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Factor Endowment, Comparative Advantage and American Jobs

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Please review the following case study and then assist with the questions below:
Globalization Threatens Canada's Auto Industry: Implications for the Economy and Society
Richard Ivey School of Business
9B06M008

Discussion questions:
If the auto industry were to leave Canada, how seriously would the Canadian economy and society be hurt?

Evaluate the impact of the globalization threat on the CAW's bargaining power.

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https://brainmass.com/economics/economic-history-and-theory/factor-endowment-comparative-advantage-american-jobs-162376

Solution Preview

If the auto industry were to leave Canada, how seriously would the Canadian economy and society be hurt?

If the auto industry were to leave Canada, the Canadian economy would be seriously hurt. The closure of one GM plant meant a job loss for 3,900 persons. In general the automobile industry represents a large share of the Canadian economy. The annual production in 2006 was $109 billion, the auto industry directly employs 149,000 workers and indirectly creates jobs for many more, 20 percent of Canada's exports are accounted for by the automobile industry and 12 percent of Canada's trade surplus is accounted for by the auto industry. In other words, if the auto industry were to leave Canada, the economy of the country would be severely hurt. It would be dented. There would be loss of jobs, there would be a setback to the GDP, a reduction in exports and a reduction in trade surplus.

In 2007 the Canadian national unemployment rates of 5.9% is the lowest in 33 years. The Canadian economy has been growing at a fast pace since 1990. This growth of the Canadian economy will be severely dented if the automobile industry closes down. Canadian economy is unique among the developed countries because it is still based on the manufacturing sector. The manufacturing sector has ...

Solution Summary

Canada's auto industry is among many that has been affected by globalization. This Solution reviews the case study "Globalization Threatens Canada's Auto Industry: Implications for the Economy and Society" and addresses the effects of the auto industry's departure from Canada on its economy and the overall impact globalization has had on the Canadian Auto Workers and their bargaining ability.

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