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  • Articles and reports: 11F0027M2008055
    Geography: Canada
    Description:

    This paper has three main objectives. First, it presents the long-term trends in outsourcing and offshoring across Canadian industries. Second, it examines the relationship between offshoring and changes in trade patterns at the industry level. It focuses on two major drivers that some have suggested are behind the recent trends toward offshoring: globalization and technological changes associated with information and communications technologies. Third, the paper examines the economic impact of offshoring by investigating the relationship between the extent of offshoring and productivity growth, shifts to high value-added activities and changes in labour markets.

    Release date: 2008-05-23

  • Articles and reports: 11F0027M2008054
    Geography: Canada
    Description:

    The paper investigates how Canadian manufacturing plants adjust to an increase in low-wage import competition by changing their commodity portfolios. At the commodity level, we distinguish between 'core' versus 'peripheral' and differentiated versus homogeneous commodities. We also account for cost and technological complementarities using input-output linkages between commodities produced by a plant. We document large commodity turnover within plants over the period from 1988 to 1996. The largest changes happened in multi-commodity plants and involved peripheral commodities. The commodities that were affected the most were those commodities that are potentially used as inputs in production of the 'core' commodity; homogeneous (rather than differentiated) commodities; and, commodities with relatively weak input complementarities with the core product. Plants experiencing large import competition shifted their output toward production of their core commodity and away from production of unrelated peripheral commodities.

    Release date: 2008-05-16

  • Articles and reports: 11F0027M2008052
    Geography: Canada
    Description:

    Over the past three decades, tariff barriers have fallen significantly, leading to an increasing integration of Canadian manufactures into world markets and especially the U.S. market. Much attention has been paid to the effects of this shift at the national scale, while little attention has been given to whether these effects vary across regions. In a country that spans a continent, there is ample reason to believe that the effects of trade will vary across regions. In particular, location has a significant effect on the size of markets available to firms, and this may impact the extent to which firms reorganize their production in response to falling trade barriers. Utilizing a longitudinal microdata file of manufacturing plants (1974 to 1999), this study tests the effect of higher levels of trade across regions on the organization of production within plants. The study finds that higher levels of export intensity (exports as a share of output) across regions are positively associated with longer production runs, larger plants and product specialization within plants. These effects are strongest in Ontario and Quebec, provinces that are best situated with respect to the U.S. market.

    Release date: 2008-05-09

  • Articles and reports: 11F0027M2008051
    Geography: Canada
    Description:

    This paper investigates the productivity effects of the Canada-United States Free Trade Agreement (FTA) on Canadian manufacturing. It finds that Canadian tariff cuts increased exit rates among moderately productive non-exporting plants. This led to the reallocation of market share toward highly productive plants, which helps explain why aggregate productivity gains were observed when Canadian tariffs were reduced. The paper also finds that all of the within-plant productivity gains resulting from the U.S. tariff cuts involved exporters and, especially, new entrants into the export market. It demonstrates that any lack of output responses and labour-shedding as a consequence of the FTA were experienced by Canadian plants who were non-exporters, while exporters captured the gains from the FTA.

    Release date: 2008-05-07

  • Articles and reports: 11-010-X200800110510
    Geography: Canada
    Description:

    This paper empirically illustrates the impact of ongoing changes to Canada's terms of trade. It provides a discussion of how the terms of trade are measured and how to interpret terms of trade shifts. Examples of two major factors affecting Canada's terms of trade are provided, followed by an empirical analysis of how the terms of trade improvements that began in early 2003 have affected consumption, investment and import activity. The paper concludes by illustrating why final domestic demand growth has outpaced real GDP growth since 2003.

    Release date: 2008-01-17

  • Articles and reports: 11-624-M2008018
    Geography: Canada
    Description:

    This paper empirically illustrates the impact of ongoing changes to Canada's terms of trade. It provides a discussion of how the terms of trade are measured and how to interpret terms of trade shifts. Examples of two major factors affecting Canada's terms of trade are provided, followed by an empirical analysis of how the terms of trade improvements that began in early 2003 have affected consumption, investment and import activity. The paper concludes by illustrating why final domestic demand growth has outpaced real GDP growth since 2003.

    Release date: 2008-01-17

  • Articles and reports: 11F0027M2007048
    Geography: Canada
    Description:

    Evaluations of an economy's economic performance are often made using a measure of real gross domestic product (GDP) per capita, which represents the average remuneration (labour income plus capital services) that an economy generates through domestic production.

