The battle to control COVID-19 might be won with local isolation and limited cross-boundary interaction, but the battle to improve Canada’s domestic economy will be lost using those tools.
The latest restrictions aimed at limiting human interaction in B.C. and elsewhere in Canada will also likely encourage more micro-local shopping and commerce.
That will be good for neighbourhood merchants, many of whom continue to suffer mightily from pandemic fallout. But balkanized approaches to the economy are far less beneficial for building businesses and sharpening competitive edges.
As a country with a relatively small population in a vast geography, Canada has traditionally defaulted to parochial economics. But that approach, excusable when the country had no national communication or transportation links, has created stubborn inter-jurisdictional barriers that limit domestic growth and stifle the innovative vigour the country’s business sector needs to compete globally.
A recent Fraser Institute essay argues that the abundance of interprovincial trade barriers and the shortage of national regulatory standards are costing the country billions in lost economic growth. It also points to Canadian Journal of Economics data estimating that those barriers add between 7.8% and 14.5% to the costs of goods and services in Canada.
According to the Towards a More Productive and United Canada essay, removing interprovincial trade roadblocks could add $90 billion annually to the country’s economy. That is significant, especially during a pandemic economy that has spawned a deep and devastating service industry recession.
The Fraser Institute’s essay notes that the Canadian Free Trade Agreement, which came into force in 2017, has removed some interprovincial barriers. But much more needs to be done to open the country up to itself.
The message is simple: leave lockdown isolation to the COVID fight; apply the opposite to inter-regional commerce and trade.
