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DFAIT / Trade and Economic Analysis Division (EET) Canada-U.S.: Bilateral Trade Canada-U.S.: Bilateral Trade and Economic Performance in and Economic Performance in the 1990s the 1990s Compiled By: Trade and Economic Analysis Division (EET) Department of Foreign Affairs and International Trade (DFAIT) August 1999

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Page 1: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Canada-U.S.: Bilateral Trade and Canada-U.S.: Bilateral Trade and Economic Performance in the Economic Performance in the

1990s1990s

Compiled By:Trade and Economic Analysis Division (EET)

Department of Foreign Affairs and International Trade (DFAIT)

August 1999

Page 2: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Summary SlideSummary SlidePages 2-6 Index

Economic Indicators in Canada and the U.S.A. in the 1990s 8. GDP and employment growth between 1989 and 1998 9. Standard of living between Canada and the U.S.A.10. Provincial share in Canada’s GDP11. Provincial merchandise exports to the U.S.A.12. Share of the U.S. market increased in provincial merchandise exports13. Canada’s terms of trade

14. Sectoral growth in Canada and the U.S.A. 15. Product shares of Canadian goods exports to the U.S.A., 1989 and 1998 16. Labour market performance: Canada and the U.S.A. 17. Average hourly earnings of production workers, Canada and the U.S.A. 18. Distribution of income, Canada and the U.S.A., 1985 and 199519. Taxes and transfers and distribution of incomes in Canada20. UNDP Human Development Index rankings, Canada and the U.S.A.

A Statistical Synopsis of the debate: Why has Canada lagged the U.S. performance?22. Budget deficit/surplus as a share of GDP, Canada and the U.S.A., 1989 - 200123. Annual percentage change in CPI, Canada and the U.S.A., 1989 - 199824. Interest rates, Canada and the U.S.A., 1989 - 1998 25. Total tax revenue as percentage of GDP, Canada and the U.S.A., 1990 - 1996

Page 3: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Summary Slide (cont.)Summary Slide (cont.)26. Sources of revenues and share of GDP, Canada and the U.S.A., 199627. Personal income tax and social security contributions (net of refundable tax credit) as a share of

family income, Canada and the U.S.A., 199828. Federal Government expenditures as a percentage of GDP, Canada and the U.S., 1989 - 200129. Debt to GDP ratio, Canada and the U.S.A., 1989 - 1997 30. Net debt interest payments as a percentage of GDP, Canada and the U.S.A., 1989 - 1997 31. Technology innovations and adoption, Canada and the U.S.A. 32. Research and Development spending, Canada and the U.S.A. 33. Share of gross private investment in GDP, Canada and the U.S.A., 1989 - 1998 34. Labour productivity growth, Canada and the U.S.A., 1989 - 199735. Business sector multifactor productivity, Canada and the U.S.A., 1961 - 199736. Annual growth rate of multifactor productivity

in manufacturing between1990 and 1995, Canada and the U.S.A.37. Expenditures on educational institutions for all levels of education, Canada and the U.S.A., 1993

and 199537. Expenditure per student for all levels of education, Canada and the U.S.A., 1993 and 199539. Employment rates, Canada and the U.S.A.40. Type of job growth, Canada and the U.S.A.41. Unemployment rate by educational attaintment, Canada and the U.S.A., 199842. Unemployment rates by age/sex groups, Canada and the U.S.A., 199843. Incidence and duration of unemployment, Canada and the U.S.A. 44. Brain-drain to the U.S.A.45. Canadian emigration to the U.S.A., 1990 - 1996

Page 4: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Summary Slide (cont.)Summary Slide (cont.)46. Emigration to the U.S.A. and the stock of workers in the Canadian labour force47. Share of recent immigrants into Canada account to population and employment growth in the

high-tech sector

The importance of Canada and the U.S.A. in each other’s economy49. Canada’s trade with the U.S.A., 1989 - 199850. Share of Canadian trade with the U.S.A. in our GDP, 1980 - 199851. U.S. trade flows with Canada as a percentage of U.S. GDP 52. Index of exports of goods and services trade 53. Canada-U.S. trade as a percentage of total Canadian trade, 1980 - 199854. U.S.A. state exports to Canada55. Growth of Canadian exports to the U.S.A., by Industry , 1989-9856. Canada-US exchange rate and Canadian share of North American marlket, 1989 - 199857. Canadian manufacturers’ share in the combined Canada/U.S.A. market, 1989 - 199858. U.S.A. manufacturers’ market share in the combined Canada/U.S.A. market59. Canadian manufacturers’ market share in Canada60. U.S.A. manufacturers’ share of the U.S. market61. Canadian manufacturers’ market share in U.S. industries, 1987-88 to 1993-9462. U.S.A. manufacturers’ market share in Canadian industries, 1987-88 to 1993-9463. Canadian manufacturing industries: Relationship between market share in the U.S.A. and the

share of manufacturing employment, 1987-88 to 1993-94

Page 5: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Summary Slide (cont.)Summary Slide (cont.)64. Changes in the U.S. tariffs and Canadian manufacturers’ share in the U.S. market65. Canada’s agri-food exports, 1988 and 199866. Canada’s agri-food imports, 1988 and 199867. The U.S. share of Canadian agri-food trade, 1988 and 199868. Sales by Canadian-owned affiliates in the U.S.A., 1990-199869. Processed food sales by U.S. affiliates in Canada, 1990-199870. Distribution of sales by U.S. foreign affiliates71. Canada’s two-way services trade with the U.S.A., 1989 - 199872. Canada’s travel account deficit with the U.S.A. has narrowed73. Travel to Canada from the U.S.A. mostly by land74. Canadian direct investment stock in the U.S.A. and U.S. investment stock in Canada, 1989 - 199875. U.S. share in total FDI in Canada and Canada’s share in total U.S. 76. The share of Canada and U.S.A. in total world FDI, 1990 and 199777. The U.S. and Canadian direct investment , share by industry, 1989 and 1998

Human Security and Social Indicators for Canada and the U.S.A. in the1990s79. Health expenditure as a percentage of GDP, Canada and the U.S.A., 1989 and 199680. Murder rate, Canada and the U.S.A., 1989 and 199681. Robbery rate, Canada and the U.S.A., 1989 and 199682. U.S., NATO-Europe and Canadian defence expenditures as a % of GDP83. Defence expenditures per capita, Canada and the U.S.A., 1989 - 1998

Page 6: Department Of Foreign Affairs And International

6DFAIT / Trade and Economic Analysis Division (EET)

Summary slide (cont’d)Summary slide (cont’d)84. The Canadian defence budget, 1989 - 199985. Defence expenditures in the U.S.A., 1989 - 199986. Canada’s 1997 Top Cultural Commodity Export Markets87. Canada’s 1997 Top Cultural Commodity Import Markets88. Contribution of cultural sector in Canada’s economy89. Canada’s cultural exports by region90. Share of Canadian cultural commodity exports to the U.S.A. by sector, 1997

Page 7: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Economic Indicators in Canada Economic Indicators in Canada and the U.S.A. in the 1990s and the U.S.A. in the 1990s

Page 8: Department Of Foreign Affairs And International

8DFAIT / Trade and Economic Analysis Division (EET)

Real GDP growth in Canada was 19.1% and in the U.S. 24.6%

90

100

110

120

130

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

1989=100

Employment in Canada grew 9.2% and the U.S. by 12.0%

90

100

110

120

130

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

1989=100

GDP and employment growth between 1989 GDP and employment growth between 1989 and 1998and 1998

U.S.A.U.S.A.

