ECON 101: Comparative Economic Analysis of Canada and Mexico

This report provides a comprehensive comparison of the economies of Canada and Mexico. It begins by establishing that Canada is richer, citing its larger land area and various economic indicators. The report details key economic factors such as land size, production levels of consumer goods, technological advancement, labor force, and population size, highlighting how these factors contribute to a country's richness and GDP. It then delves into the reasons behind Canada's economic superiority, including good governance, favorable investment climate, and higher GDP and per capita income compared to Mexico. The analysis also considers demographic factors, such as population size and dependency ratios. Furthermore, the report includes a Production Possibility Frontier (PPF) reflection for both countries, illustrating the differences in their use of labor and capital. It concludes that Canada employs more capital than labor, while Mexico employs more labor than capital, reflecting their respective economic strengths and challenges. The report utilizes references to support its claims and offers a thorough economic analysis.

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Comparison between Canada and Mexico in terms of Riches
1. Canada is richer than Mexico. This is because Canada portrays more economical
features that differentiate it from Mexico. It is believed that Canada is the second largest world in
terms of land area (9.2 mill sq. Km). Its land area is divided into five natural regions; maritime
province, the Canadian Shield, pacific coast, among others. Mexico is found in the portion of
North America (Maclean's, 2015). It also situated with the land size of 1.973 million square
kilometers. This implies that Canada is over five times larger than Mexico.
2.The economic indicators which determine the richness of the country are; the level of
machinery and technology, level of production of food, clothing and some other basic needs, the
level of labor force in the economy, capital accumulation among other factors. These economical
are explained as follows;
Land size of the country; the land size of the country determines the richness of the
economy; this is because there is a room for individual entrepreneurs to carry out their
productive investments such as agriculture, mining among others. And for this case, Canada is
five times larger than Mexico. This implies that Canada has got more chances of being endowed
with natural resources compared to counterpart.
Furthermore, when the production level of consumer goods such as clothing, food,
among others is high in the country. Existence of consumer goods increase on the choices among
the citizens of the country thus improving on standards of living and GDP. This helps to increase
the Growth domestic product of the country (GPD). It is believed that when the GDP of the
country is high, there exists smooth running of economic activities. In this case, the GDP for

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Canada in 2018 was $20.5 trillion compared to that of Mexico thus giving the clear basement of
which country is richer than the other.
In addition, a high level of machinery and technology advancement determines the level
of richness a county owes. The increase machinery and technology advancement enhances the
production levels thus increasing on the choice among the people in the nation.
Furthermore, labor force of the country also determines the richness of the country. It is
evident that the country with many employed people has got a high level of production thus
increasing the goods and services in the country. This increases people’s standards of living
through consumption and saving benefits. Also, the population size of the country determines its
richness. The population of Mexico is 4 times more than that of Canada(Maclean's, 2015). But
unfortunately, its GDP per-capita is lower than that of Canada with the lowest population.
3. The reasons for Canada being richer than Mexico are:
Politically, Canada has outstanding good governance. The police force in Canada is not
harsh as such. The investment climate for foreign and local investors within Canada is favoring
and this highly boosts growth and development thus curbing poverty. On the other hand, the
government of Mexico has unfavorable terms and conditions to entice visitors and other foreign
countries (Vita, 2019). Tourists and investors find it difficult to dwell into the country. The level
of corruption in Mexico is rampant too and so planning for the people becomes hard due to
inadequate funds to set up public resources. It is estimated that annually, corruption sets the
country to a loss of 2% to 10% of her Gross Domestic Product.
Economically, the Gross Domestic Product and per capita income of Canada is much
higher than that of Mexico. Canada competes with United States of America in terms of

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economic development and so its ranked among the 10 richest countries. Also, the production of
high quality products that are required on the world market bring in foreign exchange to the
country that contributes to the country’s revenue and thus development of its resources say
construction of roads, provision of free services to the citizens among others while Mexico
produces majorly light goods that brings in less revenue. This makes Canada richer than Mexico
in an economic sense.
Demographically, the population of Canada is less than the population of Mexico. This
explains why Canada is richer than Mexico because Canada has few dependents who are able to
afford all their social and basic needs plus their families well as in Mexico, the level of
dependence is too high (Vita, 2019). This limits the amount of land available to practice
agriculture and grow food for consumption and thus resort to buying food
4. The PPF Reflection of Canada and Mexico Using labor force and Capital units
Figure1: PPF about Canada’s reflection
Figure2: PPF about Mexico’s reflection

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5. Canada has got more levels of capital than labor force. This is because Canada
employs more capital than labor force as seen from its PPF’s reflection. Canada’s population is
relatively low although much of it is employed well as its rate of investment is higher implying
that the country lies on point A where the rate of capital is high and that of labor is low. On the
other hand, Mexico employs more labor than capital as shown by PPF KL in (4) above. The
reason is because the population of Mexico is high and therefore more labor force is employed
although many Mexicans are unemployed well as her capital investment is relatively low as
presented at point B in the figure 2. It is therefore revealed that Canada’s production possibility
frontier is bigger than that of Mexico.

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References
Maclean's. (2015).99 reasons why it’s better to be Canadian. The results of our sixth Canada Day
survey. Retrieved from: https://www.macleans.ca/news/canada/99-reasons-why-its-
better- to-be-canadian/
Vita, S. (2019).4 Economic Challenges Mexico Faces. Retrieved from:
https://www.investopedia.com/articles/investing/011416/4-economic-challenges-mexico-
faces-2016.asp