Canadian Exporters Research Articles

Superstar Search: Studying the Current and Potential Populations of Canadian Exporters and Foreign Direct Investors Abroad

In this article, we analyze the potential to increase Canada’s exports and foreign direct investment abroad. To do so, we construct a unique administrative dataset containing detailed information for millions of companies that operated in Canada between 2010 and 2015. This allows us first to study the current population of Canada’s exporters and foreign direct investors abroad. Then, using probit modelling and propensity score matching, we infer the potential populations of these firms and examine their observable characteristics. Our estimates suggest there is considerable untapped potential to grow Canada’s outward international activity, with thousands of firms identified as high-potential exporters or foreign direct investors abroad. On a per-firm basis, the initial international activity of potential entrants is likely to be considerably lower because they tend to operate at a smaller scale than companies that are already internationally active—for exporters, less than half the scale, and for outward investors, less than one-tenth the scale.

The effect of the Canada–China canola trade dispute on canola prices

AbstractIn March 2019, China revoked the canola export licenses of two major Canadian exporters. We estimate the impact of these restrictions on Canadian canola prices. Using a vector error correction model to generate counterfactual prices, we estimate that between March 2019 and February 2020 canola prices were 3.6% lower than would have been expected in the absence of the import restrictions. We discuss the implications of our finding for both the ongoing negotiations between Canada and China and producer support in Canada.

Alberta's Oil Sands Manufacturing Supply-Chain Imports: Evaluating Borders, Boundaries and Borderlands

ABSTRACTManufacturing supply-chains for Alberta's oil sands support the assertion that international and domestic bordering processes are not always territorial. In a previous study the Canadian Manufacturers and Exporters (CME) determined that domestic exports to Alberta in this supply-chain originated primarily from Ontario and Quebec, and to a lesser degree Saskatchewan. The same study, however, also noted that an additional 50 per cent of sales came from international sources. This article examines trade statistics focusing on these specific Alberta imports, which are historically dominated by three U.S. states (Oklahoma, Illinois, and Texas) in a remarkably consistent range of product areas. Alberta's recent surge in trade with China, however, is not related to this supply-chain. As such, trade in Alberta's oil sands manufacturing supply-chain is driven by market considerations and expertise in manufacturing specific goods, as opposed to regional or borderland pressures. This supply-chain, however, is relatively underdeveloped compared to other GVCs, thereby supporting a conclusion of differentiated integration in this sub-federal sector.

How Home-Peers Affect the Export Market Exit of Small Firms: Evidence From Canadian Exporters

We investigate how home-peer entry density (the number of same-industry firms that originate from the same country and export to the same foreign market) affects the export market exit of small firms. Drawing on panel data from 41,445 Canadian small business exporters, we find a U-shaped relationship between home-peer entry density and small firms’ hazard of exit from an export market; that is, firms’ hazard of exit decreases as the home-peer density increases to a certain point and increases after that point. We also find that this U-shaped relationship is stronger for small firms that internationalize early.

U.S. Mushroom Import Demand Estimation with the Source-Differentiated AIDS Model

Recognising that the share of imports in total consumption has been increasing, and will likely continue to do so as US consumers adopt healthier diets, the goal of this paper is to contribute to the understanding of US mushroom demand by estimating the first-ever import demand elasticities for canned and fresh mushrooms by source. Price elasticities from a source-differentiated almost ideal demand system (AIDS) model suggest that while Canada, the leading exporter of fresh mushrooms to the US, may gain more revenue from rising mushroom prices; China, the leading exporter of canned mushrooms to the US may lose. The expenditure elasticities suggest that Chinese exporters of canned mushrooms stand to gain more from rising US spending on imported mushrooms than Canadian exporters of fresh mushrooms. Should NAFTA be scrapped and tariffs imposed, Mexico will lose more market share in the US fresh mushroom market than Canada.

Fishing for a Solution: Canada's Fisheries Relations with the European Union, 1977–2013, by Donald Barry, Bob Applebaum, and Earl Wiseman

