TORONTO, April 16, 2014 /CNW/ - "Government-to-government" relations,
underpinned by high-level Canadian representation in foreign nations,
such as an embassy, significantly boost the level of Canadian exports
to those countries, according to a new C. D. Howe Institute report. In
the study, entitled "The Impact of Diplomatic Representation Abroad on
Canada's Exports," author Dan Ciuriak provides new insights into where,
why and how economic diplomacy works best, and shows that an embassy or
equivalent has in the past added more to trade than have additional
consulates or trade offices in the same destination.
"As the federal government continues to prioritize "economic diplomacy"
through its Global Market Action Plan, these findings strongly support
the importance of economic diplomacy. With the government's diplomatic
efforts running on a recently tightened budget, it is critical that
scarce funding be allocated towards those countries and types of
diplomatic presence—embassy, consulate or trade office—that will reap
the largest benefits for Canadian exporters," said Ciuriak.
Ciuriak finds having an embassy in an export destination country boosts
total goods exports by 29 percent. The impact is stronger on exports
excluding mined products (39 percent), but is lower for manufactures (9
percent). In contrast to the impact of an embassy, the impact of a
consulate or trade office is very small and statistically
insignificant. Embassies are particularly effective at reducing the
inhibiting effect on Canadian exports in those countries with lower
levels of economic freedom.
"The results suggest that there is a definite importance in the 'G2G'
(government-to-government) relationship as distinct from the role of
government in providing 'B2B' (business-to-business) trade
facilitation," remarked Ciuriak, who added "The small effect for
consulates might reflect the fact that many consulates have not
historically had major trade promotion mandates - but it might also
reflect the scale of operations: there is evidence that firms that
access Canadian Trade Commissioner services gain a significant boost in
exports relative to comparable firms that do not, but only a relatively
small number of exporters actually make use of these services and the
majority are small firms." Additionally, the results show clearly the
positive impact on Canadian exports of the existence of free trade
agreements between Canada and any given destination.
Ciuriak concludes that there is a complex interaction between politics
and business that is revealed by the connection between the level of
trade, the role of the state in economic decision-making, and the level
of diplomatic representation in a country. Trade is, at the end of the
day, a "relationship" business, including political relationships.
The C. D. Howe Institute is an independent not-for-profit research
institute whose mission is to raise living standards by fostering
economically sound public policies. It is Canada's trusted source of
essential policy intelligence, distinguished by research that is
nonpartisan, evidence-based and subject to definitive expert review. It
is considered by many to be Canada's most influential think tank.
For the report go to: http://www.cdhowe.org/the-impact-of-diplomatic-representation-abroad-on-canadas-exports/25659
SOURCE: C.D. Howe Institute
For further information:
Dan Ciuriak, Director and Principal, Ciuriak Consulting Inc. and Research Fellow at the C.D. Howe Institute; or Daniel Schwanen, Assistant Vice-President, Research, C.D. Howe Institute, 416-865-1904. Email: firstname.lastname@example.org