The recent release of the provincial government’s economic plan – and specifically the pledge to craft an updated trade diversification strategy – has prompted us to take a fresh look at B.C.’s exports. This work will lead to the publication of a Business Council of British Columbia report by the end of May (available at www.bcbc.com).
Examining what a small jurisdiction sells to the world provides a useful window into the foundations of its underlying prosperity and highlights where it enjoys some degree of global comparative advantage.
Most discussions of exports focus on merchandise (or goods). But a full understanding should also capture services, including domestically provided services that can be “exported.” In value terms, services now amount to more than two-fifths of international trade. They are also becoming more important in the context of B.C.’s international trade flows.
Working with a fine-grained breakdown across more than 250 detailed industries, we have grouped and sorted B.C.’s exports into conceptually similar and/or inter-related sectors. What emerges from this analysis is a picture of the province’s overall export base, one that offers insight into the industries that make outsized contributions to our economy.
Immediately evident is the natural resource sector’s large footprint. The broad resource sector – comprised of forestry, energy, mining and agriculture products – supplies nearly half of total B.C. exports (and around three-quarters of merchandise exports). Forestry is the largest export sub-sector within the resource umbrella, with energy a close second.
The mapping of exports by industry also underscores the prominence of non-resource manufacturing. It is comprised of a host of industries that produce a wide array of manufactured products. Natural resource and related products and non-resource manufacturing, added together, accounted for 57 per cent of the province’s international exports in the pre-pandemic context.
The remaining 43 per cent of B.C.’s international exports consist of services. Tourism, gateway services and professional and other services are the largest contributors, each responsible for about nine per cent of the province’s total export earnings – close to the share of non-resource manufacturing. The important role played by these service industries is a point to keep in mind when thinking about how B.C. earns its way in the world.
Technology services, film and television production, education services and wholesaling activity round out the list of B.C.’s key export sectors. Each generates between three and six per cent of export receipts in a typical year. Film and television production and education stand out for their rapid export growth in the years before 2020.
All export sectors and the individual industries within them enhance our prosperity. But when looking at what drives the provincial economy, it is impossible to ignore the natural resources sector. Any well-grounded strategy to grow B.C.’s exports must confront the reality that even small contractions of output in the natural resource sector could easily overshadow sizable absolute gains in other parts of the province’s export basket. Boosting B.C.’s exports requires nurturing and bolstering the competitiveness of existing trade-focused industries, while also fostering growth and pursuing market development opportunities in tradable services, advanced technologies, and other sectors beyond the natural resource economy.
Mapping exports also sheds light on the gradual pace of change in industrial structure. By the end of the decade, the pattern and composition of B.C.’s exports are unlikely to be dramatically different than they are today, despite occasional statements from politicians suggesting otherwise. True, recent policy changes, high fibre and regulatory costs and environmental factors will reduce the amount of harvestable timber in B.C., which should trim forestry’s share of overall provincial exports. But the energy sector will loom larger in the export landscape, owing mainly to future liquefied natural gas production and shipments. The B.C. mining industry is also positioned to expand, supported by strong global demand for mineral resources generally – and for the minerals and metals needed to power the low-carbon transition specifically. Agriculture exports are also expected to increase.
B.C. has a diversified export mix that includes a strong historical and current base in natural resources along with substantial contributions from non-resource manufacturing, gateway transportation services, tourism, professional and technical services and other smaller but growing service exports. All of these sectors will continue to shape our export portfolio in the decades to come. •
Jock Finlayson is the Business Council of British Columbia’s senior policy adviser; Ken Peacock is the council’s senior vice-president and chief economist