State of Saskatchewan Exports
Following a difficult 2016, 2017 was a year of recovery for Saskatchewan exports. Overall, the value of Saskatchewan’s exports rose 8.2% to approximately $28.9 billion, an increase of approximately $2.2 billion from 2016. This increase placed 2017 just below the 10-year average of approximately $29.3 billion.
Saskatchewan’s top product exports had a mix of increases and decreases in value in 2017. With the stabilization of global oil prices, oil exports increased by 52.9%, followed by semichemical wood pulp at 20.5%. Potash exports increased by 8.2%, wheat by 9.7%, and canola by 5.7%. Increased trade barriers with India caused lentils to lead the decreases in export value at 40.3%, followed by dried peas at 24.0%. Uranium was next with a 14.6% reduction.
Top 10 2017 Saskatchewan Exports(C$ Thousands)
Looking ahead, Export Development Canada forecasts that Saskatchewan exports will grow by 4.0% in 2018 as stability is expected for the main economic sectors. Economists are predicting an increase in activity in the oil and gas and mining sectors and improvement in growing conditions for the agricultural sector.
Source: Saskatchewan Trade and Export Partnership, 2017 State of Trade, February 2018.
How Is Saskatchewan Doing in Labour Productivity?
Growth in labour productivity is associated with economic growth, a higher standard of living, and higher real incomes. Saskatchewan labour productivity, measured as real GDP per hour worked, continued to grow in 2017, reaching $59.50/hour, up 4.2% from 2016.
Productivity rose in both goods-producing (+5.3%) and service (+3.1%) businesses. Mining, quarrying, oil and gas extraction, retail trade, manufacturing, and finance and insurance led the growth in 2017.
There are many reasons behind the growth in labour productivity, including increases in equipment available to workers, an increase in the proportion of skilled workers, increases in plant scale, changes in organizational structure, and improvements in technology.
A great deal of attention is devoted to comparisons of productivity growth across provinces. In 2017, Saskatchewan ranked fifth among the provinces in labour productivity and scored higher than the Canadian average. In productivity growth, Saskatchewan ranked fourth among the provinces, also scoring higher than the Canadian average.
Source: Canada. “Hours worked and labour productivity in the provinces and territories (preliminary), 2017.” Released May 23, 2018. https://www150.statcan.gc.ca/n1/daily-quotidien/180523/dq180523a-eng.htm
Is Saskatchewan attracting foreign direct investment?
Foreign direct investment (FDI) is investment that allows an investor to own 10% or more of a company’s ordinary shares or voting power by creating an entirely new enterprise or purchasing an existing firm outside the investor’s own country.
With the rise of global supply chains, FDI is being used increasingly to restructure business operations, stimulate trade, and enhance profitability, thus expanding national wealth. Countries compete to attract FDI because FDI inflows lead to higher productivity, improved quality of products, and increased competitiveness.
While data on total FDI flows are not available for the provinces, comparable data are available on greenfield FDI, which is investment that expands an existing facility or creates a new facility (as opposed to brownfield FDI, in which a foreign firm purchases an existing facility or company). Although the data are not perfect, they do give a sense of which provinces do well in attracting FDI. Greenfield FDI is measured by the inward greenfield FDI performance index.
If a region’s share of global inward greenfield FDI matches its relative share in global GDP, the region’s inward greenfield FDI performance index is one. A value greater than one means the region attracts more greenfield FDI than its economic size would suggest. A value less than one indicates a smaller share of greenfield FDI relative to GDP share. In the rankings, each jurisdiction’s inward greenfield FDI index is calculated as an average over the past five years.
For 2012–16, Saskatchewan ranked nearly last among the provinces with a 0.26 greenfield FDI index, followed only by Manitoba, with an inward greenfield FDI index of 0.25.
For 2008–12, Saskatchewan ranked fifth among the provinces. This dramatic shift in ranking reflects the contraction of investment in the wake of the negative commodity shock in 2014. All provinces except Ontario and B.C. had inward greenfield FDI index scores of less than one, which means they were not attracting a global share of greenfield FDI equal to their global share of GDP.
Although resource-rich provinces did poorly on the 2017 rankings, the longterm trends are working in our favour. In 1999, total inward FDI for the mining and oil extraction sector in Canada made up less than 10% of inward FDI stock. This share had increased to 23% by 2016. When commodity prices eventually recover, the resource-rich provinces will likely move back up the rankings, although their FDI indexes may be lower than during the boom years.
Source: Conference Board of Canada, “Inward Greenfield Foreign Direct Investment (FDI) Performance Index,” 2018. https://www conferenceboard.ca/hcp/Provincial/economy/inward-fdi.aspx
First published in the December 2018 edition of The Business Advisor.