A vast amount of natural resources. A love of hockey. A penchant for bacon. And liberal use of the word "eh."

All are associated with Canada, of course. But America's neighbor to the north boasts another fine trait: an efficiently run economy.

You see, although Canada borders the United States, it takes a completely different approach towards economic policy.

That showed strongly just recently when America stoked protectionist fears by slapping stiff duties on tire imports from China. Yet days later, Canada unveiled plans for a significant move in the opposite direction. Canada aims to abolish all remaining tariffs on imported machinery and equipment used by domestic manufacturers, saving Canadian manufacturers C$250-300 million a year.

And while the United States dithers over future trade agreements, Canada has signed eight bilateral deals over the past three years and has plans to start trade talks with the European Union as part of a drive to lower Canadian exporters' dependence on its old trading partner: none other than the U.S.

Here's another example…

Canada Loves China's Money

The Canadian government recognizes the value of money – no matter where it originates.

It's already profiting from China, as the Asian nation is a key supplier of badly needed capital for many of its mining and energy projects. Such investments by state-owned Chinese companies – even in the sensitive energy sector – have created little fuss north of the border, whereas they seem to cause nothing but chaos and Congressional investigation in D.C.

The U.S. could profit from such deals, too… if it would just get its act together.

The Case For Canada

Thanks to its open economic policy and an abundance of natural resources, Canada – rather like Australia – seems to be emerging better from the global downturn. For example…

• Employment and wages rose in both August and September, with the manufacturing and construction sectors leading the way.
• Unemployment, although high at 8.4%, sits notably lower than in the U.S.
• Through a series of tax breaks over the next three years, Canada will achieve the lowest corporate tax rate among leading industrial countries.
• The Central Bank of Canada could raise interest rates from 0.25% without fear of hurting the nation's banks.

In fact, Canadian financial institutions have survived the credit crisis without any infusion of government money, putting them in much better shape than nearly all their American counterparts. Benefiting from their vast and stable domestic retail base, they have limited their exposure to more volatile money markets and securitized funding.

If anything, the biggest problem that five biggest Canadian banks have is what to do with their billions of dollars in excess capital. Built up over the past 18 months, their capital cushion has left them with some of the strongest balance sheets in the world, giving them the opportunity to increase lending and grow their asset base.

So let's look at a couple ways to profit from Canada's success…

Two Ways to Profit From America's Northern Neighbor

There are numerous Canadian stocks that trade on the American exchanges from a wide variety of sectors.

But if you don't want to figure out which individual stocks, you can spray your money around in a more diversified way with an investment in the broad-based iShares MSCI Canada Index (NYSE: EWC). This ETF tracks the price and performance of Canadian shares and is heavily weighted toward three strong Canadian sectors: Financials (36%); Energy (21%); and Materials (21%).

Or if you want to take advantage of the Canadian dollar, which has surged recently, you can go for the ETF here, too – the CurrencyShares Canadian Dollar Trust (NYSE: FXC). With Canada's rich natural resources and its economy having created important separation from the U.S., the Canadian dollar should strengthen further against the U.S. dollar in the years ahead.

Good investing,

Tony Daltorio