Development of Business in Canada - Literature review Example

Business development in Canada Number Due Introduction Landmark changes have occurred within the Canadian economy in the past centuries and the process has been commonly referred as the great transformation. The period was characterized by exponential growth of the economy, increased population, and increase in Canada’s capital stock (Wellstead, 2007). Various factors have immensely contributed to the development of businesses and economy of different countries around the world. These include factors such as the availability of natural resources, government policies, and regulations, role of entrepreneurs and other firms, foreign investment and development and banking among others. This purpose of this paper is to examine the key factor that has contributed to the shaping and development of business in Canada. Natural resources in Canada have played a significant role in the development and expansion of businesses and the overall economy of Canada. In particular, the paper focuses on the role of resources in development of business in Canada. Development of Business in Canada Canada has been considered as a powerhouse for natural resources and they have contributed extensively to the development and growth of businesses and economy of Canada. Since the past decades and centuries, natural resource sectors and related industries have been the driving force of economic growth and progression of businesses in Canada. Natural resource power houses located within the boundaries of Canada also created jobs for past and current generations. The natural resources range from minerals and metals to forestry. Further, the landscape of Canada provided major resources that formed the core foundation for business development due to the sustenance of various economic activities. Examples of natural resources in Canada include minerals, forest and water resources such as iron ore, copper, gold, silver, fish, coal, petroleum, and natural gas (Martin, 2009). Exploitation and subsequent utilization of natural resources in Canada transformed the economic parameters of the country through sustainable development approaches. Canada capitalizes on the occurrence of natural resources that are distributed across the country for economic development and growth. Canadian resources have been the cornerstone of business development and it is anticipated that it will remain the central avenue for the achievement of business prosperity for current and future generations. Resources and Growth of Businesses in Canada It is evident that throughout history, Canada has been endowed with various natural resources such as land, forests, minerals, fossils fuels, and fisheries. Exploitation of the above resources have been fundamental in the successful development of businesses through the provision of strategic raw materials, mineral and energy that are necessary in trade establishment and growth. The relationship between natural resource exploitation in Canada and business development shows a positive correlation where business and economic development depend on the endowment of an economy with natural resources (Taylor & Owram, 1994). Global and regional trade prior to the pre-war period relied majorly on the availability of raw materials, energy, and mineral commodities. Since Canada was capable of providing the above trade necessities through the exploitation and utilization of her natural resources, trade and business opportunities emerged. The availability of natural resources in Canada contributed to both domestic and international business development opportunities. The availability of natural resources in Canada led to the establishment and development of business opportunities hence intensified industrialization. Nearly all emerging and developing economies including Canada depended on the natural resources as the basis for economic growth achievement. Business growth and development in Canada have historically developed through the exploitation of natural resources that were found to be abundant within its boundaries. The transformation of Canada’s land and natural resource endowment into mediums at which they could be used for development process created increased returns and profits in virtually all sectors of the Canadian economy (Whittle, 1997). Canada involvement in the trading of natural resources shaped and led to the development of most businesses. Over the past decades and even now, Canada engaged actively in global and regional natural resource trading. Expansive and huge territories that were rich in natural resources were brought into the mainstream production. Majority of the valuable resources that existed in Canada were exploited and shipped to other distant markets. This is because of the increased demand of raw materials required for industrialization and development in the overseas countries. The exportation of resources such as cod, fur, lumber, pulp and paper, agricultural products and minerals shaped the business and economic history of Canada. The resources were predominantly exported majorly to metropolitan economies located in Europe and United States (Wellstead, 2007). Raw materials or products from natural resources exported accounted as the single source of revenue for Canada and it enabled Canada to become one of the leading trading nations in the world. Moreover, the occurrence of free and open market contributed to the participation of Canada in global natural resource trade. Due to the significant role of natural resources in