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Published online by Cambridge University Press: 07 November 2014
This paper deals with long-run changes in the structure of Canadian external trade. By structure is meant the magnitude, content, direction, and “terms” of trade. The paper is focused mainly on commodity trade rather than on all international transactions, and on long-run or secular changes rather than on the business cycle or other short-run concerns. The period of study is the “half-century” 1896–1950, and it permits some observation on recent controversies in the theory of international economic adjustment, such as the discussion of Graham's Theory of International Values.
This paper was presented at the annual meeting of the Canadian Political Science Association in Winnipeg, June 4, 1954.
1 During one summer the study of which this paper is a part was aided greatly by the Office of Naval Research through Stanford University, while the writer was at that institution.
2 Graham, F. D., The Theory of International Values (Princeton, N.J., 1948).Google Scholar See also: Metzler, L. A., “Graham's Theory of International Values,” American Economic Review, 06, 1950 Google Scholar; Metzler, L. A., “The Theory of International Trade” in Ellis, H. S., ed., A Survey of Contemporary Economics, I (Philadelphia, Toronto, 1948), 210–54Google Scholar; Elliott, G. A., “The Theory of International Values,” Journal of Political Economy, 02, 1950.CrossRefGoogle Scholar
3 The main indebtedness for data, aside from the Dominion Bureau of Statistics, is to the now Deputy Minister of Finance for his study of foreign trade statistics in Statistical Contributions to Canadian Economic History (Toronto, 1931).Google Scholar The data presented in the paper are abstracts from more or less continuous series gathered by the writer.
4 The relative decrease in imports from the United Kingdom is partly a matter of statistical reporting. Some items which came through British entrepôt channels were credited to the United Kingdom in early years; more recently they have been credited to their country of origin.
5 This report should be regarded as exploratory and illustrative; it is part of a larger study which is not yet complete.
6 These studies include the well-known work of Colin Clark, D. H. Robertson, J. Viner, B. Ohlin, the League of Nations and the United Nations, E. Staley, W. W. Rostow, W. Arthur Lewis, and so on. While there is not common agreement as to why certain changes have taken place, there is a substantial common ground regarding what has taken place in production, trade, prices, capital accumulation and labour force, resource availabilities, commercial policy, and so forth.
7 The main test of Canadian influence on the world price of a commodity is the size of the variation in Canadian production relative to world production. For example, if variations in Canadian production are less than 3 per cent of world production during a period of time, the elasticity of demand for the commodity would have to be extremely low for variations in Canadian production to bave a substantial effect on the world price. The major exceptions for Canada, as a pure competitor in world markets, are pulp and newsprint since approximately 1917, and nickel and asbestos. Canada has some effect, quite a limited one, on the world prices of wheat, copper, lead, and zinc.
In some cases the world market is divided into imperfectly competitive segments by private and governmental restrictions and natural or technological barriers. The Canadian influence on a segment of the market may be considerable. For example, hard wheat and soft wheat are not perfect substitutes. Another example is the exclusion of the Soviet Union from the world production totals because of trade barriers as well as statistical difficulties.
8 See footnote 2; also Kindelberger, C. P., The Dollar Shortage (New York, 1950).Google Scholar
9 One other resource of critical influence in Canadian development is hydro-electric power. Canada is not as well endowed with some other resources, such as economical combinations of iron ore and coal, and until recently, petroleum, which are intensively used in our new industry.
10 The income estimates from 1896 to 1950 were mainly derived from Clark, Colin, The Conditions of Economic Progress (2nd ed., London, 1951).Google Scholar Interpolations were made in Clark's series in the early years. Estimates in recent years are from: United Nations, National Income Statistics, 1950 Google Scholar; United Nations, Economic Commission for Europe, Economic Survey of Europe, various issues. The recent series were “chained” to Clark's series.
11 United States, the President's Materials Policy Commission, Resources for Freedom (Washington, 06, 1952)Google Scholar, known as the Paley Report.
12 Largely as a consequence of foreign trade policy, there has been a relative growth in home production of foods in the United Kingdom and Western Europe.
13 See United Nations, Relative Prices of Exports and Imports of Under-Developed Countries (New York, 1949)Google Scholar, and Rostow, W. W., The Process of Economic Growth (New York, 1952), chap. IX.Google Scholar
14 The analysis of internal conditions prior to 1920 is limited severely by lack of data, but enough are available to assess the major influences. After 1920, the limitations of the data become less severe, the most important gap being estimates of technological change and productivity.
15 The “steps” do not imply order of causation; they are a convenience for presentation.
16 The term “correlation” is used in its usual statistical sense, though formal calculations of correlation coeificients have not been made.
17 For the other non-ferrous metals the “price-taker” assumption is not completely accurate, but is a reasonably close approximation.
18 Guthrie, J. A., The Economics of Pulp and Paper (Pullman, Wash., 1950).Google Scholar An unpublished Bachelor of Commerce thesis at Queen's University by M. J. Rudiak (1954) has also been helpful.
19 The aggregate effective demand can be measured as Gross National Product plus imports. In constant dollars, the average rate of growth of this aggregate in the decade 1906–15 was approximately 4.75 per cent per annum, with approximately 20.5 per cent of the aggregate devoted to domestic investment. The average rate of growth per annum for the 15 years 1913–28 is estimated at 2.75 per cent per annum. The average rate of growth for the 20 years 1928–48 is estimated at 3.0 per cent. The percentage of the aggregate devoted to domestic investment is estimated at 15.6 per cent for the five years 1926–30, and the five years 1946–50. The estimates were derived from the D.B.S. sources since 1926 and from various sources prior to that year, the most important being a paper on capital formation (as yet unpublished) by K. A. H. Buckley.
20 At the 1954 meetings of the Canadian Political Science Association, one interesting and relevant point which arose was the contrast between the relative stability of Canadian terms of trade and the variability of Australian terms. The Australian terms are dominated by wool prices. This contrast between Canadian and Australian experience may be due to (a) the competition of sources of supply other than Canada for many Canadian export items; (b) the less specialized nature of Canadian exports; and (c) the conservative price behaviour of Canadian newsprint compared with the “free market” increases of Australian wool.