An Input‐Output Analysis of the Impacts of Increased Export Demand for Saskatchewan Products

Abstract

Recent efforts to expand the level of Saskatchewan's exports are expected to generate significant impacts in terms of provincial levels of household income, gross domestic product, and gross output. Besides these economic effects, increased export activity will likely impact the level of provincial resource use. A combined input‐output/resource demand model is formulated which allows for both economic and resource use impact analyses of agricultural and non‐agricultural export policies. The resources considered explicitly in the model include the level of employment, energy and water use. In this paper, the model is used to evaluate the impacts of increases in the level of provincial exports of: (i) live cattle and calves, (i i) wheat and other grains, (iii) meat and meat products, (iv) crude oil, and (v) potash.Summary and Implications of the ResultsFive export scenarios were analyzed in this study. These included increases in the level of exports of: live cattle, slaughtered meat and meat products, grains, including wheat and other grains, crude oil, and potash. Each of these exports has a unique impact in terms of both absolute and relative values of several economic and resource demand criteria. A summary of rankings of the various scenarios' impacts is presented in Table 8. These rankings are based on the value of the economic and resource multipliers generated by each export scenario.The above table indicates that there may exist trade‐offs, in terms of the promotion of one type of commodity export versus another. For example, in terms of employment impacts, scenario B (meat and meat products) generates the largest impacts per dollar of final demand. Alternatively, this scenario is least preferred in terms of the contribution to provincial GDP and imports while at the same time requiring large amounts of energy.The results presented in this paper can be applied for an analysis of regional economic development policies. That is, this type of analysis can be incorporated into a more general policy analysis of alternative regional development strategies. In this paper, only the benefits of expanded exports are estimated. The other side of the equation, of course, represents the costs of achieving these increased export levels. Examination of the excess capacity, investment needed to expand output and the opportunity cost of investment capital are important ingredients of the costs of achieving increased levels of export. However, in spite of these limitations, this study has shown that regional policy makers must be cognizant of the macro‐level economic as well as resource use impacts of continued development of export markets.