Justin Trudeau: “This Prime Minister has the worst rate of export growth of any prime minister since World War II.”
By: Dana Wagner on
Justin Trudeau, Liberal Party leader and candidate for Papineau, in the Munk leaders debate on September 28, 2015
It is true Stephen Harper’s government saw the lowest average annual growth in exports since 1946. But this is not the same thing as finding he is at fault for that record. A few experts argue he is not.FactsCan Score: Misleading
The Conservatives often flaunt their trade record, like the number of trade deals signed in the last decade. During the Munk leaders debate on foreign policy, another (mega) trade negotiation was nearing a close – the Trans-Pacific Partnership – so the topic was inevitable.
Countering the positive narrative, Justin Trudeau said, “this Prime Minister has the worst rate of export growth of any prime minister since World War II.”
The numbers are found in a 2015 report written by Unifor economists Jim Stanford and Jack Brennan. Unifor is a private sector union that is against Stephen Harper’s Conservatives in the 2015 election.
The report uses annual economic data for each year of a prime minister’s time in office to compare their records. The authors begin in 1946, and that covers the mandates of nine prime ministers, as the report excludes those in office for under one year: William Lyon Mackenzie King (1946-1948), Louis St. Laurent (1948-1957), John Diefenbaker (1957-1963), Lester Pearson (1963-1968), Pierre Trudeau (1968-1984), Brian Mulroney (1984-1993), Jean Chrétien (1993-2003), Paul Martin (2003-2006), and Stephen Harper (2006 to the most recent data year, 2014).
To compare the export growth rate of the men’s terms, the authors compared the average annual growth in real (inflation-adjusted) exports. The data come from Statistics Canada, from an online database covering 1961 on, and before that, from a 1983 publication by Statistics Canada, Historical Statistics of Canada.
A big problem with this type of analysis is the assumption that prime ministers can be credited for either strong or weak economies. That can’t be assumed. Consider the nuances: On the one hand, national policies like a free trade agreement could be directly linked to a growth in exports and imports. On the other hand, an external event like the financial meltdown that triggered the 2008-2009 global recession can tank an economy’s performance quite detached from any national-level action.
With that in mind, here are the numbers for average annual growth in real exports:
St. Laurent: 2.7%
According to this analysis, Harper presided over a period that, compared to mandates of other prime ministers, boasts the worst average annual growth in exports. But is it fair to attribute export performance to this (or any) prime minister?
Because of the attribution problem, Michael Hart, a trade policy professor at the Norman Paterson School of International Affairs at Carleton University, called Trudeau’s statement “simplistic and misleading.” He said the claim “assumes that the volume or value of exports is in the hands of the government. Canada does not export, Canadian firms do, and government policy has less and less to do with it.”
Stephen Tapp, a research director at the Institute for Research on Public Policy and former economist for the Parliamentary Budget Officer, made a similar argument. By email, he explained, “the performance of the Canadian economy during the time of a prime minister’s tenure should not be fully attributed to (policy decisions by) that prime minister. There are plenty of factors that affect economic outcomes including: growth in the global economy (particularly the US), commodity prices, (domestic and foreign) interest rates, and also the policy decisions made by previous prime ministers.”
Tapp also pointed out longer-term factors that influence economic growth indicators like exports. Demographics is one, and comparing Canadian residents from the decades 1950 to 2010 is like night and day – think of average age, diversity, education, to name a few stark differences.
Does export growth rate matter?
Exports matter for different reasons. For exporting businesses, annual growth matters a lot. But if the point is to assess the overall health of the Canadian economy, looking at export growth may matter less.
“Yes, you can calculate annual export growth year by year and cumulatively over the course of a prime minister’s mandate,” Hart said. “But the resulting numbers will be largely meaningless.”
He said it’s irrelevant if goods and services are consumed in Canada or shipped outside. What matters more for economic health is productivity and full use of resources.
If we were simply looking at Canada’s export growth rate, then Trudeau’s claim would be true. According to the statistics compiled by Unifor, annual export growth under the recession-era mandate of the Harper government was the lowest since 1946. However, Trudeau’s claim is about Harper’s growth rate. According to experts, that’s misleading. There are too many factors outside the control of the Prime Minister to put him at fault.