Business adaptation and adjustment

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  • Articles and reports: 11F0027M2007044
    Geography: Canada
    Description:

    Utilizing a longitudinal micro data file of manufacturing plants (1974 to 1999), this study tests the effect of higher levels of trade on the level of industrial specialization experienced by regional manufacturing economies. Consistent with trade driven by comparative advantage, the analysis demonstrates that higher levels of export intensity (exports as a share of output) across regions are associated with greater industrial specialization. However, the analysis also shows that changes in export intensity are only weakly associated with changes in specialization. This occurs because comparative advantage tends to shift away from industries that account for a large share of regional manufacturing employment and towards industries that initially have lower shares. This ebb and flow of comparative advantage helps to explain why Canadian manufacturing regions have not become more specialized in an environment of increasing integration into the world market.

    Release date: 2007-06-25

  • Articles and reports: 11F0027M2006038
    Geography: Canada
    Description:

    This paper examines the effect of trade liberalization on plant scale, production-run length and product diversification. We first develop a model of trade in differentiated products with multi-product plants. We then present empirical evidence using a large panel of Canadian manufacturing plants and their experience with the 1989 Canada-U.S. Free Trade Agreement (FTA). The model predicts that the bilateral tariff reduction reduces the product diversification of exporting plants, increases the production-run length and has an ambiguous effect on the size of those plants. It also reduces the product diversification and size of non-exporting plants, and has no effect on the production-run length of those plants. The empirical evidence on non-exporting plants provides broad support for the model. The evidence on exporting plants shows that exporters reduce product diversification, and increase production-run length and plant size, but those changes do not appear to be related to tariff cuts. Once in the export markets, plants respond to forces other than tariff cuts. Further tariff cuts have less effect on those plants.

    Release date: 2006-05-19

  • Articles and reports: 11-624-M2006013
    Geography: Canada
    Description:

    This paper examines the incidence of foreign control in Canadian non-financial industries. It focuses on changes in the share of assets and revenues under foreign control over a long-run period during which Canada's regulatory climate shifted from being more restrictive to more liberal in its treatment of inward foreign direct investment. These regulatory changes coincided with a retrenchment and then a resurgence in the activities of foreign multinationals in Canadian industry. We report aggregate results for non-financial industries, along with specific tabulations for the energy sector. More detailed industry tabulations are presented for the 2000-2003 period.

    Release date: 2006-03-23

  • Articles and reports: 11-010-X20060039136
    Geography: Canada
    Description:

    Foreign control in our economy has fallen and rebounded largely as a result of regulatory changes, especially in energy.

    Release date: 2006-03-16

  • Articles and reports: 11-622-M2005008
    Geography: Canada
    Description:

    This paper outlines broad changes in foreign ownership in Canada over the last forty years. It makes use of several different but complementary data sources that are produced by Statistics Canada to analyze the importance of foreign ownership in Canada. Over the last four decades, foreign multinationals that are operating in Canada have experienced first, a retrenchment and then, a resurgence in their activities. This retrenchment occurred during the period when foreign investment was tightly regulated and could be found across most industries, but was particularly evident in the energy and mining sector. The resurgence that has occurred subsequent to the introduction of a more liberal regulatory regime was also relatively widespread, though there are several sectors like the science-based and energy industries where this has not occurred.

    Release date: 2005-11-18

  • Articles and reports: 11F0019M2005256
    Geography: Canada
    Description:

    We investigate whether trade liberalization affects profitability and financial leverage, using Canadian data from the period following implementation of the Canada-U.S. Free Trade Agreement. We find that falling domestic tariffs are associated with declining profits and increasing leverage for import-competing firms, while falling foreign tariffs are associated with increasing profits and decreasing leverage for firms in export-oriented industries. This pattern is consistent with the "pecking order" theory of capital structure.

