A Study of the Economic System of Canada

What is the economic system of Canada? The economy of Canada is based on a mixed economy, that resembles a market economy. The country’s economic system combines elements of a market economy and a planned economy, individuals are free to work, produce, consume, and invest in any way they please.

In Canada, the economy comprises a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of specific goods and services. No country is purely capitalist or purely communist.

What do the freedom indexes tell about the economic system of Canada?

Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Canada is ranked 15th globally and 1st in the Americas indicating that the country has a mostly free economy.

In a similar way, the 2022 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Canada gets a score of 98/100, which qualifies it as free. Canada is a country where the government does not control what people do for political reasons, and people have the freedom to choose (what, how much and how to produce, whether to buy or not, selling price, etc.)

The Link Between Public Sector Employment and the Economic System of Canada

An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Canada, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 21.6% (2021).In the country, the public sector tends to be small and efficient. As result, the number of public sector employees as a percentage of the total workforce is low compared to other countries.

What does the biggest company in Canada say about the country’s economic system?

The biggest company in Canada should also be looked at, as well as whether it is a state-owned or private company. In this case, RBC is a Canadian company categorized as mixed private-public. It is owned by both private and public shareholders and is subject to government regulations.

More: Top 10 Biggest companies by revenue in Canada

The historical factors that have influenced the economic system of Canada

The mixed economy of Canada in the last century was caused by a combination of government intervention, private investment, and free trade. Government intervention allowed for the implementation of policies that promoted economic growth, while private investment created an environment of competition and innovation. Free trade agreements improved the access to global markets, which further stimulated the economy. These factors combined to create the current mixed economy system in Canada.


A Study of the Economic System of Canada


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