In a small jurisdiction like B.C., raising real incomes over time depends in large part on the ability to increase exports and stimulate the growth of export-capable industries.
Export industries provide many economic benefits, including by furnishing the income to enable us to pay for the vast array of imports we consume. In B.C., households and businesses rely entirely or mainly on imports to satisfy their needs for vehicles, pharmaceuticals, medical equipment, electronic products, clothing, many foodstuffs, and much else besides.
Export industries also make a disproportionate contribution to the economy by offering generally above-average wages and salaries.
Below, I briefly examine the province’s leading export industries, concentrating on those that produce tangible goods.
Last year, B.C. earned approximately $44 billion by selling goods to other countries. More than three-quarters of these exports consisted of natural resource-based products.
Forestry continues to occupy a central place in B.C.’s export portfolio, accounting for one-third of merchandise exports in 2017 (the last year for which detailed data are available). The top forestry exports are lumber and pulp and paper.
Approximately one-quarter of B.C.’s exports in 2017 came from the energy sector, with coal and natural gas being the principal export commodities.
Metallic minerals comprise a little over 12 per cent of B.C.’s exports. Copper, aluminum and zinc are the province’s leading mining-related exports.
Machinery and equipment industries supplied 10.7 per cent of B.C.’s merchandise exports in 2017, up fractionally from 10 per cent in 2010. Electrical/electronic equipment, transportation equipment, motor vehicles and parts, and scientific and technical equipment are among the advanced manufacturing industries in which B.C. is home to exporting firms.
The “clean tech” products that many politicians are preoccupied with account for less than 1 per cent of B.C.’s exports.
Agriculture and seafood products make up 9.5 per cent of the province’s goods exports. B.C. has a substantial and diversified agri-food sector that ships a mix of agricultural and seafood products to markets around the world.
Smaller shares of the province’s merchandise exports are supplied by fabricated metals, chemicals, plastics, apparel and textiles, and a handful of industries that manufacture consumer goods.
The industries highlighted above will remain foundational to B.C.’s economy for the foreseeable future. How can public policy help them to thrive and grow?
The primary challenge is to create an environment that encourages companies, entrepreneurs and investors in export-oriented industries to allocate capital to improve business operations, acquire new equipment and technologies, and expand production capacity. Without new investment, industries are destined to stagnate, shrink or wither away.
This, in turn, requires that the province have broadly competitive taxes and fees for its main export-focused industries; establish efficient and timely regulatory and approval processes; ensure an ongoing supply of qualified labour backed by a high-quality education system; invest in infrastructure that supports trade (e.g., transportation, energy and communications infrastructure); and keep energy and other business input costs at reasonable levels.
Today, B.C. performs well in some of these areas but falls short in others. Escalating taxes and fees and costly regulatory systems are significant competitive disadvantages for a number of the province’s export industries.
Talent shortages and the sluggish pace at which many of our companies adopt innovative technologies are also making it harder for some exporters to succeed.
If policy-makers want to advance overall prosperity and encourage industrial growth that supports decent wages for workers, they need to focus more attention on strengthening the underpinnings of the province’s export economy.
Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia