Another in a long line of examples

I was interested to read the results report from the Export Development Corporation yesterday. The EDC “is Canada’s export credit agency, offering innovative commercial
solutions to help Canadian exporters and investors expand their international
business.” In lay person’s terms, they take a lot of the risk out of exporting to international markets. Essentially, it is a federal government agency designed to stimulate more exports from Canadian companies.

And we are not talking about pocket change or ‘advice’. From the report:

Brazil, Russia, India, China and Mexico continue to be the priority markets for Canadian companies because of their growth rates, importance to global supply chains and alignment with Canadian strengths. EDC business volumes in these markets totaled more than $6.8 billion in 2006, up 26 per cent from $5.4 billion in 2005, with notable growth in Mexico at $2.6 billion (2005 – $1.6 billion), India at $730 million (2005 – $375 million) and Russia at $750 million (2005 – $502 million).

And you know where I am going with this, don’t you.

The Atlantic provinces make up only 2.1% of the EDC’s business volume. That means that of all the export insurance/finance deals done by the EDC, only 2.1% of the total volume was with Atl. companies. Even though the region still makes up 7.1% of the population.

They don’t break out their New Brunswick figures, but odds are they are fractional.

Why I bring this up is simple. In this blog I try to explore the causes of chronic economic underperformance. This is another example.

You will recall, with me, for a moment, the glowing peacock of a man – Kirk MacDonald – former minister of Business New Brunswick getting up in the Leg last year and bragging at great lengths about the ‘export performance’ of New Brunswick. He even said billion with a ‘b’ to make his point.

What he forgot to mention (I am sure it just slipped his mind) was that without the Irving refinery, exports from New Brunswick in real terms were actually down since the Tories came to power – the second worst exports performance of all provinces in Canada.

Now, my disgust with that performance aside, the truth is that New Brunswick is not really an ‘export’ oriented province. Stuff all the reports in your toilet. When you extract commodities and look at value added exports – there is very little coming out of New Brunswick. I did a little analysis of this a few years ago and the difference is quite staggering. From Ontario, something like 80% of all exports were high value add (auto parts, manufactured goods) while something like 5% of New Brunswick’s exports were high value (i.e. more than just commodities, paper, untreated fish or 2x4s).

And that is likely a main driver why the EDC does very little business in New Brunswick.

But back to a central theme of this blog. If you look at every program from the Federal government oriented to support economic development: Technology Partnerships Canada, federal R&D spending, EDC, etc. – New Brunswick gets well below its ‘fair share’ in a per capita sense and every program that is expense oriented (Equalization, social transfers, etc.) we get well above our ‘fair share’.

And that, folks, in my opinion, is another reason why New Brunswick is third from last in North America for its standard of living, while we are one of only a handful of jurisdictions losing population (1996-2006) and continuing to need more and more Equalization just to get by.