COMPETITIVENESS OF CANADIAN AGRI-FOOD EXPORTS

Transcription

1 JOINT SERIES OF COMPETITIVENESS NUMBER 18 NOVEMBER 1999 COMPETITIVENESS OF CANADIAN AGRI-FOOD EXPORTS AGAINST ITS COMPETITORS' IN ASIA: Kevin Chen and Yufeng Duan Department of Rutal Economy University of Alberta

2 Canadian Cataloguing in Publication Data Chen, Kevin, Competitiveness of Canadian agri-food exports against its competitors' in Asia (Joint series of competitiveness; no. 18) Includes biographical references. ISBN Food industry and trade--canada. 2. Foreign trade promotion--canada. 3. Canada--Commerce-Asia. I. Duan, Yufeng, II. University of Alberta, Faculty of Business. III. Title. IV. Series: Joint series on competitiveness ; no. 18. HD914.C32C '.41'971 C Page ii Joint Series of Competitiveness No. 18, November 1999

3 1. INTRODUCTION The agri-food industry in Canada is export-oriented and a significant component of the Canadian economy. In 1997, about one third of primary and processed agri-food production in Canada was exported and the total export value of agri-food products accounted for approximately 7 percent of Canada s total exports of goods. As such, export performance of the Canadian agri-food plays an important role in the Canadian economy. Asia was the second largest market for the Canadian agri-food exports (Chart 1). During the period , about 28 percent of total agri-food exports in Canada went to Asia. In recent years, the agri-food exports from Canada to Asia have increased rapidly. In nominal terms, total export value of Canadian agri-food products to Asia increased from US$2.1 billion in 198 to US$ 4.6 billion in Did the increased exports of the Canadian agri-food products over the period reflect its rising export competitiveness in Asia? If so, to what extent? These questions are important given the increased competition among export suppliers to maintain and increase their market shares in the Asian market. Such competition has become even more intensive in recent years as the agri-food sector in developed nations such as Australia, New Zealand, Europe, and the United States has increasingly relied on exports for growth because of their own slow-growing domestic food consumption. The objective of this research is to identify the Canadian competitive position in agri-food exports to Asia using Statistics Canada s trade data from The resulting information could help Canada s agri-food industry and policy makers gain a better understanding of its competitive position against its main competitors and determine what actions should be taken to maintain and improve Canada s export performance in the Asian market. Chart 1: Average Export Share* of Canadian Agri-food to the World by Destination: Asia 27.7% EU 1.5% The Rest of World 12.6% South & Central American 7.5% USA 41.8% Source: Word Trade Analyzer, Statistics Canada, 1999 *Notes: The average export share to a destination in the world was calculated as a ratio of total Canada s agri-food export value to the destination over total Canada s agri-food export value to the world for the period Joint Series of Competitiveness No. 18, November 1999 Page 1

4 DATA The data are obtained from the World Trade Analyzer (WTA) 1, produced by the International Trade Division of Statistics Canada. WTA, a replacement product for the previous World Trade Database, is constructed from trade data that each country reported to the United Nations. The current (1999) WTA contains eighteen years (198-97) of annual export and import values by countries and commodities. The WTA, based on the Standard International Trade Classification (SITC), provides the data at the total and 1-4 digit SITC levels. To aid in interpretation of the CMS (Constant Market Share) decomposition results later on, some aggregations are in order. Following Wang (1997), Canada's and its main competitors agri-food exports are grouped into four broad categories in terms of their factor-intensity, degree of processing, and readiness for direct consumption on the 1i Designed with ORACLE software, the WTA is an all-in-one analytical tool, allowing users to produce tables and graphs in the chosen aggregation level. Agri-food products are defined as SITC sections,1,2, and 4. basis of 4-digit SITC level data. The four categories are bulk commodities, processed intermediate goods, horticultural products and consumer-ready goods. Bulk commodities include grain, oilseed, and plant-based fibers such as cotton, raw rubber and nonmanufactured tobacco; processed intermediate products include flour, feed, live animals, animal fats/oil, and animal-based fiber such as wool; horticultural products include fresh fruits, vegetables, and flowers; and consumer-ready products include preserved vegetables, fish, fruits and nuts, fresh and frozen meats, eggs, dairy products, processed meats, manufactured tobacco, and beverages. The detailed 4-digit SITC codes under each category are provided in the Appendix 1. Based on their relative importance to Canada s exports in agri-food products, individual countries are grouped into one of five destination markets. They are Japan, Hong Kong and Taiwan, Korea (including South Korea and North Korea), Asia7 (including Indonesia, Malaysia, Thailand, Philippines, Singapore, Burma and Vietnam) and South Asia (including all regions/countries except the above regions/countries in Asia). PATTERN OF CANADIAN AGRI-FOOD EXPORTS IN ASIA CANADIAN AGRI-FOOD EXPORTS To the World: With the increase of total Canadian agri-food exports to the world, exports of consumer-ready goods, processed intermediate goods and horticultural products in Canada increased gradually during the period except bulk commodities, which fluctuated around US$ 5 billion (Figure 1). Among the exports of total agrifood products from Canada to the world, on average, bulk commodities and consumerready goods had almost the same export shares 2, being 39.5 percent and 4.4 percent, respectively (Figure 2). Processed intermediate goods accounted for 16.4 percent of total Canadian agri-food exports, ranking third. Exports of Canadian 2 The export share for a category of product was calculated as a ratio of Canada s export value in the category of product to the world over total Canada s export value in agri-food products to the world. Page 2 Joint Series of Competitiveness No. 18, November 1999

