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Growth at home just as important as world presence

Published by Steve Coleman on March 20, 2012

Darwin's Theory of Evolution was alive and well in the Canadian manufacturing sector between 1990 and 2006.

A new look at exporting versus catering to the domestic market says diversification paid off for the companies that kept their options open and changed with the times, whether it was exporting more or expanding their business at home.

"In both cases, productivity growth of Canadian manufacturing plants that entered new markets was superior to the productivity of those that maintained the status quo," a news release issued by Statistics Canada on the report says. "Entering new domestic markets was just as beneficial as entering international markets. The beneficial effects of entry accrued not just to entrants that crossed international borders but also to other forms of expansion, in particular to entrants that expanded across provincial borders."

Free trade agreements introduced in the 1990s between Canada and the US led to a ground surge in trade between the two countries and a focus on exports, Stats Can says. Things changed after Y2K.

The resource boom led to higher Canadian commodity export prices, a higher dollar and a decline in Canadian competitiveness versus the US. It also led to new opportunities at home for Canadian resource companies.

While past studies have shown that exporting led to better productivity, numbers in the new study say finding new domestic markets - instead of just living with the status quo - had the same effect for Canadian companies.

For a look at the report visit the following link.

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