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.
As global events of the past few weeks have shown beyond any reasonable doubt, whether we like it or not, our economic well-being is inextricably tied to economic and political happenings beyond our expansive borders. It's important to take a step back and re-examine Canada's position in the global economy.
As a mid-size economy, with a relatively small population and domestic market, this comes as no surprise. From the perspective of a trading nation, it is not a question of whether or not we export, import, or invest abroad, it is really a question of what, where, and how much?
On the export front, Canada sold $478.1-billion worth of goods and services abroad in 2010. This is up from $439.5-billion in 2009, but down from a peak of $563.1-billion in 2008. Among our G7 peers, Canada is second only to Germany in total exports as a percentage of GDP.
Since hitting a high of 45.6 per cent in 2000, though, exports as a percentage of GDP has been on a downward trajectory. In 2010, the figure was 29.4 per cent (up slightly from a recessionary low of 28.7 per cent in 2009).
While Canada's exports are forecasted to return to prerecession levels next year (largely on the back of high commodity prices), I don't expect to see a comparable jump in the number of Canadian enterprises participating in this rebound -- reflecting the modest number of Canadian enterprises that export and the degree to which our exports are concentrated in a relatively small number of firms.
Again, this is the difference between Canada: The Trading Nation and Canada: A Nation of Traders. It's not that we're not active in international trade and investment. We are. It's a case of depth, breadth and value, and in an increasingly competitive and integrated global economy, the spoils are going to those that know how to best leverage trade to realize sustainable and profitable growth.
In my next blog, I will build on Canada's export picture by taking a look at our product and services mix and geographic focus.