Hidden Goldmine: The Diaspora in Canada

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By Peter G. Hall *                               
Vice-President and Chief Economist Export Development Canada

Growth potential is a key strategic measure for any economy. It can be measured in a number of ways, but the most popular among analysts is the supply-side measure. That’s the technical label for assessing future growth of the labour force, the capital stock and productivity – the three key building blocks of an economy. Demand for a nation’s goods and services can also determine future potential. In an increasingly global world, are there other measures of potential that should be considered?

Cosmopolitan is a word often used to describe Canada. As a nation built to a great extent on immigration, Canada boasts a rich ethnic diversity. Census data show that by far, the largest group has its roots in Western Europe. However, a growing share – due both to recent immigration trends and higher birthrates – is accounted for by emerging economies. In 2006, this group accounted for 9.8 per cent of the population. If we only looked at those with single responses to the ethnicity question, the ratio rises to 17.4 per cent of the population, an impressive proportion.

Analysts and policymakers often lament that economic growth does not reflect this makeup. They argue that if the diaspora from the many nations represented in Canada even more fully facilitated Canadian business with their countries of origin, our trade prospects would be that much better. It sounds like a really interesting idea – are there measures we can use to test their assertions?

One possibility is reconstructing Canadian GDP growth by Canada’s people-groups. Suppose that the many diaspora in Canada were fully engaged in trade with their ancestral economies. A very rough proxy for the effect on the Canadian economy would be to add up GDP using the growth of the world’s economies weighted by Canada’s ethnic mix. Using the ratios generated by the single response cohort produces Canadian GDP growth of 2.8 per cent – 0.8 per cent per year more than the ‘supply-side’ estimate of potential growth. The implications for long-term growth are huge, vaulting Canada’s potential close to tops among OECD nations.

Another way of looking at potential is to similarly reconstruct current Canadian export growth by our people-groups. This automatically attributes a much higher weight to fast-growing emerging market trade and to other vibrant Canadian export markets. What this recalculation generates is annual average growth of 9.6 per cent, far greater than the meagre 1.5 per cent annual growth seen since 2002. While this is unlikely to be achieved anytime soon, it is an interesting measure of the potential that could be unleashed by greater trade engagement of Canada’s diaspora .

The argument doesn’t stop here; there are likely many other ways to add up these numbers, each one likely producing equally dramatic results. For instance, using Canada’s export figures ignores the losses in market share that we have experienced in our emerging market trade. Why not instead weight the import growth of the ancestral economies by Canadian ethnicity? This yields an annual export growth number well in excess of 9.6 per cent. Pretty inspiring stuff!

The bottom line? Current measures of Canada’s economic growth potential can be very discouraging. But potential can be influenced by perspective. Within the diaspora in Canada is a hidden goldmine of opportunity to further connect and trade with the fastest-growing markets of the world.


JULY 2018

Vol. 12 - No. 12


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