Question

1. China has had real GDP per capita growth rates as high as 8% for much of the past 30 years, while Canada’s growth rates are much lower. Is 8% a realistic growth target for Canada? In a few sentences, explain why or why not, using concepts discussed in class.

Answer 1

Real GDP growth refers to the trend of growth in economic activity level in a period following inflation adjustment. Over the last three decades, China has been one of the fastest rising economies. This rapid growth rate is powered by

1. Manufacturing driven export

2. High rate of household savings

3. Massive FDI inflow

4. Abundant cheap labor supply

5. The profit of post-cold war globalization surge.

If, however, we equate Canada with China, we are hopeful that Canada can also be as

1. It has one of the world's largest natural resources with energy superpower potential.

2. This is well above the OECD average per capita income and therefore is a ready market for consumer goods and services.

3. It is one of the least affected countries by the threat of corruption and gives its people economic freedom.

4. It has the necessary technology to catalyze economic growth. Whereas, Canada needs both foreign investment and expertise across the globe in order to realize its true potential. It must boost its industry and concentrate on export-oriented manufacturing in order to fill the space created by the Chinese economy's recent slowdown