The business cycle is a term used to describe the ups and downs of the economy over time. A business cycle consists of a repetition of four phases — expansion, peak, contraction, and trough — that is often called the boom-and-bust cycle. Most often a measure of change in a country’s gross domestic product (GDP), the business cycle is a tool used by investors and business managers to analyze the performance of the economy and to make spending and investment decisions. Though business cycles cannot be predicted, forecasting when an economy will expand or contract and knowing when key turning points have arrived is important for consumers and business. The wave pattern of a business cycle can be measured in length from peak to peak, or trough to trough, in terms of months and years. On average, cycles last just over 7 years, though there is no definitive time frame for how long they usually last.
Banking is a financial process carried out by an institution that accepts deposits, lends money and transfers funds. Canada's major banks play a vital role in the economy and today also engage in the insurance, trust and securities markets. Their business, the technology surrounding it and the regulations that govern it, have evolved continuously over the centuries.
Interest is the price charged to borrow money. Expressed as a rate, interest is a percentage of the amount of money borrowed (the principal amount) that is to be paid for an agreed period of time. Interest can be paid by a borrower to a lender (e.g., to a bank), but it can also be paid by a bank to individuals whose money the bank uses to lend money to other borrowers. In Canada, interest rates are determined by the policy of the Bank of Canada, the demand for loans, the supply of available lending capital, interest rates in the United States, inflation rates and other economic factors. The Bank of Canada helps the Canadian government manage the economy by setting the bank rate and controlling the money supply.
Manufacturing is a critical component of Canada’s economy. The production, sale and distribution of finished products contribute to consumer and labour markets, and secure Canada’s position as an economic leader among developed nations. Major, medium-sized and small manufacturers produce goods used by Canadians and contribute to the revenue gained from the export of goods to other countries. Since the early 2000s, the manufacturing sector in Canada has declined significantly in response to changes in the global economy and fewer regulatory controls over Canadian products (see Free Trade; Globalization). The composition and structure of the Canadian manufacturing industry is transitioning in response to these changes, aiming to produce new goods that are in greater demand.
The distilling industry is that part of the food and beverage industries engaged in clarifying, flavouring, blending and aging alcohol to make potable spirits (eg, brandies, grain spirits, rum) and establishments which manufacture ethyl alcohol, whether they are or are not used in potable spirits.
A recession is a temporary period of time when the overall economy declines; it is an expected part of the business cycle. This period usually includes declines in industrial and agricultural production, trade, incomes, stock markets, consumer spending, and levels of employment. In purely technical terms, a recession occurs when two or more successive quarters (six months) show a drop in real gross domestic product (GDP), i.e., the measure of total economic output in the economy after accounting for inflation. In this sense, recessions are broad and can be particularly painful and challenging times for a country.
BlackBerry Limited (formerly Research In Motion) is a mobile communications company. Founded in 1984 by Mike Lazaridis and Doug Fregin in Waterloo, Ontario, the company released its first device — a pager capable of email — in 1999. Following the release of its first smartphone in 2002, BlackBerrys quickly became must-have pieces of technology, first among business people and later the general public. However, in the early 2010s they struggled to keep pace with the competitive smartphone market. In 2016, the company announced it would outsource all hardware production to other companies, instead focusing on software development. Today, BlackBerry is credited with putting Waterloo on the map as an innovation hub. The business trades under the ticker BB on the Toronto Stock Exchange and BBRY on NASDAQ.
Founded in 1869, the T. Eaton Company Ltd., commonly known as Eaton’s, was an iconic Canadian department store with a retail presence in every province, at its height. From its beginnings as a retail store in Toronto to its eventual bankruptcy and absorption into its long-time rival, Sears Canada, Eaton’s significantly shaped Canadian shopping. The Eaton’s name and legacy persist today, from Toronto’s Eaton Centre to the red bricks incorporated into the facade of Winnipeg’s Bell MTS Place, a reminder of the former Eaton’s store that stood on the site for so long.
Seagram Company Limited, commonly known as Seagram or Seagram’s, was the world’s largest producer and distributor of distilled spirits. Its head offices were in Montréal. While Seagram traced its roots back to a distillery founded in 1857, it was incorporated as a public company in 1928 under the name Distillers Corporation-Seagrams Ltd., a holding company that acquired the capital stocks of Distillers Corporation Ltd. and Joseph E. Seagram & Sons Ltd. It gained notoriety during American prohibition (1920–33), during which time Seagram legally exported spirits directly and circuitously to the United States. The company was majority owned and operated by the Bronfman family; Samuel Bronfman established the company in 1928 and his eldest son, Edgar, took over after his death in 1971. Edgar in turn handed control to his son Edgar Jr. in 1994. The company expanded and diversified a few times, branching from the liquor business to the oil and gas industry in the 1950s and 1960s, the petrochemicals industry in the 1980s, with industry giant DuPont, and the entertainment and communications business in the 1990s, with MCA Inc. and Universal. In 2000, the company was sold to French conglomerate Vivendi, who retained Seagram’s entertainment and communications wing but sold its distilling interests to Pernod Ricard and Diageo.