5 horticultural products comprised the least of total agri-food exports in Canada, at 3.8 percent. In terms of export destination, from , 41.8 percent of total agri-food exports in Canada went to the United States, the largest market. Asia was the second largest market for Canadian agri-food exports during the same period. Europe and South & Central America ranked third and fourth with 1.5 percent and 7.5 percent of Canadian agrifood exports, respectively (Chart 1). Figure1: Canadian Agri-food Exports to the World: Export Value ( USD) 2,, 15,, 1,, 5,, Consumerready Goods Processed Intermediate Goods Horticultural Products Bulk Commodities Year Total Agrifood Source: World Trade Analyzer, Statistics Canada Figure 2: Canadian Agri-food Exports to the World and to Asia by Product Categories Average Export Share* (%) Consumer-ready Goods Processed Intermediate Goods Horticultural Products Bulk Commodities Exports to the World Exports to Asia Product Source: World Trade Analyzer, Statistics Canada 1999 *Note: The average export share for a category of product was calculated as a ratio of total Canada s export value in the category of product to the world (or to Asia) over total Canada s export value in agri-food products to the world (or to Asia ) for the period Joint Series of Competitiveness No. 18, November 1999 Page 3

6 To Asia: Compared with these from Canada to the world, exports of total agri-food from Canada to Asia increased but fluctuated largely during the period This fluctuation was mainly caused by the fluctuating exports of bulk commodities to Asia (Figure 3). Similar to those from Canada to the world, exports of the other three commodities to Asia (consumer-ready goods, processed intermediate goods and horticultural products) increased steadily over the period. In terms of commodity composition, however, there was difference between exports from Canada to the world and those from Canada to Asia. In the Asian market, exports of Canada s bulk commodities accounted for 64 percent of total Canadian agri-food exports, which was 23.5 percent more than that to the world (Figure 2). Exports of Canadian consumer-ready goods to Asia ranked second, accounting for 22.1 percent of total Canadian agri-food exports. There was difference of 18.3 percent between the export shares of consumer-ready goods from Canada to the world and to Asia. Exports of processed intermediate goods to Asia ranked third, being 12.3 percent, whereas exports of horticultural products accounted for only 1.6 percent, on average, over the period of In terms of export destination in Asia, Japan was the largest market for Canadian agri-food exports. More than 5 percent of Canadian agri-food exports went to Japan from 198 to 1997 (Chart 2). South Asia was its second largest export market, accounting for 33.3 percent. Hong Kong and Taiwan together constituted its third largest export market, on average, taking 5.5 percent of total Canadian agri-food exports. Asia 7 and Korea ranked fourth and fifth, respectively. Figure 3: Canadain Agri-food Exports to Asia: Consumer-ready Goods Export Value ( USD) 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, Processed Intermediate Goods Horticultural Products Bulk Commodities 5, Total Agri-food Year Source: World Trade Analyzer, Statistics Canada Page 4 Joint Series of Competitiveness No. 18, November 1999

7 Chart 2: Average Export Share* of Canadian Agri-food to Asia by Destination: Japan 51.4% Hongkong &Taiwan 5.5% Korea 4.7% South Asia 33.3% Asia7 5.1% Source: Source: World Trade Analyzer, Statistics Canada *Notes: The average export share to a destination in Asia was calculated as a ratio of total Canada s agri-food export value to the destination over total Canada s agri-food export value to Asia for the period MAIN COMPETITORS IN ASIA During the period , Asia was a main export market for agri-food in the world, occupying 25.6 percent of the total world agri-food exports. To identify the main competitors for Canada in the Asian market, the average market shares 3 of main export 3 Average market share was calculated as a ratio of an exporting region s export value in total agrifood to Asia over total import value of agri-food from all sources to Asia. suppliers to Asia in the period were calculated. The market share of total Canadian agri-food exports to Asia was about 4 percent of the total world agri-food exports to Asia (Chart 3). The main competitors for Canada in the Asian market, with their market shares were the United States (24.5 percent), Europe (13.5 percent), Australia (7.1 percent), China (7. percent), Thailand (5.1 percent), Malaysia (3.8 percent), Taiwan (3.1 percent), Indonesia (2.2 percent) and New Zealand (2.3 percent). Joint Series of Competitiveness No. 18, November 1999 Page 5

