Natural Resources and Canadian Real Income Growth

In today's issue of The Daily, Statistics Canada has released a terrific study titled "The Role of Natural Resources in Real Income Growth". The paper's authors are John Baldwin and (former UVic. grad. student) Ryan McDonald. (H.T. to Ryan for bringing this to my attention.)

The study itself is extremely comprehensive, and provides some interesting new results about long-term economic growth in Canada. You can download the pdf version from here.

To quote from The Daily:

"This study compared the growth in real GDP per capita with real GNI per capita between 1870 and 2010. During this period, a succession of natural resource products supported economic development and long-term increases in the terms of trade.

According to the study, real GDP and real GNI have shown different pictures of economic growth in Canada during particular periods because of the effect of resource price cycles. For example, between 2002 and 2007, real GNI per capita increased at an annual average rate of 3.1%, nearly double the 1.6% annual rate in GDP per capita.

This study also showed that although the terms of trade had cycles, there was a long-run upward trend. While increases in terms of trade were followed by decreases, the decreases were not sufficiently large to fully undo the effect of most of the gains. By 2010, this had generated a cumulative increase in the terms of trade of more than 90%. As a result, between 1870 and 2010, real GDP per capita grew at 1.87% per year, 0.12 percentage points slower than the 1.99% growth in real GNI per capita."

What's also really exciting (from my perspective) is that all of the data, for the period 1870 to 2010, can be downloaded free of charge from CANSIM . See Tables 383-0027 and 383-0028. (Choose Add/Remove Data, and then select the longest time-period.)

I've loaded the data into EViews and I'll be playing around with the series over the next few days - between grading exams!

© 2012, David E. Giles