Canada

Canada

Sources: Statistics Canada and U.S. Department of Commerce

Page 9: Department Of Foreign Affairs And International

9DFAIT / Trade and Economic Analysis Division (EET)

Sources: Statistics Canada and OECD

138.7

125.7

100

110

120

130

140

1989 1990 1991 1992 1993 1994 1995 1996 1997

GD

P p

er c

apit

a (P

PP

), 1

989=

100

Canada

U.S.A.

The gap in the standard of living between The gap in the standard of living between Canada and the U.S.A.Canada and the U.S.A.

Page 10: Department Of Foreign Affairs And International

10DFAIT / Trade and Economic Analysis Division (EET)

Between 1988 and 1997, the Western provinces Between 1988 and 1997, the Western provinces increased their shares in Canada’s GDP, while increased their shares in Canada’s GDP, while

Ontario, Quebec and Atlantic Canada lost Ontario, Quebec and Atlantic Canada lost relative importance in total GDPrelative importance in total GDP

Source: Statistics Canada

6.5

23.2

41.8

28.6

6.2

21.7

40.5

31.8

0 5 10 15 20 25 30 35 40 45

Atlantic Canada

Quebec

Ontario

Western Canada

Provincial GDP in national total (%)

1988 1997

Page 11: Department Of Foreign Affairs And International

11DFAIT / Trade and Economic Analysis Division (EET)

Provincial merchandise exports to the Provincial merchandise exports to the U.S.A. increasedU.S.A. increased

Growth rates and 1998 value of exports (in billions)

$0.007

$0.01

$0.4

$1.8

$2.8

$4.5

$5.4

$6.1

$17.1

$25.5

$47.9

$158.5

0 10 20 30 40 50 60 70

Yukon

North West Terr.

Prince Edward Isd

Newfoundland

Nova Scotia

New Brunswick

Saskatchewan

Manitoba

British Columbia

Alberta

Quebec

Ontario

Percent Average Growth, 1989-1998Source: Statistics Canada

Page 12: Department Of Foreign Affairs And International

12DFAIT / Trade and Economic Analysis Division (EET)

The share of the U.S. market increased in The share of the U.S. market increased in each province’s merchandise exportseach province’s merchandise exports

63.6

81.3

53.6

76.1

92.2

83.3

81.2

80.3

74.2

65.4

3.7

98.1

73.5

48.1

64.5

85.5

71.7

62.7

65.7

67.5

64.3

16.4

2.1

41.4

0 20 40 60 80 100

British Columbia

Alberta

Saskatchewan

Manitoba

Ontario

Quebec

New Brunswick

Prince Edward Is.

Nova Scotia

Newfoundland

North West Terr.

Yukon

(%)

19981989

Source: Statistics Canada

Page 13: Department Of Foreign Affairs And International

13DFAIT / Trade and Economic Analysis Division (EET)

Canada’s terms of trade declined in the late 1990s, Canada’s terms of trade declined in the late 1990s, largely due to resource-based commodity prices. largely due to resource-based commodity prices.

However, the decline of the Canadian dollar was also However, the decline of the Canadian dollar was also due to economic conditions in Canadadue to economic conditions in Canada

Sources: Statistics Canada and Bank of CanadaNote: Commodity Price Index 1982-90=100, U.S. dollar terms and Terms of Trade Index, 1992=100

80

85

90

95

100

105

110

115

92-I 92-IV 93-III 94-II 95-I 95-IV 96-III 97-II 98-I 98-IV

Terms of trade & Commodity price

index

0.60

0.65

0.70

0.75

0.80

0.85

0.90

US$ per Canadian dollar

Terms of trade Commodity price Canadian dollar

Page 14: Department Of Foreign Affairs And International

14DFAIT / Trade and Economic Analysis Division (EET)

The growth in Canada and the U.S. has been dominated by such The growth in Canada and the U.S. has been dominated by such information/knowledge-intensive sectors as financial, services, and information/knowledge-intensive sectors as financial, services, and

wholesale trading, resulting in the declining importance of wholesale trading, resulting in the declining importance of manufacturing, construction and agriculturemanufacturing, construction and agriculture

Percentage Contribution by Industry to U.S. GDP

1.6

1.5

4.1

8.8

6.9

20.4

19.4

1.9

1.8

4.5

8.5

13.6

18.6

6.6

8.3

12.7

17.0

17.6

17.8

9.0

0 5 10 15 20 25

Agriculture, Forestry & Fishing

Mining

Construction

Trasportation and PublicUtilities

Retail Trade

Government

Manufacturing

Wholesale Trade

Services

Finance, Insurance and RealEstate

Percentage Contribution by Industry to Canada's GDP

6.8

6.7

2.4

3.9

5.4

4.5

6.2

6.0

17.8

5.9

12.3

16.5

6.4

7.4

6.6

2.7

3.6

7.3

4.5

6.6

7.2

17.9

5.1

12.1

15.0

5.6

0 5 10 15 20

Educational service

Health and social service

Communications

Agricultural,forestry and fishing

Mining

Construction

Transpo & public utilities

Retail trade

Government

Manufacturing

Wholesale trade

Services

Finance, insurance & real estate

1989

1998

Sources: Statistics Canada and U.S. Department of Commerce

Page 15: Department Of Foreign Affairs And International

15DFAIT / Trade and Economic Analysis Division (EET)

The growth in knowledge-intensive sectors in the U.S.A. The growth in knowledge-intensive sectors in the U.S.A. has been correlated with increased importance of has been correlated with increased importance of machinery & equipment exports to the U.S.A. We machinery & equipment exports to the U.S.A. We

continue to be major suppliers of autos and resources to continue to be major suppliers of autos and resources to the U.S.A.the U.S.A.

Source: Statistics Canada

Product Shares of Canadian Goods Exports to the U.S. in 1989 and 1998

9.2

11.3

16.6

29.9

5.6

3.3

22.4

10.5

14.4

17.6

33.9

4.8

1.8

16.4

0 5 10 15 20 25 30 35 40

Energy

Forestry

Industrial Goods

Automotive

Agriculture

Consumer Goods

Machinery & equip. 1989

1998

Page 16: Department Of Foreign Affairs And International

16DFAIT / Trade and Economic Analysis Division (EET)

Labour market performance: in tandem with Labour market performance: in tandem with the U.S.A., high-skill jobs grew more rapidly the U.S.A., high-skill jobs grew more rapidly than other occupations in Canada between than other occupations in Canada between

1989 and 19971989 and 1997

High-skill: managerial, professional and technicalBlue collar: construction, processing, transportation and materials handling

Source: Statistics Canada

-5

0

5

10

15

20

25%

High-skill Sales, serviceand clerical

Blue Collar Total

Can U.S.