Reviewed by: Raymond B. Blake, University of ReginaA former professor and colleague at Mount Allison University in New Brunswick regularly asked students in his diplomatic history course to trace the smell of fish through the history of Canada's foreign relations. His was a historical approach to Canada's diplomatic history, and I suspect that in many Canadian universities where the history of Canada's foreign relations is still taught, fish get very little attention. However, as the authors of Fishing for a Solution ably demonstrate, fisheries still matter in Canada's foreign relations. The authors, all well versed in fisheries policy from their academic and government roles, bring both a historical understanding and first-hand experience to the subject. From 1977, when Canada extended its jurisdiction over much of the continental shelf, to 2013, when there were few fish left to catch off Canada's east coast, two of the authors were engaged in making fisheries policy in Canada's relations with the European Union (EU). The third is a leading academic who has written widely on Canada's fishery policy.This is a remarkably detailed and insightful account of Canada's relations with the EU over the catching of fish in the North Atlantic. The authors convincingly argue that international relations stand at the intersection of domestic and external policies. In this case study, they contend that factors at several different levels impact the Canada-EU relationship. Canada and the EU interact with each other as members of the international community, of course, but their fisheries policies are influenced by subnational units--provinces in Canada and member states in the EU. Canada's east coast provinces, particularly Newfoundland and Labrador and Nova Scotia, have usually demanded (without much success) a voice in the articulation of fisheries policy. In the EU, Spain and Portugal have exerted considerable pressure on fisheries policy within the EU councils. Although the book recognizes that, in Canada's case, domestic matters have frequently influenced fisheries policy, the focus here is more on the internal dynamics and politics within the EU.The book begins with Canada's decision in 1977 to extend its jurisdiction over fisheries and mineral wealth 200 miles offshore. It was a buoyant period for Canada's fishery, when many thought that the new policy would usher in a period of expansion and prosperity for Canada's fishers. So confident was Canada that it was willing to share it bounty within the 200-mile exclusive zone and subsequently negotiated agreements with European nations that had historically fished off the east coast. Canada believed that the new agreements realized effective conservation measures while achieving access to European markets for Canadian fish exports. It gave the Europeans access to species Canada did not value and fish that were surplus to domestic needs. However, Canadian exporters soon discovered that EU countries were reluctant to open their markets to Canadian fish imports and within a short period, the rush to harvest fish both within and outside the 200-mile zone resulted in dwindling catches from overfishing.The focus in this book, however, is not so much the events leading to the destruction of the fish stocks off Canada's east coast but Canada's attempts to establish long-term agreements on fishing on the continental shelf with the EU. The situation became much more complicated in 1985 when Spain and Portugal joined the EU. Both nations have large fishing industries and their powerful fishing regions exerted a strong influence on state policies. Spain and Portugal forced the EU to challenge what they considered Canada's restrictive management approach to conservation even though that approach was gaining momentum in Canada and indeed throughout the EU. Spain and Portugal quickly took advantage of the dreadful procedure within the North Atlantic Fisheries Organization (NAFO), an international organization to monitor and control fishing in the North Atlantic that allowed member states that disagreed with the quotas set for each member simply to dismiss them and set their own autonomous quotas. …

The Canada – EU Free Trade Agreement Demystified: New Opportunities for Trade, Investment and Government Procurement

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) 'agreement in principle' was signed on 18 October 2013 by Prime Minister Harper and European President Jose Manuel Barroso. On 29 October 2013, the Prime Minister tabled a report on CETA and hailed it as: 'the biggest deal ever concluded by Canada'. If it is not the biggest deal, it is certainly a big deal. CETA provides a variety of trade, investment and government procurement opportunities to Canadian and EU businesses which are expected to pay dividends for years to come. CETA will provide Canada with access to the twenty-eight member EU, which has over 500 million consumers, and CDN 17 trillion in annual economic activity. It will remove 98% of EU import tariffs on goods originating from Canada (e.g., aerospace parts, agricultural products, automobiles, beef and bison, chemicals, dairy products, forest products, fruits and vegetables, grains and oils, industrial machinery, iron and steel, IT equipment, medical equipment, metals, minerals, plastic products, and seafood products). CETA could boost Canada's annual income by CDN 12 billion, create 80,000 jobs, and result in a 20% annual increase in bilateral trade. Once CETA is ratified, Canada will have preferential trade agreements with countries having 53% of global GDP (approximately CDN 36.4 trillion), and a trade advantage over the USA. The EU expects CETA to result in duty savings of approximately CDN 700 million. CETA will remove Canadian import tariffs on goods including automobiles, some cheeses, industrial machinery, seafood products, and wine and spirits. European exporters will save three times as much in annual duty payments as Canadian exporters. Canadian businesses and consumers stand to benefit if retailers and exporters pass on duty savings to them. At present Canada is the EU's fourth largest source of investment, and the EU's twelfth largest export market. CETA is not just a free trade agreement. It addresses issues such as services and investment; government procurement; intellectual property; dispute settlement; sustainable development, the environment; immigration and labour. This ambitious agreement will create business opportunities for a large number of sectors including: advanced manufacturing; the automotive industry; chemicals and plastics; agriculture and agri-food; food processing; metals and mineral products; fish and seafood products; information and communications technology; services; investment and government procurement. Within an improved regulatory environment under CETA, Canadian and EU businesses will be able to forge new alliances, and access new markets.

