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The performance of interprovincial and international exports by province and territory since 1992

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by Craig Byrd and Pierre Généreux
Input-Output Division

Analysis in Brief


Summary
Newfoundland and Labrador
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
Northwest Territories and Nunavut

Summary: Provinces, territories relying more and more on interprovincial exports

Faced with weakening foreign markets for their goods and services, Canada’s provincial and territorial economies have relied more and more on interprovincial exports as a key source of economic growth since 2000.

Interprovincial exports have fared better than international exports since 2000. This represents a marked shift from the situation between 1992 and 2000, when international sales grew at a rapid rate, outpacing gains in interprovincial exports.

During the 1990s, Canada’s international exports grew at an average annual rate of 12.4%, while interprovincial trade expanded at only half that pace—an annual average of 6.3%.

Between 2000 and 2002, interprovincial exports rose at a slower, but still robust, annual rate of 3.2%, while Canada’s international exports actually declined at an annual pace of 2.1%.

Still, foreign sales of goods and services in 2002 were nearly double the level of interprovincial exports. Provinces and territories sold $443.1 billion abroad, and $232.5 billion within Canada.

In 2002, interprovincial exports overall accounted for about one-fifth of Canada’s total economic output as measured by gross domestic production. This proportion was virtually the same as it was in 1992. However, international exports accounted for 38% of GDP in 2002, up substantially from 26% a decade earlier.

Between 2000 and 2002, interprovincial exports have grown in each of the provinces. Gains in international sales were concentrated in Atlantic Canada and in Manitoba.

However, New Brunswick was the only province in which interprovincial exports did not increase at a faster rate than international exports between 2000 and 2002.

This article examines interprovincial and international exports for each province and territory during these two time periods (from 1992 to 2000 and from 2000 to 2002). The analysis sheds light on the sustained economic growth experienced in Canada in spite of declining international exports.

Chart
Export growth, Canada

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Ratio of exports to GDP, Canada

Note to readers

Data in this paper are all in current dollars and originate from Statistics Canada’s Input-Output and Income and Expenditure Accounts Divisions. They are consistent with the trade estimates published in Provincial Economic Accounts, Annual Estimates - Tables and Analytical Document (Statistics Canada Catalogue no. 13-213-PPB).

Canada level data include government abroad. International exports exclude re-exports.

All annual growth rates in the text are compounded annual growth rates.

Export-to-GDP ratio is a measure of the reliance of economies on exports. It is not, however, the most reliable measure of the contribution of exports to GDP. This is because export costs include imported material used in the production process that does not contribute to domestic income. This import content of exports varies across commodities and provinces.

For example, one dollar in exports of automotive products generates less income in Canada than one dollar of wood product exports because automotive products include more imported material than wood products do. For an analysis of the import intensity of provincial international exports, consult Current Economic Observer (Statistics Canada Catalogue no. 11-010-X and 11-010-X, vol. 16, no. 6).

For additional information on provincial trade flows, consult The Derivation of Provincial (Inter-Regional) Trade Flows: The Canadian Experience by P. Généreux and B. Langen, technical series no. 98, Input-Output Division, Statistics Canada, October 5, 2002.

Newfoundland and Labrador: Booming interprovincial exports

Nowhere was the increased reliance on interprovincial exports across Canada more evident than in Newfoundland and Labrador.

Between 2000 and 2002, interprovincial exports from the province increased at an annual average rate of 26.0%. This was almost three times the average annual growth rate of 9.7% recorded between 1992 and 2000.

On the other hand, the growth in Newfoundland and Labrador’s international exports decelerated considerably between the two periods. Foreign sales grew at an annual rate of 15.8% in the 1990s, but slowed to a rate of 7.7% between 2000 and 2002. Even so, both growth rates were the highest in Canada.

In 2002, Newfoundland and Labrador sold more than $6.6 billion in goods and services abroad, twice the $3.3 billion it sold to other provinces and territories.

Newfoundland and Labrador’s annual growth rate for total exports was the fastest in Canada for the entire 10-year period between 1992 and 2002. As a result, in 2002, total exports accounted for 60% of its gross domestic product, double the proportion of only 29% in 1992.

