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Here's a data point I wish was available, though I doubt the data is available:

1. What percentage of manufacturing companies are primarily exporters?
2. What percentage of service companies are primarily exporters?

Given the timing of the secular decline, I believe Dutch Disease could be playing a significant role here.

And interesting stuff, as always!


Good question. But I wonder if in today's global economy it is possible to separate "Dutch Disease" -- or the impact of a high petro-dollar currency--from the general phenomenon of lower cost developing economies like China, India, etc. being able to do the manufacturing work.

Even places like Britain that have seen a significant depreciation in their currency value are not seeing a manufacturing resurgiance as far as I know (not that I follow the UK economy very closely, you might, so feel free to correct).

I wonder how they define what sector an unemployed worker is not working in? I expect it's the sector he last worked in, rather than the sector in which he's looking for work?

I'm pretty sure that's it. I looked up the LFS questionnaire, and it asks unemployed people where they used to work. It would be hard to ask what sector they're looking for, since someone with certain skills (ex: IT) could conceivably work in many different sectors.

Stephen, thanks for the update, interesting stuff.

One comment. Last time I checked (April?), the manufacturing sector has been the largest net contributor to Canada's improvement in GDP since the May 2009 (larger than services). Interesting that it would provide the largest drag on employment but provide the largest push to GDP.

Thanks professor - very interesting.

One quick question: does employment underlying raw materials extraction & refining get picked up in the 'other goods-producing sectors' category?

Yes - you can see the breakdown for levels (the graphs plot changes) from the July LFS here.

JP - I guess productivity must be the story there. But I don't know if it's the kind we like, namely, based on better capital equipment and technology.


Once again, great stuff!

In your closing points, you suggest that a drop in commodity prices might lower the Canadian dollar and lead to a resurgence in Canadian manufacturing. There's a second possibility that could lead to a similar result, namely that the U.S. dollar could strengthen for some reason which would make Canadian manufactured exports to the U.S. much more competitive.

Although Canada is susceptible to the Dutch Disease, the dynamics are different given that 75+% of our trade goes to one nation. Not only our currency must be considered, but also the U.S. currency.

Someone in Toronto recently told me that the GDP contribution of manufacturing to the Canadian economy (or was it Ontario economy) has not changed over the past 8+ years, despite a significant decline in jobs.

They explained this as being a consequence of the shifting nature of manufacturing in Canada to include "pharmaceuticals/drugs," technology components, processed foods, and other items that might have significant export values (besides autos and auto parts).

Any comments from the WCI gurus?

I've also heard that many of the jobs that have been lost were not particularly good, high-value added jobs like generic plastic or metal parts manufacture where firms essentially compete primarily on price.

It'd be interesting to see what effects this might have on labour productivity in manufacturing. I would argue employment in the manufacturing sector in most countries has declined because of substitution for new technologies, you know, robots and such. But in Canada I'd say the same trend has to do with people shipping out west where opportunity is.

Since capital is easier to move than labour, it slipped away years ago leaving too many workers controlling too few robots, er, tools. Labour wont leave because it's a pain in the ass to take your kid out of school and ship across country, especially when you already have a decent job. That opportunity cost is reduced considerably when you get laid off. I guess the lesson to be learned here is that Canada has way too many Ontarians and not nearly enough Albertans.

It's starting to get scary how many bankruptcies and consumer proposals we're administrating these days.. our debt settlements seem to be on the decline. Never a good sign.

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