Page 17: Department Of Foreign Affairs And International

17DFAIT / Trade and Economic Analysis Division (EET)

Between 1988 and 1998, North American workers Between 1988 and 1998, North American workers become better off, but the average hourly earnings become better off, but the average hourly earnings of production workers increased by 3.16% in the of production workers increased by 3.16% in the U.S.A. while they rose only by 2.57% in CanadaU.S.A. while they rose only by 2.57% in Canada

Sources: Statistics Canada and Bureau of Labor Statistics

02468

10121416

Average hourly earnings of production

workers

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Canada (C$) U.S. (US$)

Page 18: Department Of Foreign Affairs And International

18DFAIT / Trade and Economic Analysis Division (EET)

In face of substantial restructuring in Canada, the In face of substantial restructuring in Canada, the distribution of income in Canada, unlike the U.S., has distribution of income in Canada, unlike the U.S., has

remained stable throughout the 1980s and 1990sremained stable throughout the 1980s and 1990s

Canada U.S.A.% of National Income % of National Income

1985 1995 1985 1995

Families in:

Q1 7.0 5.5 4.8 4.5

Q2 12.8 13.0 11.3 10.7

Q3 18.0 17.8 17.4 16.5

Q4 23.9 23.7 24.6 23.8

Q5 38.2 38.2 41.8 44.4

Q9 15.3 15.2 16.5 16.2

Q10 23.0 22.9 25.3 28.2

Source: Statistics Canada

Inequality and Polarization Indicators for Equivalized Family After-Tax Income

Page 19: Department Of Foreign Affairs And International

19DFAIT / Trade and Economic Analysis Division (EET)

0102030405060708090

100

100 90 80 70 60 50 40 30 20 10

Cumulative distribution of families (%)

Percentage of 1995 National Income

Before tax incomes in 1995

After tax

Taxes and transfers continue to reduce inequality Taxes and transfers continue to reduce inequality of market earnings and results in a more even of market earnings and results in a more even

distribution of incomes in Canadadistribution of incomes in Canada

Source: Statistics Canada

The pushing up of the before-tax income line represents a reduction

in inequality

Page 20: Department Of Foreign Affairs And International

20DFAIT / Trade and Economic Analysis Division (EET)

Economic growth in the 1990s has allowed the Economic growth in the 1990s has allowed the U.S.A. to catch-up to top-ranked Canada in the U.S.A. to catch-up to top-ranked Canada in the

UNDP Human Development Index rankingsUNDP Human Development Index rankings

Source: United Nations

02468

101214161820

1987 1988 1989 1990 1991 1992 1993 1994 1995

Hum

an D

evel

opm

ent

Ran

king

Canada

U.S.A U.S.A.

Canada

Page 21: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

A Statistical Synopsis of the debate: A Statistical Synopsis of the debate: Why has Canada lagged the U.S. Why has Canada lagged the U.S.

performance?performance?

Page 22: Department Of Foreign Affairs And International

22DFAIT / Trade and Economic Analysis Division (EET)

Canada experienced slower growth in the early Canada experienced slower growth in the early 1990s, in part induced by deficit reduction...1990s, in part induced by deficit reduction...

Source: OECD

(National Account Basis)

-8

-6

-4

-2

0

2

Bud

get

defic

it/su

rplu

s as

a

shar

e of

GD

P

Canada U.S.A.

Page 23: Department Of Foreign Affairs And International

23DFAIT / Trade and Economic Analysis Division (EET)

……and inflation reduction in the early-90’s; the and inflation reduction in the early-90’s; the Canadian inflation rate has since dropped below Canadian inflation rate has since dropped below

the U.S.the U.S. raterate

Source: U.S. Department of Commerce and Statistics Canada

Annual percentage change in CPI, Annual percentage change in CPI,

U.S.A. and CanadaU.S.A. and Canada

4.8

5.6

1.5

1.9

1.0

1.6

5.0

1.61.62.2

0.2

5.4

4.84.2

3.0 3.0

2.62.3

2.92.8

0

1

2

3

4

5

6

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% in

fla

tio

n r

ate

U.S.A.

Canada

Page 24: Department Of Foreign Affairs And International

24DFAIT / Trade and Economic Analysis Division (EET)

Deficit financing and inflation led to higher Deficit financing and inflation led to higher Canadian short and long-term interest rates until Canadian short and long-term interest rates until mid-1990s, before declining below the U.S. rates in mid-1990s, before declining below the U.S. rates in

recent yearsrecent years

Sources: U.S. Department of Commerce and Statistics Canada

Short-term values

12.112.7

8.8

6.6

5.0 5.5

7.1

4.43.5

5.0

0

2

4

6

8

10

12

14

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% per annumLong-term values

9.910.8

9.88.8

7.98.6 8.4

7.56.5

5.5

0

2

4

6

8

10

12

14

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% per annum

U.S.A.

U.S.A.

Canada

Canada

Page 25: Department Of Foreign Affairs And International

25DFAIT / Trade and Economic Analysis Division (EET)

Moreover, Moreover, total taxes in Canada are higher total taxes in Canada are higher than in the U.S.A.,...than in the U.S.A.,...

Source: OECD

Total tax revenue as percentage of GDP at market prices

0

5

10

15

20

25

30

35

40

1990 1991 1992 1993 1994 1995 1996

CanadaU.S.A.

Page 26: Department Of Foreign Affairs And International

26DFAIT / Trade and Economic Analysis Division (EET)

……and the total tax burden in Canada is higher and the total tax burden in Canada is higher than it is in the U.S.A.,...than it is in the U.S.A.,...

Source: OECD

3.3

13.9

3.2

10.7

9.1

6.0

36.8

4.5

7.0

4.9

2.7

28.5

0 5 10 15 20 25 30 35 40

Other Taxes

Payroll and Social Security

Taxes on Goods and Services

Corporate Income Tax

Personal Income Tax

Total

Source of revenues

% revenues of GDP in 1996

Canada U.S.A.

Page 27: Department Of Foreign Affairs And International

27DFAIT / Trade and Economic Analysis Division (EET)

……and personal income tax and social security and personal income tax and social security contributions (net of refundable tax credit) as a share of contributions (net of refundable tax credit) as a share of

family income differ in Canada and the U.S.A.family income differ in Canada and the U.S.A.

Income Canada U.S.A.15,00020,00025,00030,00035,00040,00050,00060,00075,000100,000150,000200,000

-33.5-20.8-9.21.59.814.920.424.328.532.036.739.4

-33.8-23.2-11.6-4.9-2.5-1.411.413.716.216.326.129.7

Calculations include:

•Average of Florida, New York and California for the U.S. (1998); and Ontario, Alberta, and British Columbia for Canada.

•Average income of a family of one-earner couple with two children, plus a family of two earner couple with two children.

Data Source: Department of Finance

Page 28: Department Of Foreign Affairs And International

28DFAIT / Trade and Economic Analysis Division (EET)

Federal Government expenditures as a Federal Government expenditures as a percentage of GDP have fallen in both Canada percentage of GDP have fallen in both Canada

and the U.S.A.and the U.S.A.

Total outlays: current outlays plus net capital outlays.

Data Source: OECD Economic Outlook no.65, June 1999, Preliminary EditionSource: Department of Finance

0

10

20

30

40

50

60

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

Cen

tral

Gov

t to

tal e

xpen

ditu

res

as %

of

GD

P

(Nat

iona

l Acc

ount

s)

CanadaU.S.A.

Page 29: Department Of Foreign Affairs And International

29DFAIT / Trade and Economic Analysis Division (EET)

But Canada’s debt to GDP ratio remains But Canada’s debt to GDP ratio remains above that of the U.S.A.,...above that of the U.S.A.,...

Source: OECD

0

10

20

30

40

50

60

70

80

1989 1990 1991 1992 1993 1994 1995 1996 1997

De

bt

to G

DP

ra

tio

, na

tio

na

l ac

co

un

t b

as

is

U.S.A.

