International Trade and Multinational Business

Running head: INTERNATIONAL TRADE AND MULTINATIONAL BUSINESS
INTERNATIONAL TRADE AND MULTINATIONAL BUSINESS
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Introduction
The goal of the paper is to find the trade data of a country and then apply several trade
theories to understand the position of the economy in terms of international trade. Canada is a
highly developed economy that ranks tenth in terms of nominal GDP. The main source of
income is generated from the service sectors that employs over three quarters of the economy.
These sectors are effective for the growth of the economy which exports over 40 percent of the
total production. Canada has over 36 million people with a per capita GDP (Gross Domestic
Product) over 43,000 dollars. The economy grows by 0.3 percent each year due to a change in
overall production of goods and services. International trade is very important in Canada as it
provides with several benefits in terms of export and imports, which will be studied in the paper.
Thus, the paper will evaluate the trade structure of Canada and evaluate its effectiveness on the
economy with respect to several trade theories that is effective for operation.
Discussion
Canada is well known for its trade affairs and has relations with 224 countries and
territories. The economy trades more than 5,500 types of products and services. United States is
the major trading partner of Canada. Countries like China, Japan, Mexico, Germany and Taiwan
are the major trading partners of Canada. Canada also trades with countries like Italy, France,
India, Switzerland, Mexico, European Union, Hong Kong and Australia. The main export partner
of Canada are China, Japan, United Kingdom and Taiwan (Hufbauer and Globerman 2018). It
imports goods and services mainly from Germany, Mexico and Japan.
As service, manufacturing and mining are the most effective sectors in Canada. The top
ten exports of Canada are vehicles, mineral fuels, gems, precious metals, wood, machinery and

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computers, plastic and plastic articles. Mineral fuels comprise of 22 percent of the total exports
that brings about 98.4 billion dollars as export earnings, which is the most exported good. The
market for gold and precious metals has advanced at a faster rate in the Canadian economy such
that they are able to bring about huge profits to the Canadian economy. An increase of 16.2
percent was seen in the export market for gems and precious metals. The pharmaceutical market
and the market for ores, slag and ash grew by 7.4 percent and 12.7 percent respectively in 2018
due to availability of natural resources.
Table 1: Goods that are imported to Canada
Source: (as source created by author)
The main exports from Canada are petroleum, natural gas, fishery, transportation,
equipment, wood and paper materials. The ability of an economy to produce more of a good by
using similar or less resources than its competing economies then it is known that the economy
has comparative advantage on the production of such goods. When an economy produces a

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particular good at a lower opportunity and marginal cost, then the economy gains a comparative
advantage (Fuchsová and Baume 2017).
Canada has gained a comparative advantage in production of cell phones and telephones
such that price of cellphones and television is comparatively cheaper in the world market as per
quality. This is because Canadian workers are far more efficient and technologically advanced
that enables them to produce goods using less resources at a faster rate, which has effectively
changed the way goods are produced and served in the economy. Canada has ample amount of
resources that gives them an absolute advantage in mining activities and agricultural production
(Rai 2018). The cost of land is comparatively lower that provides them with an absolute
advantage in production along with the availability of excess resources for agricultural
production. This has effectively led to the development of the service and manufacturing sectors
that has enhanced the performance of the economy.
Table 2: Goods that are mostly traded and produced in Canada
Source: (as created by the author)