouver’s
population but also increase the amount of useless people who just came to Vancouver for a
better life. The fact show that even the economy of Vancouver rise but it still not balance
with its population. Despite as one the biggest city of Canada, Vancouver usually faces to the
lack of labor force situation although the immigrants keep moving to Canada and population
keeps rising.
3World Bank. (2012). Population age 0 - 14. Retrieved 8th, August,
2012http://search.worldbank.org/quickview?name=Population ages 0-
14 (% oftotal)&id=SP.POP.0014.TO.ZS&type=Indicators&cube_no=2&qterm=Population ages 0-14 (% of
total)
4World Bank. (2012). Population age 15 - 64. Retrieved 8th, August, 2012
http://data.worldbank.org/indicator/SP.POP.1564.TO.ZS?page=1
5World Bank. (2012). Population age 65 and above. Retrieved 8th, August, 2012
http://search.worldbank.org/quickview?name=Population ages 65 and
above (% oftotal)&id=SP.POP.65UP.TO.ZS&type=Indicators&cube_no=2&qterm=Population ages 0 - 14 (%
of total)
6(n.d.). Recent immigrants in metropolitan areas: Vancouver—a comparative profile based on the 2001 census.
Retrieved 8th, August, 2012 http://www.cic.gc.ca/english/resources/research/cens us2001/vancouver/parta.asp

Most of people in the official labor force are Canadian, even the ratio immigrant move to
Vancouver still high. In fact, less and less people who are not Canadian work for Vancouver.
Natural resources give Canada advantages for economy. Mining, forestry, oil, those energy
resources bring back for Canada a lot of profit for the economy. Only with energy resources
contribute to Canada’s economy about 50% of total resources of Canada, this means they are
potential source of profit. Canada produces over 60 kinds of minerals and metals, most of
them are precious and valuable metals such as diamond, gold, silver, uranium, emerald, zinc,
nickel, cobalt .etc. Coal is also become one part in assets mineral of Canada. 10% is the
amount of forest that Canada accounts of the world. “The total recoverable oil reserves (non–
conventional) are estimated at over 334 billion barrels. According to the U.S. Energy
Information Administration, Canada has enough reserves to last at least 150 years at the
current rate of production”7. Simply, those resources have similarity; they need labor force to
run and to develop. Therefore, we can see how serious the lack of labor force for production
does to Vancouver, a very large country with a lot of resources, which is being waste just
because not enough people to exploiting and manufacturing. Let’s think for a while, the
standard of living and quality of life of Vancouver are high so people expected to have a
longer life - span, longer life cause the aging of population, the aging of population lead to
lack of young labor, which means slower economy growth, and it tend to be solved by the
Canada’s immigration policy. Vancouver (British Columbia) and Montréal (Québec), for
instance, are two area that effected by consequences of the immigration. Foreign people come
and stay there, they live there, work in there but they not contribute for country for two
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simple reason, they are not Canadian and those jobs need well – trained people.
7(n.d.). (2012). Canada: A basket of natural wealth. Retrieved 8th, August, 2012
http://www.thomaswhite.com/explore-the-world/canada.aspx

Most of immigrants move to Vancouver are not helpful for the country because they don’t
apply for Canadian citizenship. They don’t apply for Canadian citizenship so they don’t have
rights and status as a Canadian citizen. Meanwhile, jobs that help for Vancouver’s economy
only allow for Canadian, which mean although the amount of immigrants to Vancouver is
huge, it still nothing as long as they are not Canadian, this is the first case. The second case
is, even though there are people apply for Canadian citizenship, they don’t have enough
training, skill level and ability to do those job; some are too lazy to learn, some are trying to
learn but not enough. High skill occupations required not only well – trained worker but also
the enthusiasm inside these workers, because when they are working for themselves and their
families, they are working their own country, too. Therefore, as I said above, Vancouver’s
economy growth speed is not balanced with the rate of immigration has been and continues to
occur. With the advantage is the possibility of economy development potential, Vancouver
should boost training labor force which is equipped highly and professional skills to worth
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with the large amount of immigrants.

