Canada could add nearly $100 billion to its economy over the next decade by capturing more value from exported goods, services and innovations, according to a new report from Export Development Canada (EDC).
The report says Canada has an opportunity to strengthen its economic resilience and competitiveness by moving beyond exports of raw resources and producing more sophisticated, knowledge-intensive goods and services.
Moving up the value chain
"Capturing more value from trade is one of Canada's greatest economic opportunities, not only in terms of adding billions to our GDP, but also in terms of increased capabilities and higher productivity," said EDC President and CEO Alison Nankivell, citing the EDC report, From Resources to Resilience: How Canada Can Capture More Value Through Trade.
The report examines Canada's declining economic complexity, a framework used to measure a country's ability to produce sophisticated, knowledge-intensive goods and services. EDC says the measure has trended downward since the mid-1990s, although Canada retains many of the capabilities needed to strengthen its economy.
Moving toward exports of more sophisticated goods and services could conservatively add nearly $100 billion to Canada's gross domestic product by 2035, the report says.
"Our success as a trading nation has long been rooted in the strengths of our resource-rich economy. The opportunity is in scaling these capabilities to produce unique, complex products that give Canada a competitive advantage. Through this report, we hope to broaden the conversation about what is possible for Canada in a rapidly changing trade environment, and to help ambitious Canadian companies see how they can start moving up the value chain by building on their existing strengths."
The report argues that Canada's long-term prosperity will depend not only on where Canadian companies sell their products, but also on the sophistication and value of what they export as the country works to diversify its export markets.
"The opportunity is in scaling these capabilities to produce unique, complex products that give Canada a competitive advantage," Nankivell said.
International Trade Minister Maninder Sidhu said the federal government is also focused on increasing the value of Canadian exports as it seeks to diversify trading relationships.
"As we move to double our non-U.S. exports and diversify our trading relationships, we're focused not only on where we sell, but what we sell," said The Honourable Maninder Sidhu, Minister of International Trade. "From aerospace to defence to AI to clean technology, Canada has the talent and the capabilities to secure more high-value opportunities and create more good-paying jobs for Canadians. We will continue leveraging our strengths to build a more competitive, resilient, and diversified trading relationship with the world."
Processing and advanced production
EDC's analysis found that the largest economic gains could come from moving further up the value chain through processing, refining and advanced materials production rather than exporting raw resources alone.
The report identifies agri-food, critical minerals, defence and aerospace as sectors positioned to capture significant value-creation opportunities. EDC says supporting globally competitive sectors can also generate benefits for other parts of the economy.
The report outlines six conditions it says are needed for Canada to increase its economic complexity and capture more value from trade. They include an integrated trade framework connecting goods, services, imports and investment; access to growth capital to help create Canadian global companies; and greater commercialization of high-value services and intellectual property.
It also identifies skilled talent, trade-enabling physical and digital infrastructure, and targeted regional trade-diversification strategies as important to helping Canadian companies develop more sophisticated products and services.
Coordinated investment
EDC says capturing more value from Canada's existing trade strengths will require co-ordination among governments, businesses, investors, academic institutions and organizations involved in Canada's trade and economic system.
"Capturing more value from Canada's trade strengths will require a coordinated effort across our trade and economic ecosystem. Governments, businesses, investors, academic institutions and organizations like EDC each have a role to play in building the capabilities needed for Canada's long-term success. Through collaboration and sustained investment in talent, capital, innovation and infrastructure, Canada can create a more diversified and resilient economy," said Nankivell.
The report is the first in a planned series examining ways Canada can build on its trade strengths as the global trading environment changes.