    Because real GDP is a constant dollar measure of the remuneration to capital and labour in an economy, it does not account for who owns the capital, how much of it is used up through production or how relative price shifts affect the volume of goods and services that can be purchased.

    Modifications can be made to traditional estimates of GDP to account for these factors. This paper examines the performance of the Canadian economy using alternate measures' gross domestic income, gross national income and net national income. The paper also examines the relative performance of the Canadian and U.S. economies using standard GDP measures and these alternate measures.

    The comparison spans the period from 1980 to 2006, but focuses on the 2002-to-2006 period. During these latter years, changes in commodity prices, manufactured goods prices, the exchange rate, international investment income and capital consumption have all contributed importantly to real income growth in Canada.

    As a result, a very different picture of relative performance of the Canadian and U.S. economies emerges when an aggregate income measure is used that accounts for relative price changes, international income flows and capital consumption than when real GDP is used. From 2002 to 2006, U.S. real GDP per capita grew 9.3% while Canadian GDP per capita rose 7.0%, making it appear that the U.S. economy was outperforming the Canadian economy. However, once changes in resource prices and the exchange rate, international investment income and capital consumption are taken into account, real income per capita in the United States increased by 8.6%, which is similar to its GDP per capita growth. However, the Canadian adjusted measure of real income per capita growth rose 15.6%, more than twice the per capita real GDP growth in Canada and nearly double the U.S. rate.

    In contrast, the difference between the two economies was exactly the opposite in the period from 1980 to 2000 when commodity prices were falling, when the exchange rate was not appreciating and when outward flows of income to foreigners were increasing relative to the income paid to Canadians. During this period, when consideration is given to these factors, real income measures in Canada were falling relative to those in the United States.

    Release date: 2007-11-22

  • Articles and reports: 11-010-X200700810305
    Geography: Canada
    Description:

    The restructuring of the economy since 2003 has been driven by the surge in commodity prices resulting from the integration of China into the world economy. Labour and capital have shifted to the resource sector, notably in western Canada. Despite the rising exchange rate and lower prices manufacturers overall have maintained output while cutting jobs.

    Release date: 2007-08-16

  • Articles and reports: 11-624-M2007017
    Geography: Canada
    Description:

    This paper empirically investigates how the Canadian economy has evolved following the rise in commodity prices and appreciation of the Canadian dollar that began in 2003. The adjustment in the manufacturing industry has garnered the greatest attention because it has borne the brunt of job losses. However, the adjustment of the manufacturing industry has not been straightforward. Rather, a complex reallocation has been taking place within manufacturing that has been predominantly due to the integration of emerging nations into the global economy. The increased commodity prices and falling manufactured prices caused by this integration have affected durable and non-durable manufacturing industries differently. Non-durable manufacturers have tended to see their competitiveness eroded and their output has tended to fall. Durable manufacturers, on the other hand, have increased output in response to the resource boom and increased demand in general. The result has been stable manufacturing output overall, accompanied by a re-orientation of manufacturing output away from non-durables and toward durables.

    The appreciated dollar and higher commodity prices have also led to a more widespread industrial reallocation in Canada. The higher commodity prices have started a resource boom, particularly in Alberta. The boom has led to rising resource industry employment, while manufacturing employment declined, and to rising service-sector employment. It has contributed to inter-provincial migration, and has greatly increased the purchasing power of Canadian incomes as terms of trade have improved.

    Release date: 2007-08-16

  • Articles and reports: 11F0027M2006039
    Geography: Canada
    Description:

    This paper relates to two understudied, but increasingly important concerns: the measurement of regional integration, and the regional benefits to North American economic integration. The objective is to measure Canada's regional integration in manufacturing industries with that of the United States, and examine the regional impact of growing trade integration on productivity growth and select other economic performance variables.

    Our research shows that Canada and each of its regions are becoming more integrated in trade in manufactures with the United States, but Ontario is much more integrated than the rest of Canada. While all regions have benefited through improved productivity performance, higher wages and higher output growth, Ontario has been the principal beneficiary. No evidence was found that increased trade integration in manufactures with the United States caused anything more than short-run adjustment losses in employment. Canada and each of its regions have expanded their share of North American manufacturing which stands in sharp contrast to the supposition that it would be the United States that would experience a growth in North American production share (Krugman, 1980).

