Exportable Services: An Important Source of Job Growth for BC

April 11, 2014
Jock Finlayson

BCBC is pleased to partner with CKNW in their Putting BC to Work programme. Over the coming weeks, we will be highlighting issues and opportunities in British Columbia's labour market both on air and here on our blog. On April 24th, we will be holding a wrap up event featuring Canadian Economist, Don Drummond. Tickets and details here.

More than three-quarters of all employed people in British Columbia are engaged in producing “services” rather than “goods.” Services span a wide array of industry sectors, everything from retail and wholesale trade to professional services (engineering, law, accounting, architecture, etc.), scientific and technical services, transportation, financial services, accommodation and food services as well as services that are mainly delivered or at least largely funded by governments (public administration, education, and health and social services). Many of these service industries loom large in the labour market. Retail and wholesale trade, for example, together employ 350,000 British Columbians, another 200,000 or so toil in the broadly-defined education sector, 150,000 work in financial services, and 275,000 earn their livelihood by providing health-related services.

An important trend in the global economy is that more services are now being “traded” across borders. Some estimates suggest that by 2015, fully one-quarter of global trade will involve the cross-border sale of services (the rest will consist of cross-border shipments of resource products and manufactured goods). Some scholars go so far as to say the world is experiencing a “third industrial revolution” based on the increasing tradability of services.[1] Falling transportation costs and steady advances in technology have greatly facilitated the expansion of services trade. In particular, there has been a notable increase in the range of services that can be transported “digitally” thanks to the internet and access to low cost telecommunications.

The rise of tradable services as a key driver of global commerce is good news for British Columbia. The province has several strengths that position us for success in a world where the demand for exportable services is expected to grow at a significant pace. These competitive advantages include a skilled multi-cultural work force; our Pacific Rim location; a large tourism industry; and strong industry clusters in the areas of financial, professional, and scientific, technical and communications services. BC’s high quality educational institutions are also an asset. Education is already a significant source of “export earnings” for the province, owing to the tens of thousands of foreign students studying in our institutions (who generally pay “market-based” tuition fees rather than the lower taxpayer-subsidized fees charged to domestic students).

The Business Council believes that education can be an even bigger engine for export growth and economic development more generally in the coming decade. We are also optimistic about the prospects for expanding BC’s exports in many other service industries – e.g., engineering, financial services, tourism, and a host of technology-related services that embody intellectual property and depend on highly educated labour.[2] We estimate that tradable services currently represent more than 30% of the value of the province’s total international exports. A recent Business Council paper looked at BC’s exports of advanced technology products and services. We found that the value of technology-based service exports exceeds that of technology-based goods exports by more than three-to-one.[3] In addition, services account for a large majority of the jobs in BC’s advanced technology sector.

All of this underscores the main point: locally-produced services which can be sold to customers beyond BC’s borders are a significant source of employment today and are likely to figure even more prominently in our job market and economy in the future.

Some Examples of BC Service "Exports"
  • Tourism (the portion of tourism spending attributable to out of province visitors)
  • Transportation services linked to the movement of goods and people to/from BC
  • Engineering, accounting, legal and other professional services provided by BC firms to foreign clients
  • Environmental, scientific and technical services provided by BC firms to foreign clients
  • Financial services sold/provided by BC companies to foreign clients
  • Education services (out-of-country students attending BC institutions)
  • Advanced technology services (e.g., software, web-based services, digital animation, and drug trials and specialized health-related research undertaken in BC at the behest of out-of-province funders)

[1] E Ghani, A. Glover and H. Kharas, “Can Services be the Next Growth Escalator?” VOX, December 12, 2011; available at www.voxeu.org/index/php?q=node/7413.

[2] For a discussion of the role tradable services in Canadian exports, see Daniel Schwanen, “Tradable Services: Canada’s Overlook Success Story,” C.D. Howe Institute E-Brief, January 2014.

[3] BC's High Technology Exports: A Solid Base to Grow From, Business Council of British Columbia, Policy Perspectives, February 2014.

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