Canada

Page 30: Department Of Foreign Affairs And International

30DFAIT / Trade and Economic Analysis Division (EET)

…so the Canadian government’s net debt interest so the Canadian government’s net debt interest payments as a percentage of GDP are higher than payments as a percentage of GDP are higher than

in the U.S.A.in the U.S.A.

Source: OECD

0

1

2

3

4

5

6

1989 1990 1991 1992 1993 1994 1995 1996 1997

CanadaU.S.A.

Page 31: Department Of Foreign Affairs And International

31DFAIT / Trade and Economic Analysis Division (EET)

As regards technology, Canada is slower than As regards technology, Canada is slower than

the U.S.A. in innovations and adoption...the U.S.A. in innovations and adoption...

Source: National Science Foundation

29.6

31.7

1.4 1.6

0

4

8

12

16

20

24

28

32

36

1989 1995

prod

uctio

n, p

erce

ntsh

are

in th

e w

orld

U.S.A. Canada

2.1

30.830.1

2.0

0

6

12

18

24

30

36

1989 1995

cons

umpt

ion,

per

cent

sha

re in

the

wor

ld

U.S.A. Canada

U.S. continues to be a leading producer…. ...and leading consumer of high-tech products, with about

30% share of the global market

Page 32: Department Of Foreign Affairs And International

32DFAIT / Trade and Economic Analysis Division (EET)

……as Canada’s R&D spending has consistently as Canada’s R&D spending has consistently remained below the U.S.A. levels...remained below the U.S.A. levels...

Source: Statistics Canada

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1989 1990 1991 1992 1993 1994 1995 1996 1997

R&

D e

xpen

ditu

re s

hare

in G

DP

(p

erce

nt)

U.S.A.

Canada

Page 33: Department Of Foreign Affairs And International

33DFAIT / Trade and Economic Analysis Division (EET)

…….and the importance of gross private .and the importance of gross private investment in Canadian GDP appears to have investment in Canadian GDP appears to have

been limitedbeen limited

Sources: Bureau of Economic Analysis and Statistics Canada

The share of private investment declined to 16.9% in 1998 from 19.5% in 1989

0

5

10

15

20

25

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998% s

hare

of g

ross

pri

vate

in

vest

men

t in

GD

P

U.S.A.

Canada

Page 34: Department Of Foreign Affairs And International

34DFAIT / Trade and Economic Analysis Division (EET)

A comparison of labour productivity between A comparison of labour productivity between Canada and the U.S.A. presents a mixed pictureCanada and the U.S.A. presents a mixed picture

1.4

2.2

0.6

1.81.5

-1.1

2.9

0.8

3.4

2.7

0.4

-0.2

0.1

0.60.3

1.5

0.60.7

-1.5-1

-0.50

0.51

1.52

2.53

3.54

1989 1990 1991 1992 1993 1994 1995 1996 1997

(%)Canada USA

Source: Statistics Canada

Page 35: Department Of Foreign Affairs And International

35DFAIT / Trade and Economic Analysis Division (EET)

Technological progress in the business sector Technological progress in the business sector has been comparablehas been comparable

90

100

110

120

130

140

150

160

1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997

Canada USA

Index, 1961=100

Source: Statistics Canada

Page 36: Department Of Foreign Affairs And International

36DFAIT / Trade and Economic Analysis Division (EET)

Annual growth rate of multifactor productivityAnnual growth rate of multifactor productivity in manufacturing, 1990 to 1995 in manufacturing, 1990 to 1995

0.7

1.4

0.5

-1.0

1.2

1.2

1.1

0.2

1.8

0.1

0.5

1.0

1.0

2.1

1.5

0.9

0.8

1.1

1.4

-0.4

-1.2

0.6

0.3

-0.7

0.2

0.3

1.0

-0.6

0.5

1.4

1.2

3.8

8.3

0.0

1.8

-3.0

-4 -2 0 2 4 6 8 10

Food & beverage

Textiles

Clothing

Wood and lumber

Furnitures

Pulp and paper

Printing

Chemical products

Refineries

Rubber or plastic products

Leather products

Non-metallic mineral products

Primary products

Fabricated metal products

Commercial and industrial machinery

Electrical and electronics products

Transportation equipment

Total manufacturing

Annual % growth

Canada USA

Source: Statistics Canada

Page 37: Department Of Foreign Affairs And International

37DFAIT / Trade and Economic Analysis Division (EET)

Worker skills: Although expenditures on educational Worker skills: Although expenditures on educational institutions for all levels of education combined is institutions for all levels of education combined is

higher in Canada than in the U.S.A.,...higher in Canada than in the U.S.A.,...

0

1

2

3

4

5

6

7

8

1993 1995 1993 1995

% o

f G

DP

Canada

United States

Total expenditure from both public and private sources

Direct public expenditure

Source: Statistics Canada

Page 38: Department Of Foreign Affairs And International

38DFAIT / Trade and Economic Analysis Division (EET)

……expenditure per student for all levels of expenditure per student for all levels of education combined rose in the U.S.A. and fell in education combined rose in the U.S.A. and fell in

CanadaCanada

$6,747

$7,744

$6,717

$7,905

$6,000

$6,200

$6,400

$6,600

$6,800

$7,000

$7,200

$7,400

$7,600

$7,800

$8,000

1995 US dollars

1993 1995

Canada U.S.A

Source: Statistics Canada

Page 39: Department Of Foreign Affairs And International

39DFAIT / Trade and Economic Analysis Division (EET)

Demand for labour: Employment rates in the Demand for labour: Employment rates in the U.S.A. have been much higher than in Canada U.S.A. have been much higher than in Canada

in the 1990s, particularly among older and in the 1990s, particularly among older and younger age groupsyounger age groups

Source: Labour Force Survey, STC

Employment rate

52

54

56

58

60

62

64

66US (age 16+)

Canada (age 15+)

%Employment rate differences

(US minus Canada), 1998

0

2

4

6

8

10

12

14

16

Youths Core age(25-54)

Older (55-64)

Men

Women

% points

Page 40: Department Of Foreign Affairs And International

40DFAIT / Trade and Economic Analysis Division (EET)

There are striking differences in the type of job There are striking differences in the type of job growth over the 1990s in Canada and the U.S.A.growth over the 1990s in Canada and the U.S.A.

Contribution to employment growth over the 1990s (1989 to 1998)

0

10

20

30

40

50

60

70

80

Self-employed,full-time

Self-employed,part-time

Paid worker,full-time

Paid worker,part-time

US

Canada

%

Source: Statistics Canada

Page 41: Department Of Foreign Affairs And International

41DFAIT / Trade and Economic Analysis Division (EET)

Adult unemployment rates are lower in the Adult unemployment rates are lower in the U.S.A. than in Canada for all levels of U.S.A. than in Canada for all levels of

educational attainmenteducational attainment

Source: Labour Force Survey, STC

Unemployment rates by educational attainment, age 25+, 1998

0.0

4.0

8.0

12.0

16.0

Total aged25+

Less thanhigh school

High schoolgrad

Some post-secondary

orcertificate

Universitydegree

Canada

USA

%

Page 42: Department Of Foreign Affairs And International

42DFAIT / Trade and Economic Analysis Division (EET)

The unemployment rate gap persists for all The unemployment rate gap persists for all age/sex groups, but is most pronounced for age/sex groups, but is most pronounced for

male youthsmale youths

Source: Labour Force Survey, STC

Unemployment rates

0

2

4

6

8

10

12

14

19

76

19

79

19

82

19

85

19

88

19

91

19

94

19

97

%

US (age 16+)

