economy
01. economy BC doesn’t rely much on other countries to drive provincial economic growth. In the short-run that’s okay, but in the long-run we would benefit from being more open.
THE PROS AND CONS OF BC’S LACKING INTERNATIONAL EXPORTS
One way to define the components that comprise an economy’s gross domestic product (GDP) is via the “expenditure approach”, which categorizes GDP into consumption spending, government spending, investment, exports, and imports. Each of these components plays a unique role in shaping both current and potential future GDP and to better understand them it helps to recall a useful, though admittedly overly- simplistic, analogy that involves a bathtub. Think of the water in the bathtub as GDP. New consumption spending, government spending, and—for the sake of this analogy— investment is the water swirling around in the tub, neither adding to it nor reducing its level. In contrast, exports are represented by the inflow of water from the faucet, adding to GDP when the tap is on. Imports are the flow of water down the drain subtracting from GDP when the drain isn't plugged.
With this context, how should we view BC’s relatively low share of GDP that is accounted for by international exports (of both goods and services)? Compared to the Canadian average of 32%, BC’s exports account for only 24% of our GDP—second-lowest only to PEI, and sitting in stark contrast to our neighbours Alberta (39%) and Saskatchewan (45%) and our counterpart in central Canada, Ontario (33%). On the one hand, BC would be wise to expand and deepen its export destinations beyond and into its current trading partners lead by the US, China, South Korea, and Japan. However, viewed differently, our low exports-to-GDP ratio here on the west coast can be seen as something of a buffer to the transmission of external trade squabbles, including those between the US-China, the US-Europe, and the UK-EU. While this might be true in the short-run, we would certainly benefit in the longer-run from stronger international trade ties.
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