Ottawa, August 5, 2015—Despite having gone largely unnoticed, some of Canada’s strongest recent trade growth has come from service-producing industries, according to a new Conference Board of Canada report, Spotlight on Services in Canada’s Global Commerce.
- Services now account for 44 per cent of Canada’s exports (including supply chain contributions) and 43 per cent of foreign affiliate sales.
- Three out of five fastest growing Canadian exports over the last decade were services exports.
- Finance and insurance services are Canada’s largest and fastest growing services sold internationally.
- Services are the connective tissue in global value chains, and add value to goods as producers sell ideas and outcomes to complement goods.
- Canada’s global services markets are more diverse than goods, relatively more focused on European and emerging markets and less on the U.S.
“Much attention has been paid to Canada’s struggling natural resources and manufacturing sectors,” said Jacqueline Palladini, Senior Economist, Global Commerce Centre, The Conference Board of Canada. “However, there is an important but underappreciated bright spot in Canada’s trade picture—services. The reality is that Canada is a dynamic, high-value services economy, and those services are increasingly being sold to the world.”
Manufacturing in Canada—and other developed countries—is in long-term decline as a share of the national economy. Furthermore, the resources sector has pulled back from its recent high due to a decline in global commodity prices. In contrast, services continue to grow as a share of the national economy and through expanding international trade and investment activity.
Services already account for 44 per cent of Canada’s exports (including supply chain contributions) and account for 43 per cent of all products sold through foreign affiliates of Canadian companies. Demand for Canada’s services is growing fast. Three out of the top five fastest growing exports over the last decade were services.
Services are an important part of Canada’s economy, trade and wealth creation. Services-producing industries account for 70 per cent of Canada’s gross domestic product (GDP). Four out of every five Canadians are employed by the services sector.
Finance and insurance services are Canada’s largest and fastest-growing exports; management services are the third fastest growing export, and computer and information services (including telecommunications) are fourth. (Agriculture products and metals and mineral products are second and fifth respectively in order of Canada’s fastest growing exports).
The rise of services is not about the end of manufacturing. Rather, Canadian services and goods are deeply integrated with one another. High-value services such as research and development, engineering, and financing help to make Canadian goods more competitive abroad. Services jobs are often high-paying and make use of Canada’s highly educated population.
Services can boost innovation and productivity, support growth through financing and insuring, and link together and support the activities of global value chains. Moreover, selling services can better protect businesses against negative economic cycles. Services and related exports proved more resilient to economic declines during the 2008-09 global recession and aren’t as vulnerable to commodity price swings.
Spotlight on Services in Canada’s Global Commerce is the first report in a three part research series undertaken by The Conference Board of Canada’s Global Commerce Centre exploring the importance of services in Canada’s global commerce picture. The Centre provides evidence-based tools to help companies and governments respond successfully to the trends reshaping the global business environment.
Please join us for a webinar on October 20, 2015 at 3:00 p.m. titled The Future of Services: Selling Canada’s High-Value Services Abroad.
Watch a short video with Jacqueline Palladini, Senior Economist, Global Commerce Centre as she talks about selling services abroad.