Question

How about our economies in comparison with the US vs Canada, Do they function in a similar free-economic manner?

Answer 1

Since the early 1990's, most countries across the globe have been trying their best to become free market economies in which the forces of demand and supply decide what goods and services would be produced in the market and the final price for the same. Countries across the globe have realized that to satisfy the needs and wants of the customers in the best manner, it is essential for them to leave government control, tariffs and taxes and to allow companies to grow and prosper.

The United States and Canada have been the pioneers of economic progress in the West. Both these countries are ideal for business as they operate on free market economics wherein most of the industries are free for entry and exit for one and all with no significant trade barriers being present

A large portion of Canadian trade takes place only with the United States and is estimated to be around 80% in value. The United States is the worlds largest economy with a size of about 20 Trillion Dollars, whereas the Canadian economy at present is a little lesser than 2 trillion dollars on its part. The very scale tells us that the United States is much bigger than the Canadian counterpart. Having said that, the debt of Canada is much lesser than that of the United States. While the United States sees the debt at about 118% of the Gross Domestic Product, Canada on the other hand is pegged at around 87% only. Both these countries are similar in terms of the taxes which they charge from corporations as well as individuals.

The only significant difference is that the government of Canada also provides subsidies and incentive to numerous industries which the United States at present does not do. The Canadian economy is based on the service sector and the contribution of the manufacturing sector is relatively lower. The United States on the other hand sees most of its revenue coming from the manufacturing sector.

Thus, we can conclude by saying, that while the United States and Canada both happen to be free market economies in which the forces of demand and supply have continued to grow and provide choices to people over what goods and services they can buy in the markets, the Canadian government provides additional subsidies to numerous industries such as Oil, Farming, Pharmaceutical etc. This differentiates it from the American counterparts which have for a long time decided not to directly interfere in market pricing and demand and supply. Otherwise both economies are the same in terms of freedom of trade and commerce. Both these countries have been part of numerous trade arrangements such as the NAFTA or the newly constructed USMCA which is the US Mexico and Canada trade agreement. This gives them the edge of being free markets without significant market interference by the government.

Please feel free to ask your doubts in the comments section if any.