International Trade and Canadian Businesses
A trading nation is essentially a nation in which international trade constitutes a high percentage of its gross domestic product. Unlike a manufacturing-based economy, which relies on manufactured goods to create jobs and maintain growth, trading nations, such as the United States, depend on exports to support economic activity and generate revenue. When a nation manufactures a product to sell, it sends its workers off to work and produces the item in large quantities, allowing it to be sold internationally. A nation that exports its manufactured goods relies on exporting those products, which often require a tremendous amount of resources in terms of raw materials and labor to produce and facilitate the export process.
For many companies, the key to growing and maintaining a successful business model lies in using other countries’ products and capital to expand and grow their business. China is an excellent example of a trading nation. Although the United States has had an trade deficit with China for decades, China has been one of the fastest growing foreign investors in the United States since the early 1990s. Companies like Cisco, Microsoft, Apple, Wells Fargo, JP Morgan Chase and Morgan Stanley have all had major operations in China in recent years. Given this backdrop, it should not be surprising that many companies are investing in Canada to expand into new markets.
In addition to expanding into new markets through increased exports of goods and services, trading nations such as Canada become a source ofsource development. By allowing international trade to flow through the country, Canada becomes a low-cost provider of goods and services that other countries, such as the United States, can purchase quickly and affordably. With this strategy in place, Canada becomes a key player in the global economy, drawing its residents and business associates across international borders and allowing Canada’s prosperity and security to expand outward.