Canada (age 15+)

Unemployment rate differences (US minus

Canada), 1998

0123456789

10

Youths Core age(25-54)

Older (55-64)

Men

Women

% points

Page 43: Department Of Foreign Affairs And International

43DFAIT / Trade and Economic Analysis Division (EET)

Both higher incidence and longer duration Both higher incidence and longer duration contributed to the higher unemployment rate in contributed to the higher unemployment rate in

Canada in the 1990sCanada in the 1990s

Source: Labour Force Survey, STC

Incidence of unemployment (% of labour force becoming

unemployed each month)

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1976

1979

1982

1985

1988

1991

1994

1997

Canada

US

Average Weeks Unemployed

0

5

10

15

20

25

30

1976

1979

1982

1985

1988

1991

1994

1997

US

Canada

Page 44: Department Of Foreign Affairs And International

44DFAIT / Trade and Economic Analysis Division (EET)

Concerning a brain-drain to the U.S.A….Concerning a brain-drain to the U.S.A….• Less than 2.0% of university graduates settle permanently

in the U.S.A.• Four times as many university graduates come to Canada

from world-wide sources, a disproportionate share with degrees such as Master’s or Ph.Ds

• The data for movement of temporary workers to the U.S.A. are not robust– The count is based on border crossings and fluctuates

with administrative changes• The outflow of permanent and temporary workers is

currently estimated at 15,000 - 20,000 per year. Of these, 8,000 - 10,000 are likely to be university graduates

• This outflow of workers to the U.S.A. is offset by a net annual inflow of 24,500 university trained immigrants

Source: Statistics Canada

Page 45: Department Of Foreign Affairs And International

45DFAIT / Trade and Economic Analysis Division (EET)

……there appears to be no trend of increase in there appears to be no trend of increase in Canadian emigration to the U.S.A. in the Canadian emigration to the U.S.A. in the

1990s1990s

0

5000

10000

15000

20000

25000

30000

1990 1991 1992 1993 1994 1995 1996

Emigration to the U.S.A.Source: Statistics Canada

Page 46: Department Of Foreign Affairs And International

46DFAIT / Trade and Economic Analysis Division (EET)

Emigration to the U.S.A. is very small relative Emigration to the U.S.A. is very small relative to the stock of workers in the Canadian labour to the stock of workers in the Canadian labour

forceforce

Annual averagepermanent

emigration to theU.S. (1990-96)

Total stock ofworkers in the

Canadian labourforce (1996)

Permanentemigrationas fraction

of totalstock

Physicians307 59,340 5/1000

Nurses 816 246,800 3/1000

ComputerScientists

139 168,385 1/1000

Engineers527 172,415 3/1000

Managerialworkers

2,347 1,927,760 1/1000

Source: Statistics Canada

Page 47: Department Of Foreign Affairs And International

47DFAIT / Trade and Economic Analysis Division (EET)

Increase in the number of computer engineers, systems analysts and computer programmers employed, 1991 to 1996

Total increase in the employed labor force 38,290

Increase among 1990-96 immigrants 11,870

% increase accounted forby 1990-96 immigrants 31%

Recent immigrants into Canada account for Recent immigrants into Canada account for 5% of the population, but more than 30% of 5% of the population, but more than 30% of employment growth in the high-tech sectoremployment growth in the high-tech sector

Source: Statistics Canada

Page 48: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

The importance of Canada and the The importance of Canada and the U.S.A. in each other’s economyU.S.A. in each other’s economy

Page 49: Department Of Foreign Affairs And International

49DFAIT / Trade and Economic Analysis Division (EET)

Canada has become more integrated with the Canada has become more integrated with the United States as our trade rose by more than United States as our trade rose by more than

two-fold over ten years….two-fold over ten years….

Source: Statistics Canada

100

150

200

250

300

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Bil

lion

s of

C$

Canada's goods and services exports to the U.S.Canada's goods and services imports from the U.S.

Exports

Imports

Page 50: Department Of Foreign Affairs And International

50DFAIT / Trade and Economic Analysis Division (EET)

……and as the share of Canadian trade with the U.S.A. and as the share of Canadian trade with the U.S.A. in our GDP rose in our GDP rose

Source: Statistics Canada

Canadian trade flows with the US as a percentage of Cdn GDP

0%

10%

20%

30%

40%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

Year

Exp to US as % of GDP Imp from US as % of GDP

Page 51: Department Of Foreign Affairs And International

51DFAIT / Trade and Economic Analysis Division (EET)

The same trend holds for the U.S.A., but The same trend holds for the U.S.A., but proportionally lessproportionally less

US trade flows with Canada as percentage of US GDP

0.0%

1.0%

2.0%

3.0%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

Year

Exp to Cda as % of US GDP Imp from Cda as % of US GDP

Source: Statistics Canada

Page 52: Department Of Foreign Affairs And International

52DFAIT / Trade and Economic Analysis Division (EET)

Goods and services trade have been growing Goods and services trade have been growing in parallel since 1991in parallel since 1991

Index of Exports of Goods and Services (1980=100)

-100200300400500600700

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

Goods Services

Source: Statistics Canada

Page 53: Department Of Foreign Affairs And International

53DFAIT / Trade and Economic Analysis Division (EET)

The U.S.A. remains Canada’s largest trading The U.S.A. remains Canada’s largest trading partnerpartner

Source: Statistics Canada

C anadian-U S tra de as a pe rce ntage of all C a nadian trade

0%

20%

40%

60%

80%

100%

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

Year

Sh are o f exp o rts t o US Sh are of im po rts fro m US

Page 54: Department Of Foreign Affairs And International

54DFAIT / Trade and Economic Analysis Division (EET)

With all states gaining since 1991With all states gaining since 1991

0% 50% 100% 150% 200% 250% 300% 350% 400% 450%

Kentucky

Idaho

Ohio

Kansas

Nebraska

Arkansas

New York

Vermont

California

Maryland

Maine

Mississippi

Nevada

Percent growth from 1991 to 1998

Selected U.S.A. state exports to CanadaSelected U.S.A. state exports to Canada

Source: Statistics Canada

Page 55: Department Of Foreign Affairs And International

55DFAIT / Trade and Economic Analysis Division (EET)

Growth in Canadian exports to the U.S.A., by Growth in Canadian exports to the U.S.A., by Industry (1989-98) Industry (1989-98)

Source: Industry Canada

0 5 10 15 20 25 30

CLOTHING INDUSTRIES

PRIMARY TEXTILE INDUSTRIES

QUARRY AND SAND PIT INDUSTRIES

FURNITURE AND FIXTURE INDUSTRIES

PLASTIC PRODUCTS INDUSTRIES

LOGGING INDUSTRY

TEXTILE PRODUCTS INDUSTRIES

OTHER MANUFACTURING IND.

ELECTRIC AND ELECTRONIC PRODUCTS INDUSTRIES

WOOD INDUSTRIES

ARICULTURAL INDUSTRIES

FABRICATED METAL PRODUCTS INDUSTRIES

PRINTING, PUBLISHING AND ALLIED INDUSTRY

FOOD INDUSTRIES

CHEMICAL AND CHEMICAL PRODUCTS IND.

MACHINERY INDUSTRIES

RUBBER PRODUCTS INDUSTRIES

NON-METALLIC MINERAL PRODUCTS INDUSTRIES

LEATHER AND ALLIED PRODUCTS IND.

