Products and Provinces: A Disaggregated Panel Analysis of Canada’s Manufacturing Exports


Itai Agur

Publication Date:

September 26, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate


The waning of the commodity boom places renewed emphasis on manufacturing as an engine for Canadian growth. However, Canadian manufacturing exports have been relatively stagnant since 2000. While the exchange rate depreciation over the past two years has energized export growth, the response has not been as strong as would have been expected given the size of the depreciation. More fundamental issues appear to be impeding the growth of the Canadian manufacturing sector. This study analyzes the structural factors behind export competitiveness by using unique Canadian data on exports, which are disaggregated both by province and by product. Matching exports to similarly disaggregated data on R&D, the capital stock and other supply-side variables, we find that these variables significantly affect export growth, beyond the impact of the exchange rate. In particular, investment in R&D, capital infrastructure and vocational training improves innovation and production capacity. These results are robust to a factor-augmented approach that controls for multicollinearity.


Working Paper No. 2016/193



Publication Date:

September 26, 2016



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