As Premier John Horgan and his cabinet colleagues explore options to kick-start the economy while the province slowly emerges from the COVID-19 crisis, they have several strategic options to consider. For example, they could seek to boost industries which employ the most people or those that underpin economic activity in the individual regions that make up the province. They could look to accelerate new business-startups or, instead, put more emphasis on encouraging existing B.C. companies to expand and hire more people. They may decide to double down on industries that have performed well during the pandemic – such as digital services — or, alternatively, concentrate on reviving sectors that have struggled.
One way B.C. policymakers can approach the task of economic recovery and re-building is to focus on the fundamental drivers of our prosperity, or what some analysts call the province’s “economic base.” A paper published by senior B.C. public servants in late 2019 defines the economic base as activities that “bring dollars into the provincial economy through exports of goods and services.” In a small jurisdiction like B.C., export-oriented industries are vital to sustaining and improving living standards. Without competitive export industries, B.C. would have far less capacity to pay for imports. We would also find it harder to grow local companies and the high-paying jobs which are abundant among export-capable businesses.
The industries which generate export earnings for B.C. are diverse. They include businesses in the natural resources and manufacturing sectors as well as others that produce services that are sold to out-of-province buyers. Some of these industries export internationally, while others mainly sell goods or services to the rest of Canada.
In 2019, the total value of B.C.’s exports of goods and services to all external markets – other provinces plus other countries combined – was about $118 billion. The table below divides total exports into four categories, based on the type of export (good or service) and whether it was sold internationally or to other Canadian provinces.
Goods sold to other countries are B.C.’s top source of export earnings. Natural resource-based products account for two-thirds of this category, with forestry providing the biggest slice, followed by ores and minerals, energy, and agri-food products. Several of these industries have been spearheading B.C.’s recovery from the pandemic-induced recession, with exports of lumber, minerals and natural gas all rebounding since mid-2020. Other B.C. products sold in international markets include primary and fabricated metals (notably aluminum), machinery, advanced technology products, and processed food. Our province also exports a similar mix of natural resource-based and other manufactured goods to the rest of Canada, amounting to around $13 billion in final export sales in 2018.
Turning to services, each year B.C. sells in the vicinity of $30 billion of services to other Canadian provinces. Included in this category are transportation, professional and technical services, financial services, and money spent in B.C. by both leisure travelers and business visitors from elsewhere in Canada. B.C.’s status as Canada’s dominant transportation and trade gateway to the Asia-Pacific is reflected in the high value of service exports to the rest of Canada.
B.C. also earns income by selling locally produced services to international customers. Again, these include transportation services, professional, technical and financial services, and spending by international tourists. Film and t.v. production is also on the list of international service exports. It, too, is contributing to B.C.’s ongoing economic recovery. Of note, prior to the arrival of COVID-19, film and television ranked as the fastest growing industry in the province in the decade to 2019. Education is another important international service export, with billions of dollars spent in B.C. by the 130,000 or so foreign students enrolled in B.C. colleges, universities and schools prior to 2020.
Rebuilding a strong economy after the COVID-19 crisis is a top priority for provincial policymakers. Creating an attractive business and investment environment for the industries that comprise B.C.’s “economic base” will be essential to meeting the challenge.
Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia
Want to support local journalism? Make a donation here.