CRUDE PET. AND NATURAL GAS IND.

TRANSPORTATION EQUIPMENT INDUSTRIES

FISHING AND TRAPPING INDUSTRIES

REFINED PETROLEUM AND COAL PROD. INDUSTRIES

BEVERAGE INDUSTRIES

PRIMARY METAL INDUSTRIES

PAPER AND ALLIED PRODUCTS INDUSTRIES

MINING INDUSTRIES

Page 56: Department Of Foreign Affairs And International

56DFAIT / Trade and Economic Analysis Division (EET)

No evidence to support that the lower exchange No evidence to support that the lower exchange rates help Canadian manufacturers to rates help Canadian manufacturers to gain share in the Canada/US marketgain share in the Canada/US market

4

6

8

10

89 90 91 92 93 94 95 96 97 98% C

anad

a's

shar

e of

Can

adia

n pl

us U

.S. m

ark

et

1.00

1.10

1.20

1.30

1.40

1.50

$C/$US

Canadian share of North American market

Canadian and US dollar exchange rate

Source: Statistics Canada

Page 57: Department Of Foreign Affairs And International

57DFAIT / Trade and Economic Analysis Division (EET)

Canadian manufacturers have maintained share in Canadian manufacturers have maintained share in the combined Canada/U.S.A. marketthe combined Canada/U.S.A. market

4

6

8

10

89 90 91 92 93 94 95 96 97 98

%Canadian share in combined Canada/U.S.A. market

Source: Statistics Canada

Page 58: Department Of Foreign Affairs And International

58DFAIT / Trade and Economic Analysis Division (EET)

U.S.A. manufacturers have been losing share U.S.A. manufacturers have been losing share in the combined Canada/U.S.A. marketin the combined Canada/U.S.A. market

75

78

81

84

87

90

89 90 91 92 93 94 95 96 97 98

%

USA share in combined Canada/U.S.A. market

Source: Statistics Canada

Page 59: Department Of Foreign Affairs And International

59DFAIT / Trade and Economic Analysis Division (EET)

40

45

50

55

60

65

89 90 91 92 93 94 95 96 97 98

Although Canadian manufacturers have been Although Canadian manufacturers have been losing market share in Canadalosing market share in Canada

Canadian share - domestic market%

Source: Statistics Canada

Page 60: Department Of Foreign Affairs And International

60DFAIT / Trade and Economic Analysis Division (EET)

60

65

70

75

80

85

90

95

100

89 90 91 92 93 94 95 96 97 98

And so have U.S.A. manufacturersAnd so have U.S.A. manufacturers

% US share of the U.S.A. market

Source: Statistics Canada

Page 61: Department Of Foreign Affairs And International

61DFAIT / Trade and Economic Analysis Division (EET)

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5

Canada gained market share in US in industries where Canada gained market share in US in industries where US recorded the biggest losses, 1987-88 to 1993-94US recorded the biggest losses, 1987-88 to 1993-94

Rubber products

TotalFurniture and fixtures

Transportation equip.

Chemicals

Paper and allied

Electrical

Clothing

Leather Primary textiles

Machinery

US manufacturers (changes in share - percentage points)

Canadian manufacturers (changes in share - percentage points)

Source: Statistics Canada

Page 62: Department Of Foreign Affairs And International

62DFAIT / Trade and Economic Analysis Division (EET)

0

5

10

15

20

25

30

35

-35 -30 -25 -20 -15 -10 -5 0

U.S.A. gained market share in Canadian industries U.S.A. gained market share in Canadian industries where Canada recorded losses, 1987-88 to 1993-94where Canada recorded losses, 1987-88 to 1993-94

Furniture and fixtures

Rubber products

Chemicals

MachineryPrimary metals

Leather

TotalTransportation equip.

Electrical

Textiles

US manufacturers (changes in share - percentage points)

Canadian manufacturers (changes in share - percentage points)

Source: Statistics Canada

Page 63: Department Of Foreign Affairs And International

63DFAIT / Trade and Economic Analysis Division (EET)

Canadian manufacturing industries: Relationship Canadian manufacturing industries: Relationship between market share in the U.S.A. and the share of between market share in the U.S.A. and the share of

manufacturing employment, 1987-88 to 1993-94manufacturing employment, 1987-88 to 1993-94

Market shares in U.S.A. (changes in percentage points)

Manufacturing employment share (changes in percentage points)

-1.5

-1

-0.5

0

0.5

1

1.5

-1 -0.5 0 0.5 1 1.5 2 2.5

Transportation Equip.

Rubber

Wood

Clothing

Tobacco

RefinedPetroleum

Paper

Source: Statistics Canada

Page 64: Department Of Foreign Affairs And International

64DFAIT / Trade and Economic Analysis Division (EET)

-6

-5

-4

-3

-2

-1

0

-20 0 20 40 60 80

Leather

Machinery

Furniture and fixtures

Transportation equip.

Textile products

Food

Wood

Rubber

Plastic products

Chemicals

Paper & allied

Other

US imports tariffs (changes - percentage points)

Canadian share - U.S.A. market (relative change - per cent)

Changes in the U.S. tariffs and Canadian Changes in the U.S. tariffs and Canadian manufacturers’ share in the U.S. marketmanufacturers’ share in the U.S. market

Source: Statistics Canada

Page 65: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET) 65

Canada’s Agri-Food Exports

Bulk Intermediate Consumer-Oriented

In the agri-food industry, the U.S.A. remains the In the agri-food industry, the U.S.A. remains the leading destination for Canada’s intermediate and leading destination for Canada’s intermediate and

consumer-oriented agri-food exportsconsumer-oriented agri-food exports

Source: Agriculture and Agri-food Canada

5.92

7.60

2.21

5.93

2.73

9.12

0

2

4

6

8

10

12

1988 1998 1988 1998 1988 1998

Billions of C$

Other Countries United-States

Page 66: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET) 66

1.22

2.561.40

2.58

4.86

11.22

0

2

4

6

8

10

12

1988 1998 1988 1998 1988 1998

Billions of C$

Other Countries United-States

Canada’s Agri-Food Imports

Bulk Intermediate Consumer-Oriented

The U.S.A. also remains the principal source for The U.S.A. also remains the principal source for Canadian imports of intermediate and consumer-Canadian imports of intermediate and consumer-

oriented agri-food productsoriented agri-food products

Source: Agriculture and Agri-food Canada

Page 67: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET) 67

The U.S. share of Canadian agri-food trade has The U.S. share of Canadian agri-food trade has increased significantly over the 1988-1998 periodincreased significantly over the 1988-1998 period

10.86

22.65

7.48

16.36

0

4

8

12

16

20

24

1988 1998 1988 1998

Billions of C$

Other Countries United-States

Total Agri-Food Exports Total Agri-Food Imports

31% 54%

57% 61%

69%

43%

46%

39%

Total Agri-Food Exports and Imports

Source: Agriculture and Agri-food Canada

Page 68: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET) 68

0123456789

10

1990 1991 1992 1993 1994 1995 1996 1997 1998

Affiliate Sales

U.S.A. Imports

US $ Billions

Source: Agriculture and Agri-food Canada

Processed Food Sales by Canadian Affiliates in the U.S.A. vs. US Imports from Canada

