Economists and policy makers often lament that Canada isn’t trading enough with the fastest-growing corners of the world.
Yes, we’re diversifying, just not fast enough.
Canada’s export to emerging economies has grown to roughly 11 per cent from 4 per cent in 2000.
Just imagine what would happen if Canada leveraged the enormous trading potential of the many recent immigrants from fast-growing countries, such as India and China.
Peter Hall, chief economist at Export Development Canada, says this diaspora represents a “hidden gold mine” for the Canadian economy. He says new Canadians have a natural advantage in their home markets because they speak the language, they know the culture and they understand how business works in their home countries.
“Just because ethnic groups haven’t in the past doesn’t mean they won’t,” Mr. Hall argues. “That’s a function of opportunity and the opportunity is definitely there.”
Mr. Hall has done a couple of back-of-the-envelope calculations to illustrate the potential of the diaspora.
First, he added up potential GDP growth by weighting the world’s economies to Canada’s ethnic mix. The result: growth of nearly 3 per cent a year, or 0.8 percentage-points better than the conventional method of calculating potential growth.
Secondly, he reconfigured export growth to match the countries represented in the ethnic makeup of the Canadian population. The result is exports growing at nearly 10 per cent a year, versus the 1.5 per cent growth Canada has experienced since 2002.
Mr. Hall says Canada is already taking many of the policy steps to encourage these trade linkages to form, including pursuing free-trade deals, bilateral tax treaties and foreign investment protection agreements with fast-growing economies.