The phenomenal growth in interprovincial exports was, to a large extent, due to increased extraction of crude oil from offshore sources—Hibernia and Terra Nova—and the move to refine more of offshore crude at Canadian plants instead of shipping it to foreign refineries.

Its gains in foreign sales were also led by advances in foreign exports of crude oil. In addition, fish and seafood exports experienced a strong advance between 1992 and 2002.

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Export growth, Newfoundland and Labrador

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Ratio of exports to GDP, Newfoundland and Labrador

Prince Edward Island: Boosting exports to other provinces

On average, interprovincial exports are as important to Prince Edward Island’s economy as foreign markets. In 2002, interprovincial sales accounted for 26% of the island’s GDP, compared with 28% for international exports.

Prince Edward Island sold just over $1.0 billion in goods and services to foreign markets in 2002, marginally higher than the $987 million in exports within Canada.

Between 2000 and 2002, PEI’s interprovincial exports grew at an annual average rate of 7.3%, almost triple the average gain of 2.6% between 1992 and 2000, which was the slowest among the provinces.

Its foreign sales have increased at an annual rate of 3.4% since 2000, which nevertheless compares well with the rest of the nation. However, this growth rate was less than a quarter of the island’s 14.8% annual increase in international exports between 1992 and 2000.

Gains in potatoes, both frozen and fresh, led interprovincial exports between 2000 and 2002, while fish-related products and fresh potatoes accounted for a significant share of the advance in international sales.

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Export growth, Prince Edward Island

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Ratio of exports to GDP, Prince Edward Island

Nova Scotia: Increased reliance on interprovincial exports

Nova Scotia increased its reliance on interprovincial exports between 2000 and 2002, as sales to other provinces rose at double the rate of international exports.

Interprovincial sales increased at an annual average rate of 3.5%, compared with 1.8% for foreign sales. Sales of natural gas were a key factor in both gains, following the start of production of the Sable Island gas project in 2000.

During the 1990s, on the other hand, international exports increased 9.8% a year, compared with only 5.4% for interprovincial sales.

In 2002, Nova Scotia had international sales worth more than $6.7 billion, while its interprovincial sales amounted to just over $5.6 billion.

Its international exports accounted for 25% of its gross domestic product, the lowest in the nation, up from 17% a decade earlier. Interprovincial exports represented 21% of GDP, marginally higher than 19% in 1992.

Within interprovincial exports, gains in various business-related services reinforced the rise in natural gas. Weaknesses in foreign sales of railroad freight cars and paper-related products dampened the gains in natural gas.

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Export growth, Nova Scotia

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Ratio of exports to GDP, Nova Scotia

New Brunswick: Canada’s most export-oriented economy

New Brunswick was Canada’s most export-oriented economy in 2002. It was also the only province in which the growth in international exports between 2000 and 2002 outstripped the growth in interprovincial exports.

In 2002, total exports accounted for 75% of New Brunswick’s gross domestic product, the highest proportion among the provinces, up from 52% in 1992.

New Brunswick’s international exports increased at more than twice the pace of interprovincial exports between 2000 and 2002. Foreign sales rose at an annual average rate of 7.2%, second only to Newfoundland and Labrador, compared with 2.9% for interprovincial sales.

This was virtually a repeat of the situation during the 1990s when international exports rose at an annual average rate of 10.4%, compared with 7.0% for interprovincial exports.

The capacity of New Brunswick’s refinery was increased recently in parallel with recent offshore oil discoveries. As a result, New Brunswick started to import oil from Newfoundland and Labrador, increased its demand for foreign crude, refined both types of oil and then exported the production of refined petroleum products to other provinces and abroad.

International exports of fish-related products continued to perform well, more than tripling in value since 1992. Nevertheless, exports of refined petroleum products were responsible for the bulk of the increase in total international exports from 2000 to 2002.