industrialization process, major economies relied on raw materials from Canada and got involved through policy formulation and directives that encouraged the flow of natural resources. The 19th century period was dominated by free trade and open market approaches that encouraged the export and import of natural resources (Taylor & Owram, 1994). Business developed in Canada because of reliance on Canada in exportation of processed and semi- processed of resources. The exploitation of major staple products for export was fundamental in the determination of the economic path of Canada and the shaping of major business development and ventures. In addition, the presence of natural resources in Canada contributed to the growth of the manufacturing sector, a factor that enabled Canada to the join the league of other industrialized nations. The growth in foreign markets for Canadian staples and improved production in Canada continued to spur economic growth of Canada amidst the worldwide depression that was experienced in the late 1890s (Bliss, 1987). The reliance of Canada in natural resource trading that eventually contributed to business development was linked to the climatic and topographical challenges inherent in the country. Climatic and topographical constraints prevented Canada from engaging in other development processes that were carried out in other countries (Taylor & Owram, 1994). As a result, Canada depended on exports of resources to other countries to meet the needs of its population and economy. The exports earnings of Canada were largely derived from its natural resources contributed to the growth of business by venturing in new frontiers. Export in mineral and energy resources as well as fishery and forest products are considered as the leading source of income and wealth generation for Canada (Bliss, 1987). The vast endowment of crude oil and natural resources in Canada has provided jobs to various people, has therefore contributed, and developed national wealth and trade. The occurrence of fish in Canadian waters attracted Europeans and Indians in Canada and trade in fur between the groups started (Matthews, 1987). Trading in fur was dominant in the mainland of Canada and it formed part of core business engagement in the economy. Trade in timber was also characterized majority of business and economic phenomenon in Canada. Timber trade also resulted in the number of people migrated to Canada, a factor that led to the increase in overall population. The invention of new techniques of making paper from wood rather than from the conventional ways of making paper from rags provided ready market for timber exports. Majority of the ships that ferried timber to distant markets returned with people from other areas that came to seek for employment in Canada. The rapid population growth because of reduced costs of migration was significant in business and economic development in Canada (Wellstead, 2007). Canada provided employment opportunities to most immigrants in other countries in the mining sector, forestry, and industries. This led to increased population in Canada due to the influx of migrants seeking for employment and greener pastures. The growing population led to significant shifts in business and economic strategies. Because of increase in population, the economy of Canada was diversified and different business ventures were opened to cater for the needs of the needs of the already expanding population. Majority of immigrants came to Canada in the early 1900s because of the expanding economy that was fueled by natural resource exploitation (Matthews, 1987). The Indians and French settlers established trading partnership with Canada while British immigrants also established settlement and trading presence within Canada. The rising population coupled with increased incomes resulted in increased demand for an array of consumer products and services. This in turn led to the diversification of the economy as various trade activities, products and services were provided. Increased domestic consumer demands because of expanded population encouraged the setting up and development of manufacturing industries (Whittle, 1997). Investment in social amenities and public infrastructure systems also formed part of the economic uplift strategy. Road and rail transport were expanded so as to improved freight carrying capacity and reduce time of freight movement from one point to another. Because of the improved economic growth and ready market for goods and products, massive investments were directed and dedicated towards the exploitation of resources. These were evident in the construction and development of railways, shipping carriages and storage facilities. Financial establishments and institutions also began to spring up in major metropolitan towns (Matthews, 1987). Availability of exploitable resources in Canada encouraged massive investment opportunities in infrastructure, health, and education were crucial for economic and business progression. Presence of natural resources in Canada further attracted foreign direct investments (FDI). FDI in Canada was evident as various multinational foreign companies started to build new plants, expanded and improved the already existing plants and bought shares in companies that were present in Canada (Martin, 2009). The design of new plants occurred in the petroleum, gas, and mining sectors and resulted in expansion and improvement. These new ventures encouraged business development and influenced subsequent business initiatives and strategies. FDI led