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William Polushin is founding director of the Program for International Competitiveness at the Desautels Faculty of Management, McGill University, and President of AMAXIS, an international business and operational development services firm.



In my last blog, I presented an overview of how exports fit into Canada's overall economy. I am going to start peeling the aggregate figures back to give a better understanding of Canada: The Trading Nation. This week, I will take a closer look at what we export.

From a product perspective, Canada's exports span several industries -- from agriculture and forestry to petroleum and natural gas to transportation equipment to financial services to travel. Not surprisingly, given the economic and industrial make-up of our country, the vast majority (approximately 85 per cent) of what we export are goods. 1

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As highlighted in the following table, the top five exports in 2010 were crude oil, passenger cars, petroleum gases, gold, and personal travel. With the exception of personal travel, which is in deficit territory (thank you snowbirds), these exports are significant net positive contributors to Canada's GDP and are tied to either our primary resources or automotive sectors.





At the industry level, the greatest number of exporting establishments* is in the manufacturing sector (41.0 per cent), followed by wholesale trade (21.7 per cent), and business services (10.1 per cent).**



What is more telling, though, are the underlying trends that are helping to reshape Canada's export picture. An analysis of Canadian exports by industry over the past ten-plus years reveals a number of noteworthy developments:

  • a. While the Mining, Oil and Gas Extraction industry represented only 0.9 per cent, 1.0 per cent, and 1.1 per cent, respectively, of all exporting establishments in 1999, 2004, and 2009, they accounted for 3.0 per cent, 5.9 per cent, and 8.3 per cent, respectively, of the total value of exports for these particular years. A steady rise in commodity prices, coupled with what has been an expanding demand for commodities, particularly in Asia, has helped fuel this trend .
  • b. While the absolute number and percentage of exporting establishments represented by the manufacturing sector has seen moderate decline over the past decade, the value of the exports from this group has decreased at a much faster pace. Contributing to this development: an appreciation of the Canadian dollar of over 60 per cent against the USD since 2002, downward pressure on pricing due to greater international competition, and softer demand in Canada’s primary export market, the United States.
  • c. There has been a consistent and steady rise in both the number of Business Services exporting establishments and the relative value of exports represented by this industry group over the past decade. Given the increasing importance of knowledge-based industries in the global economy and the decrease in the relative contribution of the manufacturing sector to Canada’s economic output, this is a positive development in building a more diversified and value-driven export position.


In my next blog, I will continue to build on my analysis by looking at the geographic distribution of Canada's exports.



* In 2009, the latest year for which this information is available from Statistics Canada, there were 47,637 exporting establishments in Canada.



** Business services includes professional, scientific and technical services; management of companies and enterprises, and administrative and support, waste management and remediation services.



Source

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1 Statistics Canada













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