Interprovincial exports of business-related services also contributed to the overall rise in exports to other provinces. Gains in refined petroleum products and various business services were partially offset by exports of paper-related products, which have declined significantly since 2000.

Chart
Export growth, New Brunswick

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Ratio of exports to GDP, New Brunswick

Quebec: Continued strength in exports to other provinces

Quebec’s foreign exports fell sharply between 2000 and 2002, while its interprovincial exports maintained virtually the same pace of growth as they did during the 1990s.

The decline in international trade was due largely to a sharp drop in exports of information and communication technology (ICT) products and related equipment. This nullified a large share of the gains in foreign exports of these electronic products between 1992 and 2000.

In fact, Quebec accounted for about half of the decline in exports of ICT equipment at the national level.

Compounding the decline in ICT equipment was a substantial drop in international exports of motor vehicles. A major car assembly plant in Quebec gradually scaled back production, and closed in late 2002. However, foreign exports of aluminium and aircraft-related products fared well between 2000 and 2002.

Quebec’s international exports fell at an annual average rate of 2.7% between 2000 and 2002, after rising 13.6% on average between 1992 and 2000.

Meanwhile, its interprovincial exports rose 4.4% on average between 2000 and 2002, about the same as the 4.9% average increase during the 1990s.

The gains in interprovincial exports between 2000 and 2002 were led by pharmaceutical products, the production of which surged. Quebec also experienced an increase in its interprovincial exports of aluminium and alloys and of various services.

In total, Quebec exported $85.7 billion in goods to other countries in 2002, compared with $49.0 billion to other provinces.

In 2002, Quebec’s international exports accounted for 35% of its gross domestic product, up from 21% in 1992. Its interprovincial exports accounted for 20% of GDP in 2002, about the same as a decade earlier.

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Export growth, Quebec

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Ratio of exports to GDP, Quebec

Ontario: Interprovincial exports fared better

International exports remained key to the economy of Ontario, even though they declined at an annual average rate of 0.8% between 2000 and 2002.

This was in sharp contrast to the period between 1992 and 2000 when they had increased at an average rate of 12.4%.

In 2002, Ontario’s foreign exports amounted to more than $219.0 billion, almost 2.5 times the $89.3 billion in interprovincial trade.

In 2002, international exports accounted for 46% of Ontario’s gross domestic product, the highest proportion among the provinces. This compares with only 19% for interprovincial exports.

Ontario’s trade with the other provinces grew at an annual average of 3.2% between 2000 and 2002, a considerable slowdown from the 5.6% average during the 1990s.

Various services led the increase in Ontario’s interprovincial exports between 2000 and 2002. Business and computer services combined with financial services accounted for more than 50% of the increase in interprovincial exports during this period. Business and computer services encompass a wide range of industries, from accountants’ offices to software design firms.

Strong demand for consumer loans and mortgages, in parallel with lower interest rates contributed to the gain in interprovincial exports of financial services. Pharmaceuticals also played a significant role, but these gains were offset somewhat by a decline in exports of motor vehicles.

On the international front, the decline in foreign exports between 2000 and 2002 was led by drops in information and communications technology products and related equipment, partially offsetting their significant growth during the 1990s.

Foreign sales of motor vehicle parts have increased strongly since 2000. However, purchases by foreign markets of motor vehicles remained relatively flat after propelling Ontario’s international exports during the 1990s.

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Export growth, Ontario

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Ratio of exports to GDP, Ontario

Manitoba: Consistently more exports to other provinces than other countries

Manitoba has been the only province that consistently exports more to other provinces than it does to foreign nations. In 2002, Manitoba exported $11.8 billion to other provinces, compared with exports of $10.4 billion abroad.

Since 2000, the province has incurred a marked slowdown in the growth of both interprovincial and international exports since 2000.

The province’s interprovincial exports grew at an annual average rate of 3.9% between 2000 and 2002, down from an average of 7.5% during the 1990s.

The slowdown in the international export growth rate was more pronounced. Since 2000, international exports have increased at an average rate of only 3.4%, considerably less than the pace of 9.5% between 1992 and 2000.

