Alberta and the future of global trade
Adjusted for inflation, total annual global trade has gone from about $665 billion (US) in 1950 to $17.6 trillion in 2020
By Rob Roach, ATB Economics 16 December 2021 1 min read
Tuesday’s Owl looked at how Alberta’s international exports have bounced back after a rough 2020. This is an important part of the broader economic recovery in the province because we are heavily dependent on trade with other places.
At 40%, the value of Alberta’s international exports of goods and services as a share of our annual economic output (GDP) is higher than the Canadian average of 31%. It’s just 10% in the United States. (Figures are for 2020.)
It hasn’t always been this way.
In the early 1980s, international exports were about 15% of Alberta’s annual GDP and about 17% for the country as a whole.
The increased importance of trade to Alberta and Canada is part of a larger trend toward more global trade.
Adjusted for inflation, total annual global trade has gone from about $665 billion (US) in 1950 to $17.6 trillion in 2020. If we also take into account population growth, the annual volume of global trade per person is about 9 times greater today than it was in 1950.
The pandemic pushed down global trade in 2020 by 8.5% ($1.6 trillion), but we still managed to exchange around $2,260 worth of goods and services per human being compared to $258 in 1950.
Two factors explain the increase: 1) Technology has made trade easier and has increased the range of products and services available to exchange. 2) Trade liberalization has reduced the artificial barriers to the movement of goods and services that governments create. Many of these barriers remain or are thrown up when the mood strikes (just ask Canada’s softwood lumber producers), but they are not the impediment they once were.
Making sense of what all this global trade means and how it will evolve going forward is the topic of the latest episode of The Future Of podcast. Hosted by ATB Financial’s Chief Economist Todd Hirsch, you can find everything you need to know about the podcast here.
Answer to the previous trivia question: Reindeer comes from the Old Norse word hreinin, which means "horned animal.”
Today’s trivia question: According to the song “You’re a Mean One, Mr. Grinch,” what is the Grinch’s heart full of?