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UBC Theses and Dissertations

Canada 1980 methodology, trends, and forecast McCombs, Arnold Martin


The basic objective of this thesis is to identify some of the basic trends tending to shape the Canadian economy. The procedure followed was to examine economic theory and previous forecasting studies to determine methodological principles and apply these principles to estimate the possible future course of the Canadian economy between 1965 and 1980. No comprehensive economic theory appears to be presently developed to explain and therefore to form a complete basis for predicting the economic growth of a nation. In an effort to make economic theory manageable, many variables affecting economic growth and development such as those of sociology tend to be ignored in quantitative terms. Together with these unquantifiable variables, it is not known how many non-economic factors affect economic growth. It would seem to be these many unknown factors that tend to cause errors in the results of long range economic forecasts. Economic growth, defined as the expansion of a nation's capacity to produce, in an already advanced industrial economy, is heavily dependent on the quantity and quality of the nation's labour force, natural resources, real capital, and the technological level in the society. These basic determinants are tempered by the sociological, institutional, and consumption trends or factors within the economy. Although many articles have been written on various aspects of economic growth, the present state of knowledge does not appear to be appreciably past the theorizing stage. As no complete theory of economic growth and development appears to exist, the long range economic forecaster may gain some insights from economic theory but depend very much on his own resources to make various forecasts. The most common method to determine output appears to necessitate a population forecast from which a labour force estimate is made and then with assumptions regarding per-man productivity, an estimate for total output can be made. Sophisticated population and labour force forecasts tend to divide the population into age and sex specific cohorts and then analyze the trends within each of these cohorts. The methodology used in this thesis was based on broad estimates for various trends per thousand population. Due mainly to an expected high birth rate in Canada, the population is anticipated to increase at about 3.8 percent per year to about 25,800,000 by 1980. Of this figure, about 10,000,000 are expected to make up the labour force. The two significant trends expected in the labour force are a large influx of young people and a greater participation of women in the labour force. In this thesis, the total output was separated into agriculture, government and public administration, and commercial non-agricultural sectors. This enabled the analysis of the trends in the work force, productivity, and output in each sector to be examined. The significant trends in output expected are an increase in per-man productivity, but a declining labour force in agriculture, a rather constant productivity per man, but an increase in the total labour force in the government and public administration sector, and an increase in both the labour force and productivity per-man in the commercial non-agricultural sector. The real increase in output of the combined sectors is estimated to approximate 4.6 percent per year between 1965 and 1980 for the Canadian economy. With the total output estimated, an estimate was made as to the division of the output between capital accumulation, government expenditures, consumer expenditures, imports and exports. It was found that the division of the output between these broad sectors tended to be rather stable in relation to the gross national product. Because of this stability, future estimates for the broad categorical spending were based mainly on simple trend projections. From the historical spending patterns, it would appear difficult to justify any drastic changes in the basic spending patterns.

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