    Release date: 2006-05-31
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  • Articles and reports: 11F0027M2008055
    Geography: Canada
    Description:

    This paper has three main objectives. First, it presents the long-term trends in outsourcing and offshoring across Canadian industries. Second, it examines the relationship between offshoring and changes in trade patterns at the industry level. It focuses on two major drivers that some have suggested are behind the recent trends toward offshoring: globalization and technological changes associated with information and communications technologies. Third, the paper examines the economic impact of offshoring by investigating the relationship between the extent of offshoring and productivity growth, shifts to high value-added activities and changes in labour markets.

    Release date: 2008-05-23

  • Articles and reports: 11F0027M2008054
    Geography: Canada
    Description:

    The paper investigates how Canadian manufacturing plants adjust to an increase in low-wage import competition by changing their commodity portfolios. At the commodity level, we distinguish between 'core' versus 'peripheral' and differentiated versus homogeneous commodities. We also account for cost and technological complementarities using input-output linkages between commodities produced by a plant. We document large commodity turnover within plants over the period from 1988 to 1996. The largest changes happened in multi-commodity plants and involved peripheral commodities. The commodities that were affected the most were those commodities that are potentially used as inputs in production of the 'core' commodity; homogeneous (rather than differentiated) commodities; and, commodities with relatively weak input complementarities with the core product. Plants experiencing large import competition shifted their output toward production of their core commodity and away from production of unrelated peripheral commodities.

    Release date: 2008-05-16

  • Articles and reports: 11F0027M2008052
    Geography: Canada
    Description:

    Over the past three decades, tariff barriers have fallen significantly, leading to an increasing integration of Canadian manufactures into world markets and especially the U.S. market. Much attention has been paid to the effects of this shift at the national scale, while little attention has been given to whether these effects vary across regions. In a country that spans a continent, there is ample reason to believe that the effects of trade will vary across regions. In particular, location has a significant effect on the size of markets available to firms, and this may impact the extent to which firms reorganize their production in response to falling trade barriers. Utilizing a longitudinal microdata file of manufacturing plants (1974 to 1999), this study tests the effect of higher levels of trade across regions on the organization of production within plants. The study finds that higher levels of export intensity (exports as a share of output) across regions are positively associated with longer production runs, larger plants and product specialization within plants. These effects are strongest in Ontario and Quebec, provinces that are best situated with respect to the U.S. market.

    Release date: 2008-05-09

  • Articles and reports: 11F0027M2008051
    Geography: Canada
    Description:

    This paper investigates the productivity effects of the Canada-United States Free Trade Agreement (FTA) on Canadian manufacturing. It finds that Canadian tariff cuts increased exit rates among moderately productive non-exporting plants. This led to the reallocation of market share toward highly productive plants, which helps explain why aggregate productivity gains were observed when Canadian tariffs were reduced. The paper also finds that all of the within-plant productivity gains resulting from the U.S. tariff cuts involved exporters and, especially, new entrants into the export market. It demonstrates that any lack of output responses and labour-shedding as a consequence of the FTA were experienced by Canadian plants who were non-exporters, while exporters captured the gains from the FTA.

    Release date: 2008-05-07

  • Articles and reports: 11-010-X200800110510
    Geography: Canada
    Description:

    This paper empirically illustrates the impact of ongoing changes to Canada's terms of trade. It provides a discussion of how the terms of trade are measured and how to interpret terms of trade shifts. Examples of two major factors affecting Canada's terms of trade are provided, followed by an empirical analysis of how the terms of trade improvements that began in early 2003 have affected consumption, investment and import activity. The paper concludes by illustrating why final domestic demand growth has outpaced real GDP growth since 2003.

    Release date: 2008-01-17

  • Articles and reports: 11-624-M2008018
    Geography: Canada
    Description:

    This paper empirically illustrates the impact of ongoing changes to Canada's terms of trade. It provides a discussion of how the terms of trade are measured and how to interpret terms of trade shifts. Examples of two major factors affecting Canada's terms of trade are provided, followed by an empirical analysis of how the terms of trade improvements that began in early 2003 have affected consumption, investment and import activity. The paper concludes by illustrating why final domestic demand growth has outpaced real GDP growth since 2003.

    Release date: 2008-01-17

  • Articles and reports: 11F0027M2007048
    Geography: Canada
    Description:

    Evaluations of an economy's economic performance are often made using a measure of real gross domestic product (GDP) per capita, which represents the average remuneration (labour income plus capital services) that an economy generates through domestic production.

    Because real GDP is a constant dollar measure of the remuneration to capital and labour in an economy, it does not account for who owns the capital, how much of it is used up through production or how relative price shifts affect the volume of goods and services that can be purchased.

    Modifications can be made to traditional estimates of GDP to account for these factors. This paper examines the performance of the Canadian economy using alternate measures' gross domestic income, gross national income and net national income. The paper also examines the relative performance of the Canadian and U.S. economies using standard GDP measures and these alternate measures.

    The comparison spans the period from 1980 to 2006, but focuses on the 2002-to-2006 period. During these latter years, changes in commodity prices, manufactured goods prices, the exchange rate, international investment income and capital consumption have all contributed importantly to real income growth in Canada.

    As a result, a very different picture of relative performance of the Canadian and U.S. economies emerges when an aggregate income measure is used that accounts for relative price changes, international income flows and capital consumption than when real GDP is used. From 2002 to 2006, U.S. real GDP per capita grew 9.3% while Canadian GDP per capita rose 7.0%, making it appear that the U.S. economy was outperforming the Canadian economy. However, once changes in resource prices and the exchange rate, international investment income and capital consumption are taken into account, real income per capita in the United States increased by 8.6%, which is similar to its GDP per capita growth. However, the Canadian adjusted measure of real income per capita growth rose 15.6%, more than twice the per capita real GDP growth in Canada and nearly double the U.S. rate.

    In contrast, the difference between the two economies was exactly the opposite in the period from 1980 to 2000 when commodity prices were falling, when the exchange rate was not appreciating and when outward flows of income to foreigners were increasing relative to the income paid to Canadians. During this period, when consideration is given to these factors, real income measures in Canada were falling relative to those in the United States.

    Release date: 2007-11-22

  • Articles and reports: 11-010-X200700810305
    Geography: Canada
    Description:

    The restructuring of the economy since 2003 has been driven by the surge in commodity prices resulting from the integration of China into the world economy. Labour and capital have shifted to the resource sector, notably in western Canada. Despite the rising exchange rate and lower prices manufacturers overall have maintained output while cutting jobs.

    Release date: 2007-08-16

  • Articles and reports: 11-624-M2007017
    Geography: Canada
    Description:

    This paper empirically investigates how the Canadian economy has evolved following the rise in commodity prices and appreciation of the Canadian dollar that began in 2003. The adjustment in the manufacturing industry has garnered the greatest attention because it has borne the brunt of job losses. However, the adjustment of the manufacturing industry has not been straightforward. Rather, a complex reallocation has been taking place within manufacturing that has been predominantly due to the integration of emerging nations into the global economy. The increased commodity prices and falling manufactured prices caused by this integration have affected durable and non-durable manufacturing industries differently. Non-durable manufacturers have tended to see their competitiveness eroded and their output has tended to fall. Durable manufacturers, on the other hand, have increased output in response to the resource boom and increased demand in general. The result has been stable manufacturing output overall, accompanied by a re-orientation of manufacturing output away from non-durables and toward durables.

    The appreciated dollar and higher commodity prices have also led to a more widespread industrial reallocation in Canada. The higher commodity prices have started a resource boom, particularly in Alberta. The boom has led to rising resource industry employment, while manufacturing employment declined, and to rising service-sector employment. It has contributed to inter-provincial migration, and has greatly increased the purchasing power of Canadian incomes as terms of trade have improved.

    Release date: 2007-08-16

  • Articles and reports: 11F0027M2006039
    Geography: Canada
    Description:

    This paper relates to two understudied, but increasingly important concerns: the measurement of regional integration, and the regional benefits to North American economic integration. The objective is to measure Canada's regional integration in manufacturing industries with that of the United States, and examine the regional impact of growing trade integration on productivity growth and select other economic performance variables.

    Our research shows that Canada and each of its regions are becoming more integrated in trade in manufactures with the United States, but Ontario is much more integrated than the rest of Canada. While all regions have benefited through improved productivity performance, higher wages and higher output growth, Ontario has been the principal beneficiary. No evidence was found that increased trade integration in manufactures with the United States caused anything more than short-run adjustment losses in employment. Canada and each of its regions have expanded their share of North American manufacturing which stands in sharp contrast to the supposition that it would be the United States that would experience a growth in North American production share (Krugman, 1980).

    Release date: 2006-05-31
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