News Feed, News Tip | Aug. 5, 2010

Canadian trade missions generate zero trade benefits: UBC study

Foreign trade missions may cost the taxpayer millions and have been touted as beneficial, but in reality do nothing to increase trade between Canada and partner nations, according to a University of British Columbia study.

UBC researchers Keith Head and John Ries analyzed Canada’s bilateral merchandise trade data for 181 countries between 1993 and 2003.  Their findings appear in the August issue of the Canadian Journal of Economics.

Head and Ries looked at commodity and service trade and foreign direct investment during that period, using data from Statistics Canada and Eurostat, the statistical agency for the European Union, among other sources.

“When you look at the data carefully trade missions don’t seem to work,” says Head, professor of strategy and business economics at UBC’s Sauder School of Business.

“What that implies is that the main cost of trade missions may not be financial, it may be the distraction of government leaders from their primary tasks,” says Head. “Instead of sorting through tricky issues involving hospital beds or highways, they are instead jetting around the world, taking pictures with world leaders, feeling important but accomplishing nothing.”

The Canadian federal government first started regular trade missions in 1994. Often led by the prime minister, the government claimed these efforts generated tens of billions of dollars in new business deals. Although the current Conservative government appears no longer to conduct trade missions, provincial governments continue to invest in these efforts.

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Contact

Prof. Keith Head
Strategy and Business Economics
Sauder School of Business
Tel: 604.822.8492
E-mail: keith.head@sauder.ubc.ca

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