Stephen Harper may be talking the talk of closer trade ties at the Summit of the Americas in Cartagena, Colombia. But the reality is -- despite decades of scolding -- Canadian businesses are still far more focused on trade with their next-door neighbour than with vast and growing markets like Latin America.
Despite its proximity and potential, just 1.5 per cent of Canadian exports went to South America last year, and the region accounted for 3.4 per cent of imports.
Sluggish diversification worries officials – in a key speech this month, Bank of Canada Governor Mark Carney said Canada's share of world exports has declined since 2000 and been the second worst in the G20.
"The combination of overexposure to the U.S. market and underexposure to faster-growing emerging markets is almost entirely responsible for Canada's further loss in world market share over the last several years," he said.
A case in point: more than half, or 52 per cent of Canadian CEOs, say the U.S. is one of the three most important countries to their business, while just 8 per cent list Brazil, according to a PwC poll in February. And, if a Goldman Sachs projection comes true, Canadian business leaders could be missing a big opportunity: Brazil is expected to become the world's 4th-largest economy by 2050, from 7th place in 2010.
Yet slow change doesn't mean there's been no change at all. While exports to South America are still a tiny part of the total -- they did almost triple between 2002 and 2011. A growing number of businesses listed on the TSX Venture Exchange are doing business in countries such as Brazil.
And, as the accompanying charts show, equity investors are also pouring money into the region.
As hyper-inflation and political turmoil give way to stable governments and sturdy economic growth, one of the biggest challenges of doing business nowadays is global competition.
In fact, as recent headline put it, Canada needs Latin America more than it needs us.