Manitoba was the only province outside Atlantic Canada that has recorded a gain in international exports since 2000.

Its growth in interprovincial exports since 2000 has been widespread. Various agricultural products, insurance services and electric power, among others, contributed to this growth.

The increase in international exports between 2000 and 2002 was led by agricultural products.

International exports accounted for 28% of Manitoba’s economic output in 2002, up from 19% a decade earlier. Its interprovincial exports accounted for 32% of GDP in 2002, up from 25%.

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Export growth, Manitoba

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Ratio of exports to GDP, Manitoba

Saskatchewan: Modest increase in interprovincial exports

Saskatchewan has incurred a marked slowdown in the growth of both interprovincial and international exports since 2000. However, the decline was much more pronounced for foreign sales.

The province’s foreign exports fell at an annual average rate of 4.3% between 2000 and 2002, compared with a gain of 11.2% during the 1990s.

Its interprovincial sales increased at an annual rate of 2.7% between 2000 and 2002. But this was much less than the average growth rate of 8.6% during the 1990s.

Exports are a key element of the Saskatchewan economy. In 2002, total exports accounted for 65% of the province’s gross domestic product, slightly higher than the proportion of 64% in Ontario.

The modest gain in interprovincial exports since 2000 originated with pipeline transportation and crude oil. Exports of other key commodities for this resource-based economy, such as livestock and natural gas, declined.

The drop in international exports from Saskatchewan since 2000 was concentrated in three commodities: crude oil, communication wires and selected agricultural goods.

Crude oil accounted in 2002 for about 30% of all international exports from Saskatchewan. Gains in international exports of livestock were a bright spot and partially offset these declines.

In 2002, Saskatchewan’s foreign exports amounted to $12.8 billion, while its interprovincial exports exceeded $9.7 billion.

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Export growth, Saskatchewan

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Ratio of exports to GDP, Saskatchewan

Alberta: Biggest slowdown among the provinces in both interprovincial, foreign exports

Alberta incurred the sharpest slowdown among the provinces in the growth rates of both international and interprovincial exports between 2000 and 2002. Nevertheless, its interprovincial exports performed better than foreign sales.

Between 2000 and 2002, Alberta’s interprovincial exports grew at an annual average rate of only 1.6%, which was second lowest in the nation. This compares with 8.8% during the 1990s, which was the nation’s second best.

During the 1990s, Alberta’s foreign exports grew at an average rate of 14.7%. Since 2002, they have declined at an average rate of 5.4%.

Among Alberta’s interprovincial exports, the large slowdown was concentrated in energy-related products, especially in refined petroleum products. These declines were partially offset by the widespread gains elsewhere. For example, the services sector has performed well since 2000.

The deceleration in Alberta’s foreign exports since 2000 was led by decreased exports of natural gas and oil. While Alberta relies traditionally on energy commodities, information and communications technology equipment also had an important impact on the drop.

In total, Alberta’s foreign exports amounted to more than $53.2 billion in 2002, compared with just under $35.4 billion in exports to other provinces.

International exports accounted for 35% of Alberta’s gross domestic product in 2002, up from 27% a decade earlier. Interprovincial exports accounted for 24%, virtually unchanged.

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Export growth, Alberta

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Ratio of exports to GDP, Alberta

British Columbia: Sharp decline in international exports

Growth rates for both interprovincial and international exports in British Columbia have slowed drastically since 2000. As with other provinces, interprovincial exports fared better than international exports.

Between 2000 and 2002, B.C.’s international exports plunged at an average annual rate of 7.7%, the biggest decline among the provinces. This occurred after foreign exports rose at an average rate of 9.7% during the 1990s.

In terms of interprovincial exports the growth rate slowed from 6.9% between 1992 and 2000 to an average gain of only 0.8% between 2000 and 2002. This increase since 2000 was the slowest of any province.

Despite the sharp decline in the growth of international exports, they remained twice as important to the British Columbia economy as interprovincial exports. International exports accounted for 27% of the province’s gross domestic product in 2002. On the other hand, interprovincial exports represented only 14%, the smallest share among the provinces.

