helast two years of the decade it rose with the growth of GDP, whichreached an annual rate of 4% in the first quarter of 2000. The relative decline in the demand for Canada's resources, and the associateddecline in foreign investment and in the value of the Canadian dollar,together will a heavy burden of taxes associated with both cyclical andsystemic fiscal problems, accounted for the decline in average real incomein the 1990s. Attempts to keep the economy expanding by seeking a niche inexternal market for manufactured goods, and by upgrading producitivity inthe new telematic information economy, were successful only at the end ofthe decade. The nineteen nineties were a time of incomplete adjustmentfor Canada. The Main Lines of Historical Development Late Nineteenth and Early Twentieth Century Capital Flows. Throughout the nineteenth century, and into the twentieth Canada had anunfavourable Balance of Trade with the United States. It had a favourablebalance with Britain, but mostly it paid for its excess of imports from theUnited States with capital imports from Britain -- toward the end, mostly to pay for the building of transcontinental railways. The flow of goodsfrom the United States, to Canada, to Britain, to the United States, wasmatched by a flow of money the other way. There was a small, but growingflow of capital from the United States to Canada, but that was equity, rather than portfolio capital. There was no question of the value of theCanadian dollar. The Gold Standard was in effect internationally, and Canada's currency was, by 1913, virtually a gold certificate. This perfect beginning for the century - Canada growing quickly, immigrantspouring in, capital pouring in - was about to change, but not, at first,for the worst. The Great Shift 1910-1930 The First World War hastened the economic reduction of Britain, the decline of the British Empire, and the rise of the United States tothe position of the most industrialized and...
