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Foreign Trade and the Level of Economic Activity in Canada in the 1930's*

Published online by Cambridge University Press:  07 November 2014

A. E. Safarian
A. E. Safarian*
Affiliation:
Dominion Bureau of Statistics
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Extract

The purpose of this paper is to evaluate the impact of exports on the economy, particularly in the perspective of the over-all recovery in the thirties. In assessing the conclusions, the reader should note particularly that many other aspects of Canada's dependence on foreign countries, such as capital movements, have had to be neglected. The first part of this paper gives some statistical measurement of the role of exports, stressing both the great importance of exports to several large industries and the lead in exports at the turning points, but also suggesting that both the over-all level of exports and the proportion of an industry's product which is exported may be misleading indicators of the impact of exports on the economy. Changes in the composition of exports, and the reaction of the more or less domestic factors in the economy can affect the force of the stimulus from expanding exports. In particular, the paper suggests that while a rising or high level of exports may be a necessary condition for prosperity, it need not be a sufficient one.

Type
Research Article
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 18 , Issue 3 , August 1952 , pp. 336 - 344
Copyright
Copyright © Canadian Political Science Association 1952

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Footnotes

*

This paper was presented at the annual meeting of the Canadian Political Science Association in Quebec, June 4, 1952.

References

1 Index numbers are computed from data in Dominion Bureau of Statistics, National Accounts, Income and Expenditure, 1926-1950 (Ottawa, 1952).Google Scholar

2 The statistics used in the following paragraphs and in Table I are derived from data published in the Bank of Canada Statistical Summary, 1950 Supplement, and the following publications of the Dominion Bureau of Statistics: The Canadian Balance of International Payments, 1926 to 1948 (Ottawa, 1949)Google Scholar: Trade of Canada (Ottawa, 1941), I, 50 Google Scholar; and Export and Import Price Indexes, 1926-1948 (Ottawa, 1949).Google Scholar

3 The three groups are agricultural, vegetable, and animal products; wood and products; and non-ferrous metals and products.

4 Investment in physical assets by industries is available in Dept. of Trade and Commerce, Private and Public Investment in Canada, 1926-1951 (Ottawa, 1951).Google Scholar The groups or combination of groups used in this publication are comparable to the ones used in Table II above.

5 The indexes mentioned in this section on turning points are from various issues of the Monthly Review of Business Statistics (now the Canadian Statistical Review) of the Dominion Bureau of Statistics. The seasonally adjusted index of export values was compiled largely from data appearing in Trade of Canada, 1941, I, 208.Google Scholar The lead in exports in the 1937-8 downswing is also indicated if wheat clearances are used rather than wheat exports.

6 These percentages are compiled from the value series in Dominion Bureau of Statistics, National Accounts.

7 The percentages above add up to more than 100 per cent in any year since each of the components mentioned includes an import content. To arrive at the net primary impact of exports, one should subtract imports used to manufacture exports. Estimates of these are not available. Another method would be to add imports of goods and services back to gross national expenditure and deduct indirect taxes (some of which do not affect export prices). Exports as a percentage of this total would be a better estimate of the primary impact of exports than that which is used, but a measure of the extent to which indirect taxes enter export prices is lacking. The percentages given above for the primary impact of exports are probably not too far off from what would result if the methods just mentioned could be applied to this period.

8 For example, Chang, Tse-Chun, Cyclical Fluctuations in the Balance of Payments (Cambridge 1951), chap. 5Google Scholar; and his “A Note on Exports and National Income in Canada,” Canadian Journal of Economics and Political Science, XIII, no. 2, 05, 1947, 276–80.Google Scholar

9 Dominion Bureau of Statistics, The Canadian Balance of International Payments, 80.Google Scholar The categories used here and in the following sentences are not fully comparable to those in Table II.

10 Supplied by the Balance of Payments Section, Dominion Bureau of Statistics.

11 What has been said here with respect to primary mining and related industries applies, to a degree, to some smaller industries with a large ratio of capital to labour which had better export recoveries than the agricultural sector. It will be noted that we have not commented on the relative propensities to import of the agricultural and the mining sectors. Imports of finished machinery and equipment were larger, in proportion to domestic supply, in primary mining than in agriculture; but it was not possible to come to a conclusion in the case of imports of parts and general supplies.