to the rapid expansion of the Canadian economy. The multi-national corporations had their roots from United States of America and hence foreign direct investment made America to become part of the Canadian business elite by virtue of owning various natural resource investments (Matthews, 1987). The influx in large number of American firms and corporations in Canada through foreign direct investment was a key business strategy for the firms to take advantage of the expanding market and industrial technology. The prevailing Canadian business laws and policies also encouraged firms from United States to establish their branch manufacturing companies in Canada (Matthews, 1987). Since Canada was the hub of natural resources, United States corporations increased ownership of manufacturing and processing plants in Canada. Foreign direct investment by American firms was concentrated in the resource sector and in particular, the paper mills, and mining companies. The intensive incursion and successive ownership of manufacturing and processing plants in Canada by American led to the emergence of mergers as a new form of business strategy. Merger of multinational firms and local firms also concentrated control and ownership of natural resources in few hands. New economic organizations and re-orientation was evident with entry of larger firms in mainstream business operations. The market shifted from industrial capitalism to corporate capitalism where large multi-organizations began to take charge of business operations in Canada by increasing the size of economic units (Matthews, 1987). Emergence of merger in natural resource exploitation sector also prompted other business investors from other sectors to follow suit. For instance, during the early 20th century, alliances and mergers were formed among various sectors such as between bankers, investment dealers and industrialists (Whittle, 1997). The increased adoption of merger and alliance as the new business strategy further led to the elimination of independent merchant wholesalers and dealers that dominated and controlled business processes in the 19th century. Initially, merchant wholesalers and dealers were responsible for control and distribution of goods and they achieved this through exertion of greater influence on retailers and manufacturing and regulating credit provision. The emergence of large corporations because of mergers and alliances edged out independent merchants and they took the role of resource allocation. Independent merchant wholesalers were also edged out because of increased and stiff competition from the multi-national companies that accessed manufacturers directly (Matthews, 1987). The growth and development of financial institutions like banks and insurance firms in Canada was also connected to the proliferation of international companies into the country through merger and alliance formation. Statistics have revealed that between 1900 and 1929 banks recorded an increase in their asses and majority of smaller and non-performing banks were absorbed by larger banks (Matthews, 1987). Most of the major banks played crucial role in property and resource development strategies. Subsequently, insurance firms also spread their operations across Canada as was evidenced by the presence of various insurance head offices (Martin, 2009). Foreign direct investment and the formation of mergers and alliances due to strategic and availability of natural resources in Canada, contributed to fundamental and structural changes in the Canadian economy. The effects of such structural changes included increased urbanization and growth of metropolitan towns into rich and powerful economies. The inflow of capital from international countries also increased the capital stock of Canada therefore boosting the economy and trade (Wellstead, 2007). Conclusion Canada has been commonly referred to as the storehouse of resources since the past decades. Indeed Canada is endowed with various natural resources such as petroleum, fisheries, forests, and minerals among others and it boasts of a huge territory that is under natural resources. Natural resources have played a significant role in shaping up and development of business and economy of Canada. The export of staples such as pulp and paper, industrial minerals, timber, fur and agricultural products has contributed immensely to the growth of business and trade. It resulted in increased revenue and income, industrial growth and foreign direct investment initiatives. The entry of large multi-national companies in Canada due to the huge potential of natural resources exploitation caused revolution in the Canadian economy through increased capital stock, growth of financial institutions, infrastructure development and increased trading. References Bliss, M. (1987). Northern Enterprise:Five Centuries of Canadian Business. Toronto: McClelland and Stewart. Martin, J. (2009). “Relentless Change: A Casebook for the Study of Canadian Business History”. Toronto : University of Toronto Press. Matthews, G. J. (1987). Historical Atlas of Canada: Addressing the twentieth century, 1891-1961. Toronto: University of Toronto Press. Taylor, M. B., & Owram, D. (1994). Canadian History: Confederation to the present. Toronto: University of Toronto Press. Wellstead, A. (2007). (Post) Staples Economy and the (Post) Staples State in Historical Perspective. Canadian Political Science Review , 1 (1), 8-25. Whittle, J. (1997). Canada Business:The Portable Encyclopedia for Doing Business With Canada. Toronto: World Trade Press. Read More