Sales by Canadian-owned affiliates in the Sales by Canadian-owned affiliates in the U.S.A. have been variable, but they have U.S.A. have been variable, but they have

grown over the 1990-1998 periodgrown over the 1990-1998 period

Page 69: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET) 69

Processed Food Sales by US Affiliates in Canada vs.US Exports to Canada

US $ Billions

Source: Agriculture and Agri-food Canada

Sales by U.S. affiliates in Canada are over twice as large as U.S. Sales by U.S. affiliates in Canada are over twice as large as U.S. processed food exports to Canada, and both are growing. A highly processed food exports to Canada, and both are growing. A highly

integrated and expanded regional market is evidenced by the increase integrated and expanded regional market is evidenced by the increase in both U.S. and Canadian affiliates and the growth in trade between in both U.S. and Canadian affiliates and the growth in trade between

the two countries the two countries

0

2

4

6

8

10

12

14

1990 1991 1992 1993 1994 1995 1996 1997 1998

Affiliate SalesU.S.A Exports

Page 70: Department Of Foreign Affairs And International

70DFAIT / Trade and Economic Analysis Division (EET)

Mexico

US$5.5 B

In Canada, U.S. affiliates export a higher percentage of their In Canada, U.S. affiliates export a higher percentage of their production to the U.S.A. than do U.S. affiliates in other production to the U.S.A. than do U.S. affiliates in other

countries. In addition, many U.S. affiliates in Canada have countries. In addition, many U.S. affiliates in Canada have product mandates which result in the imports of semi-product mandates which result in the imports of semi-

processed ingredients from the U.S.A.processed ingredients from the U.S.A.

Distribution of Sales by US Foreign Affiliates, 1996

World-wide

US$121.2 B

Canada

US$11.6 B

Local Sales Exports to Other Countries Exports to the US

Source: Agriculture and Agri-food Canada

Page 71: Department Of Foreign Affairs And International

71DFAIT / Trade and Economic Analysis Division (EET)

With regard to services trade, Canada’s two-way With regard to services trade, Canada’s two-way services trade with the U.S.A. grew by $30 billion services trade with the U.S.A. grew by $30 billion

between 1989 and 1998, mostly on account of between 1989 and 1998, mostly on account of commercial servicescommercial services

Canada's Services Trade with the U.S.

27.7

32.6

0

5

10

15

20

25

30

35

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

bil

lio

ns

of

C$

Exports Imports

Share of Commercial Services to Total Services Trade with the U.S.

47.050.6

48.4

53.3

0

10

20

30

40

50

60

1989 1998

pe

r ce

nt

Exports Imports

Source: Statistics Canada

Page 72: Department Of Foreign Affairs And International

72DFAIT / Trade and Economic Analysis Division (EET)

Also due to a lower Canadian dollar, Also due to a lower Canadian dollar, Canada’s travel account deficit with the Canada’s travel account deficit with the

U.S.A. has narrowedU.S.A. has narrowed

-8

-3

2

7

12

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

bill

ions

of C

$

Travel exports Travel imports Travel balance

Source: Statistics Canada

Page 73: Department Of Foreign Affairs And International

73DFAIT / Trade and Economic Analysis Division (EET)

Travel to Canada from the U.S.A. mostly by Travel to Canada from the U.S.A. mostly by landland

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

num

ber

of c

ross

ings Automobile

Plane

Bus

Other including Rail andBoat

Source: Citizenship and Immigration Canada

Page 74: Department Of Foreign Affairs And International

74DFAIT / Trade and Economic Analysis Division (EET)

Two-way flow of investment between Canada and the Two-way flow of investment between Canada and the U.S.A. was also an important component of the on-going U.S.A. was also an important component of the on-going

integration. Canadian direct investment stock in the U.S.A. integration. Canadian direct investment stock in the U.S.A. and U.S. investment stock in Canada has doubledand U.S. investment stock in Canada has doubled

57

80

60

84

63

86

65

88

68

91

78

103

88

113

95

120

103

132126

147

0

50

100

150

Bill

ions

of

C$

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Canadian Direct Investment to the U.S. (stock)

Direct Investment in Canada from the U.S. (stock)

Source: Statistics Canada

Page 75: Department Of Foreign Affairs And International

75DFAIT / Trade and Economic Analysis Division (EET)

65.6 67.1

16.7 11.6

0

20

40

60

80

1989 1997

Share (%)

U.S. share to Canada Canada's share to U.S.A.

While the U.S. share in total FDI in Canada has While the U.S. share in total FDI in Canada has remained in the 65-68% range, Canada’s share in total remained in the 65-68% range, Canada’s share in total U.S. FDI has declined to 11.6% in 1997 from 16.7% in U.S. FDI has declined to 11.6% in 1997 from 16.7% in

19891989

Source: Statistics Canada

Page 76: Department Of Foreign Affairs And International

76DFAIT / Trade and Economic Analysis Division (EET)

The share of Canada and U.S.A. in total world The share of Canada and U.S.A. in total world FDI declined between 1990 and 1997FDI declined between 1990 and 1997

6.5

4.0

20.922.7

0

5

10

15

20

25

1990 1997

% share of world FDI Share of Canada Share of U.S.A.

Source: World Investment Report

Page 77: Department Of Foreign Affairs And International

77DFAIT / Trade and Economic Analysis Division (EET)

The share of U.S. and Canadian direct investment The share of U.S. and Canadian direct investment has increased in information and knowledge-has increased in information and knowledge-

intensive sectors: our investors are contributing to intensive sectors: our investors are contributing to the restructuring in North Americathe restructuring in North America

3.1

20.4

2.6

23.6

16.2

34.1

0 10 20 30 40 50

Wood and Paper

Energy & MetallicMinerals

Machinery &Transportation Equipment

Finance & Insurance

Services & Retailing

Other Industries

per cent

Canadian Direct Investment to the U.S., Share by Industry Foreign Direct Investment in Canada from the U.S., Share by Industry

Source: Statistics Canada

7.9

18.1

16.8

14.4

10.9

31.9

0 5 10 15 20 25 30 35

Wood and Paper

Energy & MetallicMinerals

Machinery &Transportation Equipment

Finance & Insurance

Services & Retailing

Other Industries

per cent1998 1989

Page 78: Department Of Foreign Affairs And International

DFAIT / Trade and Economic Analysis Division (EET)

Human Security and Social Human Security and Social Indicators for Canada and the Indicators for Canada and the

U.S.A. in the 1990sU.S.A. in the 1990s

Page 79: Department Of Foreign Affairs And International

79DFAIT / Trade and Economic Analysis Division (EET)

Health expenditure as a percentage of Health expenditure as a percentage of GDP in Canada has declined slightly GDP in Canada has declined slightly

since 1992since 1992

9.28.6

13.6

11.5

0

2

4

6

8

10

12

14

16

1989 1990 1991 1992 1993 1994 1995 1996

% of GDP

Source: Canadian Institute for Health Information and Health U.S.A.

U.S.A.

Canada

Page 80: Department Of Foreign Affairs And International

80DFAIT / Trade and Economic Analysis Division (EET)

The murder rate in the U.S.A. has been declining since The murder rate in the U.S.A. has been declining since 1992 but is still much above that of Canada1992 but is still much above that of Canada

Sources: Statistics Canada and the U.S. Federal Bureau of Investigation

7

1.90

2

4

6

8

10

12

1989 1990 1991 1992 1993 1994 1995 1996

Rat

e pe

r 10

0,00

0 po

pula

tion

U.S.A.