8 Chart 3: Average Market Share* of Canada's and its Main Competitiors' Agri-food Exports in Asia: USA 33.8% Canada 5.4% New Zealand 3.2% Australia 9.8% Indonesia 3.% Malaysia 5.2% Thailand 7.% Taiwan 4.3% EU 18.6% China 9.7% Source: World Trade Analyzer, Statistics Canada 1999 *Note: Average market share was calculated as a ratio of an exporting region s export value in total agri-food to Asia over total import value of agri-food from all sources to Asia for the period METHOD FOR ASSESSING EXPORT COMPETITIVENESS Without analyzing both price and nonprice determinants of competitiveness, one can still analyze changes in an exporting region s market shares as ex post reflections of changes in competitiveness (Bowen and Pelzman 1984). Although changes in market shares are not entirely determined by changes in competitiveness, they nonetheless provide an accepted measure of changes in an exporting region s competitiveness vis-àvis the world market. For example, competitiveness is defined as the sustained ability to profitably gain and maintain market share in the domestic and/or export market by the Task Force on Competitiveness in the Agri-food Industry (Agriculture Canada 199). To infer an exporting region s competitiveness from changes in its exports, this research uses the Constant Market Share (CMS) model 4. Chart 4 presents a two-level CMS decomposition. The formulas for the two-level CMS decomposition are provided in 4 Some recent applications include Jepma (1986), Bowen and Pelman (1984), Fagerberg and Sollie (1987), Feldman (1994), Ahmadi-Esfahani (1995), Ahmadi-Esfahani and Jensen (1994), and Lloyd and Toguchi (1996). Page 6 Joint Series of Competitiveness No. 18, November 1999

9 Chart 4: The Two-level Decomposition of the Change in Exports Change in Exports First-level Decomposition Structural Effect Competitive Effect Second-order Effect Second-level Decomposition Growth Effect Market Effect Commodity Effect Interaction Effect General Competitive Effect Specific Competitive Effect Pure Second-order Effect Dynamic Structural Residual Joint Series of Competitiveness No. 18, November 1999 Page 7

10 Appendix 2. In the first level, the CMS model decomposes the change in exports into three components: the structural effect, the competitive effect, and the second-order effect. With the second-level decomposition, the structural effect is further decomposed into the growth effect, the market effect, the commodity effect and the interaction effect; the competitive effect is split into the general competitive effect in the Asian market and the specific competitive effect in specific markets; and second-order effect is divided into the pure second-order effect and the dynamic structural effect. The interpretations for these decomposition items are provided in Appendix 3. To assess Canada s competitive position, this study relies on the competitive effect in the first-level CMS decomposition and its two components (the general competitive effect and the specific competitive effect) obtained from the second-level CMS decomposition. The competitive effect measures an exporting region s overall competitiveness, which is caused by the change in an exporting region s general competitive effect and specific competitive effect. The general competitive effect is caused by the change in market share of an exporting region in total agri-food exports to the Asian market. The specific competitive effect results from the change in market shares of an exporting region in specific commodities to specific destinations in Asia. DECOMPOSITION PROCEDURES AND RESULTS DECOMPOSITION PROCEDURES The CMS decomposition was carried out yearly, so that the end of the period in each decomposition becomes the beginning of the next period. The simple average of yearly decomposition results was then used to represent the chosen period. Using this method, the year chosen as the beginning of the overall period does not dominate the results. As the above, competitiveness is measured in absolute values, they cannot be used to compare competitors directly due to the different export size among competitors. To derive relative measures, the competitiveness measures were divided by the change in an exporting region s exports. The relative measures indicate the percentage change in an exporting region s exports attributed to the percentage change of an exporting region s competitiveness. An exporting region is regarded as having a stronger competitiveness in the target market if its relative competitiveness measure is positive and larger. A similar procedure is also applied for the rest of the decomposition items to obtain the relative contribution of each component to the changes in exports. THE RESULTS OF THE CMS DECOMPOSITION The average results of the yearly CMS decomposition of the change in agri-food export values to Asia from for Canada and its main competitors are provided in Table 1. On average, all the ten exporters increased their agri-food exports to Asia during the period. The first level CMS decomposition results indicate that the increase in their exports to Asia was mainly attributed to the structural effects. In terms of percentage, the contribution of the structural effects to the increase in exports ranged from 73 percent (Thailand) to 466 percent (Taiwan). The competitive effects contributed to the increase in their exports to Asia positively in China, Canada, Indonesia and Thailand, while they contributed to the increase in their exports to Asia negatively in the United States, Europe, Australia, New Zealand, Malaysia and Taiwan. In other words, while China, Canada, Indonesia and Thailand were competitive, the United States, Europe, Australia, New Zealand, Malaysia and Taiwan were not. Page 8 Joint Series of Competitiveness No. 18, November 1999

