From today's Globe and Mail:
In the decades prior to 2000, Canada made progress in moving away from being an economy of resource extraction. By that year, as labour economist Jim Stanford has pointed out in an analysis for the Centre for Policy Alternatives, well over half of Canada’s exports consisted of an increasingly sophisticated portfolio of value-added products in areas such as automotive assembly, telecommunications, aerospace technology and more.
But in the past decade, the clock has been turned back. Because of a boom in the oil and gas sector and a range of other factors, the economy has reverted toward being a staples-driven enterprise.
But were things really so great back then? What were people saying about the low dollar and manufacturing? I decided to have some fun with LexisNexis and CBCA.
Dollar woes a mixed blessing? (CIO Canada - March 2002)
And with one U.S. dollar worth more than $1.60 Canadian, companies south of the border may be tempted to shop around. "This makes Canadian companies cheap, which will result in a flood of American takeovers," D'Cruz said. "That's not healthy because we will be converted more and more to a branch-plant economy, an economy where the strategic decisions are made in the United States."
Ownership and control of business under siege? The BCNI says that Canada stands to lose a good dollop of quality jobs to foreign markets (Globe and Mail - October 4, 1999):
"The combination of a weak currency, high corporate and personal taxation and policies and regulations that restrict growth and diminish the value of Canadian equities are leaving many major Canadian enterprises highly vulnerable to foreign takeovers," said the BCNI in a Sept. 15 memo to the Prime Minister. "A low Canadian dollar does help exports, but it also cripples the ability of Canadian companies to recruit top talent and makes it more difficult for them to grow through acquisition rather than being acquired."
Coming from the BCNI, this is equivalent to an emergency call to 911. Canada "faces an accelerating loss of key head-office functions and the high-paying jobs that go with them. . . . Recently announced acquisitions, mergers and strategic decisions demonstrate that this process is already under way and . . . we believe that many more such moves are possible in the months and years ahead."
Big trade surplus is actually a deficit (Toronto Star - July 9, 1995)
In 1993, according to James McCormack, an economist with the international trade department and author of the study, Canada reported a $ 19.5 billion merchandise trade surplus with the United States.
But when imported parts and components used in those exports are taken into account, Canada actually had a $ 4 billion trade deficit.
Canadians simply do not make a lot of the high-value parts and components - the black boxes - that are at the heart of many manufactured products.
That's why, McCormack says, "trade statistics can be misleading in terms of the contribution of trade to the domestic economy."
In 1993, when adjustments are made for imported components, merchandise exports accounted for 22 per cent of Canada's gross domestic product in 1993, not the 26 per cent the official statistics suggest.
McCormack's findings, while troubling, are not surprising.
What they show is that there is little vertical integration within the Canadian economy - little interaction between companies here. Instead, Canadian companies are often assemblers or suppliers to the U.S. economy; to a large extent, a century of U.S. ownership of much of our industry has produced a branch plant economy.
This one is neat - shows we've been having the same arguments for decades. Five-point plan unveiled Pressing multinationals key to recovery: NDP (Globe and Mail - February 19, 1982):
In an interview, Mr. Broadbent argued the roots of structural imbalance in the economy date back to the end of the Second World War, when Canada eroded its strong industrial base amd turned back to its traditional dependence on resource-based growth and exports.
The manufacturing sector was developed on branch plants which were to serve the domestic market, but the branch plant economy did not do enough of its own research and development or pursue export markets.
'What we have seen coming upon us in these last half dozen years, during the whole (Prime Minister Pierre) Trudeau period for that matter, is the crumbling of the twin pillars.
'Other countries have been selling resources and so we have competition there and there have been some layoffs in the resource sector... But ... the manufacturing sector, even in the limited terms in which it thought it was to be able to perform, namely the domestic market, has been undercut by competition."
Mr. Broadbent said it is not too late to turn the situation around.
'That is the decisive attitudinal question I'm concerned about. What we have been lacking from (Mr.) Trudeau from 1968 on has been the political will."
He chastised the Liberals for their plans to promote development of resource projects and to emphasize resource exports. 'It may keep the dollar at a higher level but it perpetuates the situation."
Dependence on imports for manufactured goods leaves Canada locked into the U.S. economy and without independent room for manoeuver during a recession, domestic stimulation only promotes imports, he said.
And unlike industrial development, large scale resource projects tend to provide immediate jobs in construction but few long-term jobs, he argued.
And finally, from the 1970s: Adding value (Globe and Mail - January 27, 1978):
For the past generation, however, manufacturing has been in a relative decline as an employer. The industry's share of total employment dropped from 26 per cent in 1949 to 20 per cent in 1977, while its proportion of real domestic product dropped from 27 per cent to 22 per cent.
Perhaps the major reason for the relative decline of the manufacturing sector can be attributed to its international trading performance, said Mr. Peters. For a variety of reasons such as rising labor costs, lack of innovation, the failure to upgrade domestic resources, injurious exchange rate policies, the impediments faced in a branch plant economy and the lack of public incentives to overcome all of these obstacles, Canadian manufacturers have experienced increasing difficulty exporting finished products and competing with imported products in their own domestic market.
There's your historical context for the morning. There are hundreds of these articles out there. Could easily waste a day or two going through them all.
[Edited to add] I really need to stop going through these articles. I can't help myself, though. Here's a Canadian Business piece from February 1979:
The advent of smaller, lighter cars indicates that the auto industry is about to undergo a technological revolution that will cost the industry in North America about $60 billion in R&D funds. The question arises concerning the extent to which the Canadian "branch-plant" auto industry will share in this bonanza. It appears that the U.S. auto industry is going to get the major share of the benefits, while the Canadian segment will just get the "crumbs". As a result of the 13-year-old U.S.-Canada auto pact, the high technology segment of the industry, with its potential for creating new jobs and investment, is increasingly centered in the U.S., to the exclusion of Canada. The Canadian industry is playing an increasingly menial role in auto production, with the choice R&D jobs going to the U.S. Canada appears to be in a vicious circle; their unskilled workforce will not attract high-technology industry, but without such industry, skill levels cannot improve.