    Release date: 2005-06-22

  • Articles and reports: 11F0019M2005257
    Geography: Canada
    Description:

    This article summarizes findings from the research paper entitled: Trade liberalization, profitability, and financial leverage. Changes in international trade policy may influence financial leverage, the relative importance of debt as opposed to equity in financing the firm, expressed by a debt-to-asset ratio. The primary objective of this paper is to investigate empirically whether trade liberalization has an impact on leverage. The second is to estimate the effect of trade liberalization on profitability. Changes in trade policy are a major part of the international business environment, and our theoretical formulation suggests that trade liberalization influences leverage largely through its effect on profits. Therefore, testing the link between liberalization and profits is a central test of our overall theoretical structure. The paper is divided into the following sections: four testable hypotheses regarding the possible effect of trade liberalization on profits and leverage; a description of the data set; empirical results and analysis; and concluding remarks.

    Release date: 2005-06-22

  • Articles and reports: 11F0027M2005031
    Geography: Canada
    Description:

    This paper studies the impact that a small country joining a regional trade agreement, but particularly a small country, might be expected to gain from the exploitation of scale economies. It makes use of the experience of Canada when it entered into the Canada-United States Free Trade Agreement (FTA) in the early 1990s.

    It finds that there was a general increase in the pace of plant commodity specialization around the time of implementation of the Free Trade Agreement. At the time of the treaty, plant diversity was found to be higher in larger plants and in industries with assets that are associated with scope economies. Diversity was also higher in industries that had higher rates of tariff protection.

    Over the 1980s and 1990s, plant diversity decreased with reductions in both U.S. and Canadian tariffs. And the decline was greater during the post FTA era than before, thereby suggesting that this treaty had an impact above and beyond that just engendered by the tariff reductions that were associated with it. The study also found that foreign-controlled plants tended to adjust more over the entire period.

    Release date: 2005-03-24

  • Articles and reports: 11F0027M2005029
    Geography: Canada
    Description:

    This paper uses a detailed industry-level data base of industry prices in the manufacturing sector in Canada and the United States to investigate whether prices are co-integrated in the two countries and whether the relationship between the two sets of prices follows the law of one price. We find that aggregate Canadian price movements track U.S. price movements closely, but not perfectly, in the long run. But there are substantial deviations from the law of one price in the short run. Moreover, many individual industries deviate from the law of one price. These deviations are related to the degree of tariff protection and to the degree of product differentiation at the industry level.

    Release date: 2005-02-15

  • Articles and reports: 11F0019M2004208
    Geography: Canada
    Description:

    There is much debate over whether agents form rational expectations of variables or whether they suffer from systematic errors in judgment. This paper estimates models for plant-level survey data in order to test rationality for those manufacturing plants that report expectations of capital expenditures. An advantage of using such data is that rationality is tested in markets where agents may not have knowledge of each others' expectations so strategic motives behind purposefully irrational forecasts are minimized. Statistical estimates and test results suggest that expectations may indeed be rational depending on size. That is to say that the larger a plant is, the more resources it can expend on forecasting its future needs. Thus, the statistical results in this paper validate, for the first time, a class of assumptions in the macroeconomic literature.

    Release date: 2004-12-17
Reference (5)

Reference (5) ((5 results))

  • Surveys and statistical programs – Documentation: 96-328-M2004012
    Geography: Geographical region of Canada
    Description:

    This activity is designed to show students some of the changes affecting Prairie agriculture over the past 100 years, and how Prairie farmers have adapted to them.

    Release date: 2004-08-30

  • Surveys and statistical programs – Documentation: 2936
    Description: This survey was sponsored by the Ontario Ministry of Economic Development and Trade.

  • Surveys and statistical programs – Documentation: 5001
    Description: This survey is being conducted to measure the extent to which knowledge management practices are used or will be used by Canadian businesses.

  • Surveys and statistical programs – Documentation: 5095
    Description: The survey mandate is to collect and benchmark vital information on the business incubator sector of the Canadian economy. The information is critical in assessing the business incubator sector and in developing programs to support them.

  • Surveys and statistical programs – Documentation: 5171
    Description: Statistics Canada has undertaken this survey to provide statistical information on the strategic decisions, innovation activities and operational tactics used by Canadian enterprises. The survey also collects information on the involvement of enterprises in global value chains.
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