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Published online by Cambridge University Press: 07 November 2014
This paper presents some computations of the impact of exports to various areas of the world in 1956 upon output, employment, and income originating in Canadian industries. It also examines what might have happened if both exports and imports in 1956 had increased by, say, one hundred million dollars; that is, if a balanced increase in foreign trade had occurred. A major purpose of the analysis is to illustrate a method by which the effects of such an increase on the industrial distribution of output, employment, and income might be estimated. The analysis includes, in addition to the direct effects, the indirect effects on industries which produce materials or other inputs used by the industries directly affected by foreign trade. Inter-industry input-output analysis has been used to estimate these indirect effects. Secondary effects resulting from the changes in income induced by the changes in foreign trade are, however, not included in the analysis.
The year 1956 was chosen largely as a result of statistical convenience. As a result of previous work by the present authors, a large body of inter-industry statistics for 1956 exists. This made it possible to “update” the 1949 input-output matrices to 1956 by a technique which will be explained below so that it could be used in conjunction with the export figures specially prepared for this study.
This paper is an outgrowth of some similar (but unpublished) analyses for the year 1949 presented by the authors at the Canadian Political Science Association Conference on Statistics at Sir George Williams College, Montreal, June, 1961. The 1949 analysis was based on statistics of exports of Canadian industries and competitive imports into Canada presented in Dominion Bureau of Statistics Publication 13–513, Supplement to the Inter-Industry Flow of Goods and Services, Canada, 1949 (Ottawa, 1960), Tables 6 and 9. Most of the computations for the present paper were done by the authors at the Institute of Computer Science of the University of Toronto. Some clerical assistance was provided from the funds of the Dominion Stores Research Grant to the School of Business of the University of Toronto.
1 DBS publication 67–201, The Canadian Balance of International Payments, 1960, Table II.
2 An analysis of the effect of exports to the United States on domestic output for the year 1949 using the data in DBS, Supplement to the Inter-Industry Flow of Goods and Services, 1949, has been made by Wonnacott, R. J., Canadian-American Dependence: An Inter-Industry Analysis of Production and Prices (Amsterdam, 1961), chap. 6.Google Scholar
3 This point was overlooked by Wahl, D., in his estimates of the labour content of Canada's exports, “Capital and Labour Requirements for Canada's Foreign Trade,” this Journal, XXVII (08 1961), 349–58.Google Scholar
4 For a discussion of the difficulties of this task see Goldberg, S. A., “Long-Run Changes in the Distribution of Income by Factor Shares in Canada,” in National Bureau of Economic Research Google Scholar, Conference on Research in Income and Wealth, Studies in Income and Wealth, vol. XXVII Google Scholar, The Behavior of Income Shares” (Princeton, 1964), 203.Google Scholar
5 A similar analysis of the primary effects of import liberalization on output and employment of United States industries has been made by Salant, Walter S. and Vaccara, Beatrice N.. See their “Primary Effects on Employment of Shifts in Demand from Domestic to Foreign Products,” Review of Economics and Statistics, XL, Supplement (02 1958), 91–103 CrossRefGoogle Scholar, and Import Liberalization and Employment (Washington, 1961).Google Scholar
6 Leontief, Wassily, “Factor Proportions and the Structure of American Trade: Further Theoretical and Empirical Analysis,” Review of Economics and Statistics, XXXVIII (11 1956), 391–5.Google Scholar
7 Humphrey, Don D., American Imports (New York, 1955), 33 and 65 Google Scholar, also uses the terms “competitive” and “non-competitive” but notes that the United States Department of Agriculture used the terms “supplementary” and “complementary” in its official series of agricultural imports.
8 DBS, Supplement to the Inter-Industry Flow of Goods and Services, 1949, 20–1.Google Scholar
9 DBS, Canadian Balance of International Payments, Table II.
10 Leontief, , “Factor Proportions and the Structure of American Trade,” 394, makes the same assumption.Google Scholar
11 See Humphrey's, Don comment on Salant's use of the same assumption, Review of Economics and Statistics, XL, Supplement, 104.Google Scholar
12 See their “Alternative Treatments of Imports in Input-Output Models: A Canadian Study,” Journal of the Royal Statistical Society, Series A, CXXXVI, no. 3 (1963), 410–19.Google Scholar A very brief description of the models is contained in their paper, “Inter-Industry Estimates of Canadian Imports, 1949–1958” in Hood, Wm. C. and Sawyer, John A., eds., CPSA Conference on Statistics, 1961: Papers (Toronto, 1963), 141–5.Google Scholar
13 DBS, Supplement to the Inter-Industry Flow of Goods and Services, 1949.
14 “L'ajustement périodique des systèmes de relations inter-industrielles, Canada, 1949–1958” Econometrica, XXXI (Jan.-04, 1963), 90–110.Google Scholar The method is also referred to in the paper “Alternative Treatments of Imports in Input-Output Models,” 427–31. Richard Stone and his associates at the University of Cambridge have also developed an adjustment in which the d type adjustment is used jointly with a column adjustment. See University of Cambridge, A Programme for Growth, No. 3, “Input-Output Relationships, 1954–1966” (London, 1963).Google Scholar
15 “Linear Programming Estimates of Input Coefficients,” this Journal, XXX (05, 1964), 209–10.Google Scholar We are indebted to Mr. A. A. Tooms of the Dominion Bureau of Statistics for his estimates of competitive and non-competitive imports for 1956 in 1956 dollars.
16 Ibid.
17 These estimates were made by Mr. F. H. Leacy, while he was on the staff of the Royal Commission on Taxation, and the authors are indebted to him for his permission to use them.
18 This is the matrix (A + M) of Model III in the papers referred to in notes 12 and 14.