Page 8
II. Literature Review
Concepts
 Economy:
By definition from Oxford Dictionary, Economy is: the state of a country or region in
terms of the production and consumption of goods and services and the supply of money.
Paul Samuelson, who was an American economist who was awarded the Nobel Prize in
Economic Sciences in 1970 for his fundamental contributions to nearly all branches
of economic theory, definite Economy as: “science, that explores how people and society
try to employ rare resources, which have many different uses, in order to produce
different goods and distribute them among people.” (Michael M. Weinstein, 2009)(18).
 Stability:
By definition from MacMillan Dictionary, Stability is: a situation in which things happen
as they should and they are no harmful changes.
 Immigration:
MacMillan Dictionary definite Immigration is: the process in which people enter a
country in order to live there permanently.
 Immigrant:
Based on the definition of Immigration, Immigrant is someone who comes to live in a
country from another country.
 Citizenship:
Definited by MacMillan Dictionary, Citizenship is the legal right to be a citizen of a
particular country.
1:Michael M. Weinstein. (2009). Paul a. Samuelson, economist, dies at 94. Retrieved 8th, August, 2012
http://www.nytimes.com/2009/12/14/business/economy/14samuelson.html?pagewanted=all

Canada’s economy did not
develop as its expectation
Immigrant Lack of labor force
General view
of Immigration
Labor force in
importantjobs
Effective by
economic
downturn
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III. Methodology
The
immigration
effective for
economics
Affect for
society
With a limited of time, we only research in two of many reasons that cause difficult to
develop Canada’s economy including immigrant and lack of labor force.

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IV. Analysis
1. Immigrant
1.1 General view of Immigration
In Canada, the immigration is increasing so much day by day. In Vancouver, over the
period of the 1986 to 2001, the number of the immigration increased 346,700 people (88%)
While the people who born in Canada just increased 229,220 people (24%) mean that if this
pace keep going the immigration will be much more Canada’s popular. The population
increasing of Canada (Vancouver is a main place) was distributed by immigration. In
Vancouver, from 1996 to 2001, that number increased is 38% in 18% of Canada and no areas
in Canada can compare with Vancouver because Vancouver’s number rising of immigration
is the highest.
(Recent Immigrants in Metropolitan Areas: Vancouver—A Comparative Profile Based on the
2001 Census, 2005)9
9(2005). Recent immigrants in metropolitan areas: Vancouver—a comparative profile based on the 2001
census. Retrieved 8th/08/2012http://www.cic.gc.ca/english/resources/research/census2001/vancouver/parta.asp

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1.2 The immigration effective for economics
Quality of immigration employment in Canada
In this part, we will talk about the quantity of immigrant employment in Canada and
compares with born-Canada, and also show the number in 2008 and perform for people who
are in working-age (25-54)
Difficulties for immigration in labor market
This is a real challenge with some immigration that came to Canada in 2001 to 2008.
The different from education system, degree, standard of experience and language barriers
and the most things is some knowledge for the social Canada and labor market of Canada.
The government must give them the subsidies when they wait for work. This number of
unemployment is 6.8%. This was a high number and it is a reason why the GDP of Canada
was affected. If the government can limited the immigration, the Canada’s GDP can be grow
up more and more.
Degree and technical skill
Degree and technical skills of immigrant cannot make the Canada’s companies assure
for their quality. Although the number of university degree of immigration is so impressive
(39.5%) and diploma is (30.2%).They are better number of Canada-born are (41.1% and
24%) (2008).In fact, some companies in Canada still want to rent Canada-born more than
immigrants. Mean that the rate of immigration’s employment is higher day by day. The
number of the high school or less is 30.3%, it leads to Canada must face more problems to
solve: unemployment and the lack of the high technology’s labor force. If they can limit
immigrant so that they can keep some money and use it to invest the education, and good

education will help them train better – qualified people who can teach immigrants knowledge
Page 12
to contribute Canada. The natural resource is use suitable more as well.
Old labor force
The old labor force is in a high rate status. Although the age 45 to 54 decreased from
45.5% to 36.3% but it still a high number and it really become a measure for the government.
The government must spend more time and more money to help them when they resign.
45.5% is high number and imaging when all of them retire and cannot do anything to
contribute the country and Canada must spend some money to pay pension for them.
Moreover, if the immigration decreased the economics of Canada will grow up.

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1.3 Affect for society
Population imbalance
Immigrant can make popular imbalance because when people stay in Canada, they
just want to live in a comfortable life or a city have some natural resources, and that is reason
why Vancouver has a popular imbalance with other place .We can see the table A of the
popular above of the dwelling in counts of Canada in 2006. Toronto is a city which has a
biggest number of the population. Toronto had 2,503,281 people live in 2006 and 2nd is
Montréal city had 1,620,593 people and Ottawa had 812,129. Seeing a medium city is
Hamilton had 504,559 people. We can easy to see the different thing with big cities. It can
lead to the imbalance natural resource and effective environment. The natural resources of
medium and small cities are not exploited and vice versa. Environment in the big city will
affect so much because it has so many people living in there. In that case, some natural
resources can be exploited. However Canada doesn’t have enough labor force to do that.
Canada is wasting to their natural resources.
Financial burden
Immigrants are increasing more and more means that the Canada government must
have some fee in order to take cake them such as education, health care system .Canada has
immigrant more than Canada-born means that their government is takes care the immigrant
more than their real Canadian. The number of old labor force and something about
immigration mention about the financial burden. Canada must spend some money to
something make Canada’s GDP slow down. Canada is wasting too much money for
immigrants. Indeed, GDP may be increase slightly if immigrants decide to contribute effort
for Canada.

