DYK with Jeff Bell – Exploring the Edmonton region’s export data

Part one: Unrealized potential 

On one of the buildings in downtown Edmonton, there’s a really simple mural that reads, “Take a risk. It’s the most Edmonton thing you can do”. As I interact with more and more of the business owners in the Edmonton region, I see how aptly this describes the business community here.  While Edmonton is the fifth largest city in Canada, it ranks within the top three in terms of total number of businesses1 – demonstrating a strong entrepreneurial mindset. It is this mindset that drives economic growth in the region.   

As Edmonton Global begins to activate on its trade strategy, I’ve been doing a deep dive into the data related to trade and export in our region. What I have found is somewhat surprising, where we are leaders in terms of taking risks related to starting new businesses, we currently trail all major cities in Canada in terms of percentage of firms that are pursuing export activities (Figure 1), as well as total value of exports (Figure 2). It is interesting to note the discrepancy between the numbers for the city of Edmonton proper versus the larger Edmonton region. This suggests that firms in the region that are not based in the Edmonton city limits have a better track record of capturing export opportunities.  

Figure 1

Figure 2

I believe that exporting is a major area of under realized opportunity for firms across the region. Capitalizing on the export opportunity would create new jobs and spur new economic activity while diversifying our local economy and making it more resilient. 

Part two: Existing trade

Why export? 

Increasing exports can certainly benefit individual companies and the region as a whole. 

According to studies, 2 exporting increases a company’s growth rate and overall revenue. Alberta’s population is relatively small (~4.7 million people). Exporting can provide access to much larger markets.  For comparison, the Netherlands, with a land area only 3.5 times the size of the Edmonton region, exports 80 times the value of our exports. 

Figure 3

Landing a foreign customer can also improve a company’s resiliency in a few different ways. First is geographic diversity – exporting can help reduce the volatility of demand.  If demand for the product decreases in Canada demand may still be robust in the importing country- and vice versa. Another benefit of exporting is the potential to discover new market verticals that may not exist in domestic markets. For example, through exploring export markets, a local oil and gas company may discover demand for their product in the medical device industry or aviation. 

By increasing our export activity, these advantages would have spill over affects across the region. It would improve economic resiliency, increase employment, and increase tax revenue. 

Edmonton region advantages 

There are number of advantages that Edmonton region companies enjoy that make exporting even more attractive. Interestingly, Edmonton region companies have access to much larger markets than their peers in (for example) the United States because of the diversity of trade agreement Canada is party to. With free trade access to 54 countries (compared to 20 for their American peers), Canada is the only G7 nation with free trade access to the entire G7 and European Union. Canada’s 15 free trade agreements cover about two thirds of the world’s GDP and open markets to more than 1.5 billion consumers worldwide.  

Figure 4

Figure 5

And we have the infrastructure to support international trade. The Edmonton region is an inland port with excellent cargo connectivity and favorable regulations and tax regimes. Currency exchange rates can also work in the favor of exporters.  My previous blog posts on air and rail cargo speak to the competitive advantages Edmonton-based firms have in terms of accessing US and Asian markets. Edmonton is the closest city in North America to New Delhi and is closer to Beijing than anywhere in the lower 48 states. The Edmonton region has excellent road and rail connectivity to all major Canadian sea ports as well as the USA and Mexico via the Cannamex highway. Finally, Edmonton firms can also benefit from a number of support programs and policies that favor exports such as “no declaration is required” designations3 or a Foreign Trade Zone designation to name a few. 

Conclusion 

The Edmonton region’s track record on trade is mixed. On the one hand there is a wealth of experience of local companies in building and operating successful businesses, with some of them accessing foreign markets to drive growth. On the other hand, very few companies are exporting relative to our Canadian peers – there is a relatively untapped opportunity for local companies to increase the region’s exports and accelerate their growth- and that of the region. 

Does any of this pique your curiosity around what exporting could do for your business? If so, please join Edmonton Global on September 7th 2023 at the inaugural Access Export event. Edmonton Global will be hosting its first trade networking event to bring together exporters and the ‘export-curious’, along with the organizations that have resources to support export companies and set them up for success. Learn more, and register here.