FROM its beginnings the Canadian economy has developed as world markets needed Canadian products and as improved techniques of exploration, production and transportation made possible the conquest of various stubborn obstacles. It has developed at very uneven rates. There have been short periods of rapid progress, succeeded by frustration and painful readjustment. There have been periods of waiting for scientific knowledge to progress and for markets to expand or open as transportation costs were cut or competitive sources dried up. Other conditioning factors were the exacting climate of northern latitudes and the high cost of rearing an economic and social structure on the basis of a sparse population unevenly spread over great land masses.
Political forces also helped shape the Canadian economy. Under a different political history the regions of Canada might have been simply the extended northern frontiers of the United States. But the presence of the French-speaking population and the United Empire Loyalists, the intermittent encouragement of British imperialist policy and the lack of interest shown by the United States all but forced Canada into developing an independent economy. Not until the beginning of the twentieth century, however, did it begin to show promise of vigorous survival.
Up to the time of World War II, the Canadian economy was to a peculiar degree dominated by bulk exports of food and lightly processed materials--pulp and paper, wheat, nonferrous metals. Lumber, fish and some other exports were less important nationally but had great regional importance. A significant export of manufactures in automobiles, electrical equipment, rubber and other products went primarily to Commonwealth countries where they enjoyed the advantage of preferential tariffs. A number of United States firms found it profitable to concentrate their manufacture of exports to the Commonwealth in Canadian branches or affiliates. There also was a considerable production of manufactures for the home market, protected by tariff and other devices but subject to competition over the tariff with products of the United States, the United Kingdom and other countries.
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