In Canada the economy is growing thanks to immigration
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by Donald Delaney
in Economy, News
In contrast to almost all major developed countries, but there are some "but"
In 2019, Canada's economy grew by about 1.7 percent: a respectable result, given the general slowdown that affected almost all major developed countries, in addition to China and India. France and Germany, for example, grew by around 0.8 and 0.4 per cent, Italy only by 0.3. But the source of much of this growth is even more unusual: in fact, economists have discovered that the Canadian economy grew in 2019 mainly thanks to immigration.
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To grow GDP – an approximate measure of all the goods and services that are produced in a country over the course of a year – there are essentially two ways.
The first is to increase the machinery with which it is produced and introduce new production processes: in other words, you can "do better" than you did before, introducing material or immaterial innovations into the system. The latter is a "qualitative" increase, but an economy can also grow for "quantitative" reasons: for example because new lands are being cultivated, or because more and more people start working. Indeed, more people who produce generally equate to more things produced and therefore to a growing economy. The more people at work there are in a country the more people are able to buy houses, cars, restaurant dinners, baby strollers and running shoes.
What happened in Canada in 2019, and that has been happening in the country for several years, is that the economy grows mainly thanks to the second factor: the population increase.
The labor force, that is, the amount of working-age Canadians, grew in 2019 by 2 percent, he told the Wall Street Journal . This increase is largely due to the growth of the Canadian population, which in turn is 80% the result of immigration.
Canada has long been considered one of the most open to immigration countries and its integration system is among the most efficient and resourceful in the world, while multiculturalism is included as a fundamental value for the nation in section 27 of its Constitution. The result is a constant influx of new immigrants, a phenomenon that has reversed the demographic decline and aging of the population afflicting most of the more developed countries.
Since the 2000s, for example, the Canadian population has started to grow by 1 percent annually and in recent times this growth has accelerated. In 2016, the liberal government led by Justin Trudeau lowered immigration limits and population growth rose to 1.4 percent in 2018, the highest level among all G7 countries. There is no data yet for 2019, but according to the Wall Street Journal the increase should have been even more substantial.
Canada has a population of 38 million people and in 2019 welcomed 340 thousand new residents, a growing number compared to 270 thousand in 2015. It also granted 810 permits for international students and temporary workers, compared to 470 granted in 2015. According to David Rosenberg, an economist from a Toronto research center interviewed by the Wall Street Journal, "without the immigration boom, the Canadian economy would be lost right now."
Canadian economic growth due to immigration however has some obvious limitations.
The first is that it is an "extensive" growth, a growth that derives above all from the increase in production factors, in this case the number of workers, and only secondarily from technological innovations or from the investment of new capital. This means that, potentially, the economy could grow but without making big life improvements for Canadians. In fact, if the population increased by 2 percent, and the GDP grew by the same figure, the result would be a bigger cake but divided by a greater number of people, with little benefit for each.
Canada, however, does not seem to have reached this point. The economy is growing slightly faster than the population, while welfare indicators, such as average wages and the poverty rate, continue to show improvements after they deteriorated significantly between the 1970s and early 2000s.
The other limitation of this growth is its replicability. Canada is in fact a unique country for many reasons: it is huge and very sparsely populated (it has a density of just 3.9 inhabitants per square kilometer against the two hundred of our country), and this means that new arrivals have a large territory that they can exploit. It is also rich in raw materials, especially gas and oil, and a large part of its economy (including that fueled by new migrants) is based on the construction of oil pipelines and on the maintenance of large refineries, which in turn cause many conflicts with the part of the population most sensitive to environmental issues.
The isolation of Canada, which borders only with the United States and the ocean, is also equally important.
Canada can afford to select a large part of immigrants based on the economic interests of its businesses and has never had to face sudden migration crises as seen in Europe, for example, when hundreds of thousands of people, often fleeing the war, arrive suddenly at the borders.
All these peculiar factors have contributed to keeping immigration away from the center of the political debate.
Up to now, reception has never become a topic of confrontation as it has been in Italy or in the nearby United States. In Canada there are no populist or radical right-wing parties that use immigration as an argument to attack the governments in office, which have never had the need to limit access to the country to avoid losing consensus. It is this "political" possibility that up to now has made it possible to keep the country's doors "open" and, consequently, to continue to grow the local economy.
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