Final answer:
Canada's competitive position relative to the United States is defined by their role as each other's largest trading partners, Canada's shift towards a knowledge-based economy, and the influence of natural resource industries. Economic fluctuations in Canada are often tied to the comparative strength of the Canadian dollar, and its trade balance with the US reflects its globalization efforts.
Step-by-step explanation:
The discussion of Canada's competitive position relative to the United States focuses on their trade relationship and economic interactions. As the largest trading partners for each other, with more than 80 percent of Canadian exports going to the United States and 70 percent of imports to Canada originating from the United States, the ties between the two economies are significant. The Canadian economy has been transitioning towards a knowledge-based economy, with an emphasis on innovation and technology sectors such as biotechnology and information technology. Nevertheless, the traditional backbone of the Canadian economy has been its rich natural resources, with primary industries including agriculture, fishing, mining, energy, and forestry.
Canada's economic fluctuations are often linked to the strength or weakness of the Canadian dollar against the US dollar. The theory of comparative advantage suggests that economies with stark differences in opportunity costs should trade with each other. Despite this, much of the US trade, around half, occurs with economically similar and geographically close nations such as Canada. Additionally, while the US has largely run trade deficits, Canada has managed a different trade balance, with an account balance that reflects its economic globalization and trade practices.
In comparison to its southern neighbor, Canada's population is substantially smaller, and despite being geographically larger, the majority of its population lives close to the US border. This proximity further solidifies the importance of bilateral trade. Moreover, Canada's democratic state shares a similar developmental history and economic status with the United States, yet it maintains its distinctive competitive position in the global market.