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Control their charities
Immigrants come to from other nations in the world and the Canada government
cannot control their education system. They can’t accept immigration certificate for a thief, a
murderer and it may put national security at risk. Illegal immigrants will appear more and
more and will become a warning to Canada’s economic and society. In fact, the crime in
Canada continues to decrease in other years. In 2011, it falls down to 6% than previous years.
Even though Canadian polices reported about 2 million Criminal Code fewer than 2010,
Canadian invests so much money to police and education.
Brain-drain
Some arguments will appear when immigration has a big achievement or a big
distribution for Canada. Because when a nation loses its people by other countries, which
mean that it can lose its power. Lose population is similar to lose the most important resource
nature. According to Statcan.ca, Canada’s immigrants come to from more than 55 nations.
Moreover, Canada must be measured when having a disputation and Canada may lose their
people who were educated, trained, taken cake by Canada government.

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2. Lack of labor force
2.1 Effective by economic downturn
In the economic downturn, it is the time the unemployment rate decreased the most.
In 2009, the number of unemployment is 8.7% which is the highest number from 2007 to
2012. The unemployment rate has been stable decreased until 2012 and it has a signal to
recover. In 2010, the number of unemployment rate is 8% that decreased 0.7% compare with
2009. In 2011, it is a 7.3% which decreased 0.7% compare with 2010. Although
unemployment rate decreased from 2009 to 2010, it did not decrease as much as 2007 and
2008. While from 2009 to 2011, the amount of immigrants increased that means the Canada
government must solve the problem of employment and new immigrants.
(Source: http://www.statcan.gc.ca/daily-quotidien/120810/dq120810a-eng.htm10)
10Statcan. (2012). Labour force survey, july 2012. Retrieved 8th, August, 2012
http://www.statcan.gc.ca/daily-quotidien/120810/dq120810a -eng.htm

Page 16
2.2 Labor force in important jobs
In 2008, Canada-born had a 10.5% and immigration was 9.6% in management
occupation .A number is not high for a important job. Health occupation: Canada-born was
6.8% and immigration was 6.6%. Occupation for government and education just had 10.3%
and 7.2%. The trade, transport had 16.1% and 13.7%. The business finance had 19.5% and
18.3%. The occupation can make GDP of Canada increased so much is natural and applied
scientist just had 6.8% and 6.6 %. We can see a fact; Canada is a country which is natural
resource wealth. However, the occupations which need to exploit is natural resources and
applied scientist had a few people. Immigrants who like to live Canada in order to business
and trade more than contribution and use the natural resources of Canada. They just like
Canada as a market in order to make rich. If Canada limit immigration and invest so much
this occupation, they will receive so much so money from natural resource.
* Natural Resource of Canada.
Natural resource at the moment in Canada is divided into 3 parts: energy, mineral and
timber resources. Energy resource include: oil, gas and coal. We can see they had 3 things is
the most important for energy resource. Mineral resource include:gold-silver, nickel-copper,
copper-zinc, lead-zinc, iron, molybdenum, uranium, potash and diamonds.
It is so various and luxury things. All of thing is use suitable it will bring so much money
back Canada and GDP will increased in glance. Timber reserves include timber stocks that
are physically accessible and available for harvesting. They are 2 things; just have in a dream
of some country.

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3. Conclusion
According to main findings above, the immigration and lack of labor force are main
problems in Canada. The immigrants usually gather in big cities such as Vancouver,
Toronto… so it leads to the uneven population distribution in Canada. Because the
immigrants are so much, it makes society complicated such as different education attainment,
language barriers, religion and personality. On the other hand, it causes financial burden
because Canada government use money to give support to the immigrants about education,
health care and social security, and this makes Canada’s GDP slow down, and government of
Canada also care about that we may lost people who are trained and educated. One more
thing old labor force is still high rate status, so they may lack of labor force. Furthermore,
economic downturn causes high unemployment rate. However, the lack of labor force still
happens because some occupations need human resources to exploit and research such as
energy resources: coal, gas and oil and mineral resources: gold-silver, uranium, diamonds.
Labor force and immigrants have relationship that makes a consequence on economic and
GDP. Because the immigration is so much, it contributes to get unemployment rate.
Meanwhile the necessary occupations to make GDP development are shortage. Therefore, in
order to solve problems above, the Canada government has to limit amount of immigrants
that the unemployment rate decreases and be low costs and invests to training and the others
important industries. To sum up, the Canada government needs to limit immigrants and
invest human resources to exploit and research available abundant resources, Canada’s
economic will develop as best as they expect.

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