New Horizons in International Business series
Edited by Lorraine Eden and Wendy Dobson
Chapter 14: Policy Roundtable: Life as Neighbor to an Economic Giant – Issues and Options
Wendy Dobson, Grant L. Reuber and Andrei Sulzenko This chapter consists of three papers presented at a roundtable on Canada’s priorities. While they deal with Canada, at the same time they illustrate some of the issues that other neighbors to the world’s large emerging economies can expect to face in future. The challenge that smaller neighbors face is to identify and pursue their own economic objectives in a turbulent and uncertain economic environment. The papers bring out three general objectives: (1) management of the bilateral trade and investment relationship to ensure market access for the smaller partner; (2) diversiﬁcation of trade and investment relationships globally to reduce bilateral economic dependence; and (3) domestic economic policy frameworks to take advantage of opportunities in the changing world economy. Canada has successfully achieved the ﬁrst objective. Management of what is still the world’s largest bilateral trade relationship has been successful overall, despite periodic trade disputes and emerging tensions over tighter US security restrictions. But Canadians have become increasingly dependent on the US market despite historical attempts to overcome this magnetic eﬀect. The emergence of other economic giants may provide some oﬀset, but this remains to be seen. Underpinning success in both objectives will be progress on the third: achieving a better productivity performance and greater ﬂexibility in the domestic economy. While Canada has established a prudent macroeconomic policy framework, the same cannot be said of microeconomic policies where, as the papers point out, much remains to be done to establish...
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