Two factors have thrown more attention on the export dependency of the provinces within Canada: (1) the increase in value of the Canadian dollar versus the U.S. dollar since early 2003; and (2) the impacts of the U.S. slowdown/recession on economic activity north of the border. TD Economics, in its recent Provincial Economic Outlook report, presented rankings for each province based on export sales to the U.S. and the world at large.

The first set of numbers, based on 2006 results, looks at total exports as a percentage of Gross Domestic Product (GDP) in each province. Ontario, at 46.5% (or nearly half), is clearly the most export-dependent province. New Brunswick is second at 43.4% and Saskatchewan ranks third at 40.2%. The provinces with the lowest export dependency are Nova Scotia (25.1%), British Columbia (29.8%) and Manitoba (30.8%). Québec (36.8%) and Alberta (36.6%) are in the middle of the pack.

A second measure ranks the U.S. as the destination for export sales by each province. At 90.0% of its total exports, New Brunswick is the most U.S.-oriented province in terms of foreign sales. Alberta (88.5%) is in second spot and Ontario sits third (86.4%). Newfoundland and Labrador (55.9%) is least U.S.-oriented, followed by British Columbia (61.2%) and Saskatchewan (65.5%). All of the other provinces lie in the middle ground.

The final figures are a composite of the first two sets of numbers – exports to only the U.S. as a percent of provincial GDP. Ontario (40.2%) is most dependent on U.S. sales, followed by New Brunswick (39.1%), Alberta (32.4%) and Québec (28.6%). British Columbia (18.2%) is least U.S.-sales-dependent, followed by Nova Scotia (19.0%), Saskatchewan (26.3%) and Manitoba (23.8%).

With respect to the provinces that are most dependent on the U.S., a look at the major product lines reveals much about the cross-border relationship. Ontario’s large motor vehicle sector (autos and parts) sells mainly into the United States. New Brunswick’s important forestry sector is geared towards U.S. sales. Alberta pumps crude oil and natural gas to the American Midwest and South. Québec moves forestry products, primary metals (aluminum) and electric power to the U.S., but also makes large transportation equipment (airplanes and subway cars) sales to other countries. Newfoundland and Labrador ships offshore crude oil to the U.S.

For provinces with a lower U.S. export-dependency, their products are either more diverse or are shipped to a wider variety of markets. British Columbia has export sales of forestry products, metals, electricity and oil and gas. Many of these sales are destined for Japan and other Asian nations, as well as the United States. Saskatchewan has agricultural products, crude oil, potash and uranium. Saskatchewan’s non-energy products find buyers around the world.

Finally, Manitoba has a variety of manufactured goods (e.g., buses and airplane components), as well as electric power, that are purchased by U.S. customers. And Nova Scotia ships natural gas from offshore fields to the U.S. by way of onshore pipeline networks that also pass through New Brunswick.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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