Overall, total exports accounted for only 42% of B.C.’s economic output in 2002, the smallest share in Canada. In 2002, the province’s international exports amounted to nearly $37.2 billion, while interprovincial exports were worth just over $19.5 billion.

The modest increase in interprovincial exports since 2002 was fairly concentrated. Gains were recorded in business-related services and in natural gas. These were mitigated by a significant decline in the export of motor vehicles, mostly trucks, and of wood-related products.

The decline in international exports was led by declines in electric power and forestry-related products. This decline in foreign exports of electricity followed strong demand in 2000 from south of the border, in particular to satisfy the energy requirements of California.

Exports of forestry-related products, such as lumber, wood pulp and newsprint, have posted significant declines as well since 2000. International exports of lumber were hurt by the recent softwood lumber dispute.

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Export growth, British Columbia

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Ratio of exports to GDP, British Columbia

Yukon: Interprovincial, international exports both fall

The Yukon was the only province or territory in which both interprovincial and international exports have declined since 2000.

Its exports to other countries declined at an annual average rate of 5.2% between 2000 and 2002, while its exports to other provinces fell at an average of 4.1%.

The decline in international exports continued a long-term trend. Between 1992 and 2000, the Yukon’s foreign exports fell at an annual average rate of 12.3%. In contrast, its interprovincial exports during the 1990s rose at an average rate of 6.4%.

As a result, international exports accounted for only 13% of the Yukon’s gross domestic product in 2002, lowest in Canada. This is a major drop from 47% a decade earlier.

Its interprovincial exports accounted for 15% of GDP, up from 11% in 1992.

In 2002, the Yukon’s interprovincial exports amounted to $181 million, slightly higher than its international exports of $160 million. A decade earlier, the Yukon’s international sales were almost five times the value of interprovincial exports.

Since 2000, the key factor in international exports has been the decline in gold, the territory’s biggest foreign export. This was due mostly to the closure of a gold mining operation in 2001. By 2002, gold exports from the Yukon originated mostly from gold placer mining operations. Gold exports now sit at below 1992 levels.

Interprovincial exports declined primarily because of natural gas, which is exported entirely to British Columbia.

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Export growth, Yukon

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Ratio of exports to GDP, Yukon

Northwest Territories, Nunavut: Gains in both foreign and interprovincial exports

For the purpose of the first part of this analysis, the Northwest Territories and Nunavut were considered as a whole. (The territory of Nunavut came into existence on April 1, 1999.).

Combined, the territories recorded gains in both interprovincial exports and international exports between 2000 and 2002, although these gains were slower than during the 1990s.

Interprovincial exports have risen at an average annual pace of 1.4% since 2000, compared with 9.5% during the 1990s. International exports have gone up an average 5.5%, as opposed to 11.3%.

In 2002, the territories combined had foreign exports of more than $1.1 billion, compared with interprovincial sales of $863 million.

International exports accounted for 29% of their gross domestic product in 2002, up from 20% a decade earlier, while interprovincial exports represented 22%, up from 19%.

However, the performance of foreign and interprovincial exports was not the same for both territories since 2000. In the Northwest Territories, continuing rapid growth in diamond exports to foreign markets led to a substantial 9.7% average increase in international exports between 2000 and 2002. At the same time crude oil, the Northwest Territories’ most important commodity exported within Canada, fell considerably.

The trend in exports from Nunavut between 2000 and 2002 was the opposite. International exports were lower, driven by a drop in metal ores, while interprovincial exports were higher, led by a rise in various services.

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Export growth, Northwest Territories and Nunavut

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Ratio of exports to GDP, Northwest Territories and Nunavut

Tables

Table
Compounded annual growth rates for interprovincial and international exports, Northwest Territories and Nunavut, 2000 to 2002

Table
Interprovincial and international exports, Canada, provinces and territories, compounded annual growth rates for the 1992–2000 and 2000–2002 periods and values for 2002

Table
Interprovincial and international exports as a share of GDP, Canada, provinces and territories, 1992, 2000 and 2002