Canada

Page 81: Department Of Foreign Affairs And International

81DFAIT / Trade and Economic Analysis Division (EET)

With a broadly similar trend for the robbery rate in the With a broadly similar trend for the robbery rate in the U.S.A. and CanadaU.S.A. and Canada

202

106.1

0

50

100

150

200

250

300

1989 1990 1991 1992 1993 1994 1995 1996

Rat

e pe

r 10

0,00

0 po

pula

tion

U.S.A.

Canada

Sources: Statistics Canada and the U.S. Federal Bureau of Investigation

Page 82: Department Of Foreign Affairs And International

82DFAIT / Trade and Economic Analysis Division (EET)

Source Data: SIPRI Yearbook; NATO Publication M-DPC-(98)147

5.8

5.5

4.95.1

4.7

4.34.0 3.7

3.5 3.3

2.22.22.32.32.42.82.93.03.03.1

1.21.31.51.61.81.91.91.92.02.0

0

1

2

3

4

5

6

7

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% of GDP

U.S.A.

NATO-Europe

Canada

U.S., NATO-Europe and Canadian defence U.S., NATO-Europe and Canadian defence expenditures as a % of GDPexpenditures as a % of GDP

Page 83: Department Of Foreign Affairs And International

83DFAIT / Trade and Economic Analysis Division (EET)

Source Data: SIPRI Yearbook; NATO Publication M-DPC-(98)14

443 415 388 388 382 359 335 302 278 253

12871225

10741128

1047971

914863 850

804

0

200

400

600

800

1000

1200

1400

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Exp

endi

ture

/Cap

ita

(US

$ 19

90)

U.S.A.

Canada

Defence expenditures per capitaDefence expenditures per capita

Page 84: Department Of Foreign Affairs And International

84DFAIT / Trade and Economic Analysis Division (EET)

Source Data: Military Balance; SIPRI Yearbook; NATO Publication M-DPC-(98)147

Canadian Defence Expenditures

$12.9$13.5

$12.8 $13.1 $13.3$13.0

$12.5

$11.5

$10.8

$10.0$10.4

8

9

10

11

12

13

14

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Bil

lion

s of

Can

adia

n $

The Canadian defence budget increased The Canadian defence budget increased marginally in 1999marginally in 1999

Page 85: Department Of Foreign Affairs And International

85DFAIT / Trade and Economic Analysis Division (EET)

Source Data: Military Balance; SIPRI Yearbook; NATO Publication M-DPC-(98)147

United States Defence Expenditures

$304.1$306.2 $305.1$297.6

$288.1

$278.9

$271.4$276.3

$269.8

$280.8

$280.3

250

260

270

280

290

300

310

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Bil

lion

s of

US$

Defence expenditures in the U.S.A. started Defence expenditures in the U.S.A. started rising again this yearrising again this year

Page 86: Department Of Foreign Affairs And International

86DFAIT / Trade and Economic Analysis Division (EET)

Canada’s 1997 Top Cultural Commodity Canada’s 1997 Top Cultural Commodity Export MarketsExport Markets

Source: Statistics Canada 1997-98 Cultural Trade and Investment Project

Export Market $C %1 United States 1,337,523,706 89.22 United Kingdom 31,453,134 2.13 France 17,251,052 1.24 Japan 14,607,692 1.05 Germany 11,009,849 0.76 Australia 10,585,514 0.77 Netherlands 5,954,964 0.48 Switzerland 4,739,799 0.39 Hong Kong 3,810,981 0.3

10 South Africa 3,799,967 0.311 Mozambique 3,525,583 0.212 Italy 3,419,041 0.213 Ireland 3,348,659 0.214 Ghana 3,252,786 0.215 Belgium 2,848,262 0.2

Page 87: Department Of Foreign Affairs And International

87DFAIT / Trade and Economic Analysis Division (EET)

Canada’s 1997 Top Cultural Commodity Canada’s 1997 Top Cultural Commodity Import MarketsImport Markets

Source: Statistics Canada 1997-98 Cultural Trade and Investment Project

Import Market $C %1 United States 4,052,230,165 85.32 United Kingdom 162,001,753 3.43 France 152,697,411 3.24 China, P. Rep. 62,153,800 1.35 Japan 42,221,585 0.96 Hong Kong 39,973,531 0.87 Germany 31,296,389 0.78 Ireland 23,780,254 0.59 Italy 22,922,116 0.5

10 Taiwan 14,496,148 0.311 Singapore 14,112,558 0.312 Korea, South 12,647,777 0.313 Canada 12,001,925 0.314 Mexico 9,969,918 0.215 Belgium 8,664,048 0.216 Rest of World 87,387,357 1.8

TOTAL 4,748,556,735

Page 88: Department Of Foreign Affairs And International

88DFAIT / Trade and Economic Analysis Division (EET)

• The cultural sector grew 13.9% between 1989-90 and 1995-96, outstripping growth in some other key sectors such as transportation and agriculture.

•From 1990 to 1994, the cultural labour force increased by 5.6% while total employment declined 0.5%.•Where as only 60% of total employment in Canada is knowledge-based, 82% of Canada’s cultural sector may be defined as such; creators, managers, professionals and technicians.

* Statistics Canada 1997-98 Cultural Trade and Investment Project‡ Statistics Canada 1994 expenditure based GDP; 1994 labour force

Source: Canadian Heritage

Culture610,000*

Totalemployment13,292,000 ‡

Culture$20 billion*

Total grossdomestic product

$767.5 billion‡

1994-95 GDP 1994-95 Employment

The cultural sector is an important The cultural sector is an important contributor to the economycontributor to the economy

Page 89: Department Of Foreign Affairs And International

89DFAIT / Trade and Economic Analysis Division (EET)

CANADA'S CULTURAL EXPORTS BY REGION*1997

CANADA'S MERCHANDISE EXPORTS BY REGION 1998

USA 84.72%

Japan 2.8%

Other OECD 2.6%

EU 5.39%

Other coutries 4.5%

USA 89.2%

Asia 2.9%

Americas 0.7%

Europe 6.2%

Africa 1.0%

Source: Statistics Canada; Statistics Canada 1997-98 Cultural Trade and Investment Project

• Overall export growth has been

strong but largely reliant on the

U.S. market

• Similarly, 1997 Statistics Canada

data for cultural exports indicate a

heavy reliance (89%) on the U.S.

market

• Preliminary consultations with

Canadian cultural exporters

indicate that the U.S.A. will always

be the primary destination market

for their goods and services

Canada’s cultural exports by regionCanada’s cultural exports by region

Page 90: Department Of Foreign Affairs And International

90DFAIT / Trade and Economic Analysis Division (EET)

87.8

3%

98.5

8%

95.6

0%

81.1

6%

100.0

0%

65.3

2% 99.1

4%

91.0

1%

98.7

2%

92.3

7%

89.1

9%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Books

& P

rintin

g S

erv

ices

New

spapers

, Periodic

als

Oth

er

Written M

ate

rial

Music

, V

ideo, S

oft

ware

& O

ther

Record

ing

Printe

d M

usic

Vis

ual A

rt

Arc

hite

ctu

ral P

lans

Desig

n-R

ela

ted G

oods

Advert

isin

g M

ate

rial

Photo

gra

phs &

Mass P

roduced A

rt

Tota

l

Sector

Sh

are

(%

)

World

USA

Source: Statistics Canada, Cultural Trade Report for 1997/1998, May 1998

Share of Canadian cultural commodity Share of Canadian cultural commodity exports to the U.S.A. by sector (1997)exports to the U.S.A. by sector (1997)