The Dynamics of Expansion to Emerging Markets: Evidence from Canadian Exporters

AbstractThis study investigates the expansion patterns of Canadian firms towards emerging markets. A unique large‐scale longitudinal (1997–2004) dataset which includes 2600 Canadian exporters is constructed by linking multiple administrative databases at Statistics Canada. Our results suggest traditional sequential exporting patterns do not apply to all Canadian exporters. Since 2001, there has been an increasing trend among a new generation of exporters to target emerging markets as their initial export destination; and both macroeconomic and firm‐specific factors seem to account for this development. Compared with foreign‐controlled firms, Canadian‐controlled firms are less likely to export to the emerging markets. In order to successfully expand into emerging markets, Canadian firms have had to improve their productivity and reduce their labor costs.

The Pattern of Foreign Market Entry of Canadian Exporters

Dans cet article, nous analysons, grâce à un vaste ensemble de données longitudinales (1997-2005), la façon dont 6 079 entreprises exportatrices canadiennes ont pénétré les marchés étrangers. Nos résultats montrent que de moins en moins d’entreprises commencent par exporter aux États-Unis. Cette tendance suggère donc que le nombre d’entreprises auxquelles le modèle des stades de l’internationalisation ne s’applique pas augmente. Nos résultats indiquent de plus que les gouvernements qui veulent soutenir les entreprises en matière d’exportations devraient cibler les petites et les jeunes entreprises, puisque ce sont celles qui sont les plus susceptibles de faire face à des obstacles et qui ont le plus avantage à exporter sur un plus grand nombre de marchés étrangers.

The Pattern of Foreign Market Entry of Canadian Exporters

Dans cet article, nous analysons, grâce a un vaste ensemble de donnees longitudinales (1997–2005), la facon dont 6 079 entreprises exportatrices canadiennes ont penetre les marches etrangers. Nos resultats montrent que de moins en moins d’entreprises commencent par exporter aux Etats-Unis. Cette tendance suggere donc que le nombre d’entreprises auxquelles le modele des stades de l’internationalisation ne s’applique pas augmente. Nos resultats indiquent de plus que les gouvernements qui veulent soutenir les entreprises en matiere d’exportations devraient cibler les petites et les jeunes entreprises, puisque ce sont celles qui sont les plus susceptibles de faire face a des obstacles et qui ont le plus avantage a exporter sur un plus grand nombre de marches etrangers. Abstract: This paper employs a unique large-scale longitudinal (1997–2005) dataset to investigate the pattern of foreign market entry by 6,079 Canadian exporters. We have found that fewer firms are choosing the United States as their initial export destination. This trend suggests that a growing number of firms are not following the traditional stage model of internationalization. Furthermore, our results suggest that government support should be targeted towards young and small Canadian-controlled firms, since they are more likely than established firms to encounter barriers and to gain benefits from exporting to a wider range of foreign markets.

The Impact of the U.S. Bio-Terrorism Act upon Canadian Exporters of Food Products to the United States: A Firm-Level Analysis

This article examines the impact of the 2002 U.S. Bio-terrorism Act (BTA) upon Canadian exporters of food products to the United States. A major goal of the BTA is to secure U.S. ports of entry against imports that might threaten the health or safety of U.S. citizens. Although this is a respectable goal, data from a sample of 144 Canadian exporters suggest that the BTA represents a non-tariff barrier to Canada-U.S. trade. Current regulatory procedures have disrupted cross-border supply chains in significant ways. These disruptions have damaged the Canada-U.S. commercial relationship by imposing extra shipment and distribution costs upon Canadian exporters. These delays have had a serious impact upon small-to-medium sized firms (SMFs). The article concludes with a brief discussion of possible remedial actions that might be taken by Canadian exporters.

Political risk and the internationalization of firms: An empirical study of Canadian‐based export and FDI firms

AbstractPolitical risk analysis primarily receives attention for foreign direct investment (FDI) but only rarely for exporting. We examine how exporters and foreign direct investors evaluate the relative importance of political risk factors. We provide a rationale for exporters to evaluate political risk factors for FDI and for foreign direct investors to evaluate political risk factors for exporting. Survey data were collected from Canadian exporters and foreign direct investors and capture the distinctive nature of salient factors for exporting and FDI. We offer unique insights on the evolutionary character of political risk that are of practical value for both exporting and FDI. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.

Accessing US and EU Markets for Nutraceuticals and Functional Foods

Natural health products represent a rapidly expanding and high value segment of the market for agricultural products. Many of these products individually represent niche markets, which present a problem for firms from small market countries-domestic markets will be too small for firms to achieve a minimum efficient size and, as a result, to reach their full potential access to foreign market is required. Canada represents such a market. The international marketing of nutraceuticals and functional foods is characterized by barriers to market access and greatly differing regulatory regimes. The marketing challenges faced by Canadian exporters in two major potential markets, the US and the EU, are examined and a market access strategy that includes a major role for government is outlined.