Founded in 1779, the North West Company was a major force in the fur trade from the 1780s to 1821. Managed primarily by Highland Scots who migrated to Montréal after 1760, or came as Loyalists escaping the American Revolution, it also drew heavily on French-Canadian labour and experience. The name first described Montréal traders who in 1776 pooled resources to reduce competition among themselves and to resist inland advances of the Hudson’s Bay Company.1
The balance of payments, or balance of international payments, is an accounting statement of the economic transactions that have taken place between the residents of one country (including its government) and the residents of other countries during a specified time, usually a year or a quarter.
The General Agreement on Tariffs and Trade (GATT) was an international trade agreement signed by 23 nations, including Canada, in 1947. GATT came into effect on 1 January 1948 and was refined over eight rounds of negotiations, leading to the creation of the World Trade Organization (WTO), which replaced GATT in 1995. GATT was focused on trade in goods and aimed to liberalize trade by reducing tariffs and removing quotas among member countries. Each member of GATT was expected to open its markets equally to other member nations, removing trade discrimination. The agreements negotiated through GATT reduced average tariffs on industrial goods from 40 per cent (1947) to less than 5 per cent (1993). It was an early step towards economic globalization.
E.I. du Pont Canada Company, commonly known as DuPont Canada, is a subsidiary of E.I. du Pont de Nemours and Company, which is headquartered in the United States and known worldwide as the maker of Kevlar, Teflon, Lycra, nylon and cellophane, among many other products. DuPont Canada is headquartered in Mississauga, Ontario. The company has six main product lines, including agricultural, food and personal care products, construction equipment, industrial biotechnology, safety equipment, and polymers and fibres. It is the largest subsidiary of DuPont in the Americas with some $730 million in net sales in 2016.
Manulife Financial Corporation, based in Toronto, is Canada’s largest insurance company and one of the largest in the world. The company’s principal operations are located in Canada, the United States and Asia. Manulife offers life, health and income insurance protection, as well as annuities and wealth and asset management. Founded in 1887, under the name Manufacturers Life Insurance Company Inc., Canada’s first prime minister, Sir John A. MacDonald, was also the company’s first president.
Industrialization is a process of economic and social change. It is one that shifts the centres of economic activity onto the focus of work, wages and incomes. These changes took two forms in Canada, beginning in the 19th century. First, economic and social activities were transformed from agriculture and natural resource extraction to manufacturing and services. Second, economic and social activities shifted from rural cottage industries to urban industrial pursuits. Industrialized production took place under the privately owned factory system, in which a larger proportion of the population expected to be wage earners for all of their working lives. Therefore, industrialization brought major changes, not only in work and the economy, but in the way society was organized and in the relations among different groups in society. Although it has evolved over nearly two centuries, the process of industrialization is considered revolutionary — as the term Industrial Revolution suggests — because it marked the shift from feudalism to capitalism, and from agriculture to manufacturing and services — changes that fundamentally altered human existence.
Canadian Tire Corporation, Ltd., is one of Canada’s most recognized retail franchises. Founded in Toronto by brothers J.W. and A.J. Billes, the company got its start when the brothers bought the Hamilton Tire and Garage in 1922. In 1927, they incorporated the business as the Canadian Tire Corporation. Today the company’s headquarters remain in Toronto, and the business has a store presence in every province and territory except Nunavut. Canadian Tire also owns Mark’s Work Wearhouse and FGL Sports, including the retail companies Sport Chek, Atmosphere and Sports Experts.
The aerospace industry includes the development and production of aircraft, satellites, rockets and their component parts. Aerospace is a major component of Canada's economy, employs tens of thousands of Canadians, and accounts for a large part of Canadian trade with foreign markets. Canada boasts a diverse aerospace sector and is one of just a few countries that produce airplanes. Through close partnership with the United States space agency, the National Aeronautics and Space Administration (NASA), Canada has also launched satellites as well as built sophisticated components used on the International Space Station.
The Automotive Products Trade Agreement of 1965, better known as the Canada-US Auto Pact, led to the integration of the Canadian and US auto industries in a shared North American market. While it brought great benefits to Canada, it was eventually found to be contrary to international trade rules and was cancelled in 2001. By then it had accomplished its biggest goal — an integrated North American industry with a much stronger Canadian presence.
Sun Life Financial, based in Toronto, is one of Canada’s largest insurance companies. It has operations located around the world and offers insurance and other investment products to individuals and corporate clients. Total assets of the company have grown from $74 million in 1915, to $55.8 billion in 2000 and $258 billion in 2016. Its shares trade on the Toronto, New York and Philippines stock markets.