Consumer Groups Take Action as Glaxo Moves Against Canadian Exporters

Consumer Groups Take Action as Glaxo Moves Against Canadian Exporters

Erratum: Welfare impacts of the 1996 United States – Canada Softwood Lumber (trade) Agreement

Note: Values are in millions of 1997 U.S. dollars. This change in Canadian producer surplus only accounts for Canadian exports to the U.S. market and does not cover Canadian domestic and other foreign markets for Canadian softwood lumber. In theory, the SLA should reduce softwood lumber prices in the two (domestic and other foreign) markets, which in turn lower producer surplus (and raises the amount of consumer surplus) in these markets. Since the primary focus of this paper is on U.S. market, we merely point out that a full welfare analysis for Canadian producers must include all three markets. Thus, the net Canadian producer surplus, including all three markets, should be lower than what we have estimated in this paper. At one extreme, Canadian producers could experience a net decrease in well-being as result of decrease in price and output of their softwood lumber in their own domestic and other exporting markets, even they are better off in the U.S. market with the SLA. Although this extreme scenario is not likely to be true because the U.S. market (accounts for 65% Canadian production) is the largest of the three markets for Canadian softwood lumber, a further study could clarify this issue. This number is calculated based on data in Table 1. Other producer surplus is the gain of Canadian exporters in provinces that are not covered by the SLA and of exporters from other countries that supply softwood lumber in the U.S. market. Table 5. Estimated welfare impacts for the first 4 years under SLA.

Crossing the border: testing a negotiation model among Canadian exporters

The interdependence of economies has led many researchers to examine whether US business practices are universal. Various models and scenarios have been investigated in an attempt to further understand foreign business counterparts. This paper utilizes a previously developed US‐based model on the problem‐solving approach in negotiation and tests its applicability among Canadian industrial exporters. The authors found that the sample’s problem‐solving orientation was highly influenced by two sets of factors: individual as well as organizational factors. Consequently, it seems that within the context of the problem‐solving orientation, Canadian exporters share similar patterns of behavior to those of their US counterparts.

An Industrial Analysis of Trade Creation and Diversion Effects of NAFTA

Welfare effects of economic integration are often studied with aggregate data, and as such provide limited insights about the effects of trade pacts to individual economic agents in the free trade area. In this study a three-digit disaggregated commodity/ industry data grouped under the Standard International Trade Classification is used to empirically assess the economic benefits of the North American Free Trade Agreement (NAFTA). Import demand elasticities from a dynamic demand model were used to estimate both trade creation and trade diversion effects of removing all tariff barriers from among NAFTA countries – US, Canada and Mexico. Results show that US imports of crude oil and petrole - um products from Canada and most US imports from Mexico are more sensi - tive to domestic prices than to bilateral import prices. Further, results indicate that US will benefit the most from the initial trade effects of NAFTA, while Mex - ico will benefit the least. Specifically, US exporters of automatic data processing equipment, and pulp and waste paper products will benefit the most from increased trade with NAFTA countries. Mexican exporters of crude oil, and veg - etables and fresh produce; and Canadian exporters of paper and paperboard products will be the most beneficiaries of NAFTA among exporters in these respective countries.

Financing export activities of small Canadian businesses: Exploring the constraints and possible solutions

This study explores the challenges that face Canadian entrepreneurs and small business owners in financing their export activities and investigates the problems that constrain financial institutions in providing more financial resources to current and potential exporters. The data are obtained during interviews with the export financing executives of various financial institutions and with entrepreneurs and managers of several companies who are in various stages of their export activities and represent many industries. The interviews reveal that some problems are fundamental and will continue to constrain export finance. At the same time, the study finds that some problems can be resolved by bridging the informational gap that currently exists between Canadian exporters and suppliers of credit.

Domestic competitive strategy and export marketing strategy: The impact of fit on the degree of internationalisation of SMEs

A model to explain the degree of internationalisation of SMEs is proposed and tested using data obtained from a survey of 207 Canadian exporters. Certain aspects of the domestic competitive strategy employed by a SME are shown to have a significant effect upon the chosen export marketing strategy. In turn, the degree of internationalisation attained by the SME is shown to be influenced by two aspects of export marketing strategy, namely the level of support offered to the foreign distributor, and the pricing strategy adopted for the chosen export market.

Strategic positioning for export market development: the role of managerial attitudes, export development programmes and firm characteristics

This paper examines a set of strategic factors related to managerial attitudes, firm characteristics and export development support programmes which are important in determining export readiness and performance. The study differentiates between Canadian exporters and non-exporters of different sizes and levels of export activity. Using discriminant analysis, the author identifies strategic variables which relate to export status. The discriminant model performs well above a prioriexpectations in effectively classifying firms as non-exporters, minor exporters or major exporters and identifies the strategic factors influential in developing export-oriented firms.