11 Table 1. The Average Results of the Yearly CMS Decomposition of the Change in Export Value Items Canada US EU Australia New Zealand Average % Average % Average % Average % Average % Change in Export Value First-level Decomposition Structural Effect Competitive Effect Second-order Effect Second-level Decomposition Growth Effect Market Effect Commodity Effect Structural Interaction Effect General Competitive Effect Specific Competitive Effect Pure Second-order Effect Dynamic Structural Residual Joint Series of Competitiveness No. 18, November 1999 Page 9

12 (Continued) Items Indonesia China Thailand Malaysia Taiwan Average % Average % Average % Average % Average % Change in Export Value First-level Decomposition Structural Effect Competitive Effect Second-order Effect Second-level Decomposition Growth Effect Market Effect Commodity Effect Structural Interaction Effect General Competitive Effect Specific Competitive Effect Pure Second-order Effect Dynamic Structural Residual Page 1 Joint Series of Competitiveness No. 18, November 1999

13 Among the four strong competitors, China ranked first with 32% of its agri-exports to Asia attributed to the competitive effect, Canada second with 31%, Indonesia third with 26%, and Thailand fourth with 23%. It is interesting to observe that, among developed economies considered under the study, only Canada was competitive in its agri-food exports to Asia. The most non-competitive exporting region to Asia in agri-food was Taiwan, in which the competitive effect negatively contributed to the increase of its agri-food exports to Asia by 373%. The second level CMS decomposition results further indicate that, for most exporting regions except Taiwan, the positive structural effects were almost entirely caused by the positive growth effects. In terms of percentage, the contributions of the growth effects to the increase in exports ranged from 73 percent (Thailand) to 381 percent (Taiwan). The contributions of the market, commodity, and structural interaction effects to their respective increases of agri-food exports to Asia were rather insignificant. That is, the large part of all competitors export growth during the period can be attributed to the increase in the level of the Asian agri-food imports. Further decomposition of the competitive effect into the general and specific competitive effects indicates that, while Canada was strong in its specific competitiveness, it was not in its general competitiveness. This implies that Canada had rising competitiveness in exports of certain commodities to certain markets in which the level of the demand was relatively large, but it had declining competitiveness in its total agri-food exports to the Asian agri-food market. China and Thailand were strong competitors in Asia, having both positive specific and general competitive effects. Indonesia was strong in its general competitiveness but weak in its specific competitiveness in Asia. Though they were not competitive overall as indicated by their competitive effects from the first level CMS decomposition, the United States and Australia appeared to have rising specific competitiveness, while Europe and New Zealand appeared to have rising general competitiveness. Malaysia and Taiwan were not competitive in Asia, having both negative specific and general competitive effects. The large negative percentage contributions of the specific and general competitive effects to Taiwan s agri-food export growth indicate weak competitive position in the Asian agrifood import market. The contributions of other items in the second level CMS decomposition to the export growth from were marginal except in Taiwan. The commodity effect was much more pronounced in Taiwan than that in any other exporting regions. Joint Series of Competitiveness No. 18, November 1999 Page 11

14 CONCLUSION AND IMPLICATIONS During the period , Canada and its main competitors were able to increase their agri-food exports to Asia. The increase was mainly attributed to the rapid growth of the Asian agri-food imports during the period. Canada appeared to be very competitive in the Asian market, ranking second after China in terms of its overall competitiveness. The traditional competitors to Canada, such as the United States, Europe, Australia, and New Zealand, were found to be non-competitive in the Asian agri-food importing market. As the recent Asian financial crisis is likely to slow down the growth of agri-food import demand in Asia, its adverse effect on the Canadian agri-food exports to Asia should be smaller than that on the agri-food exports to Asia from the United States, Europe, Australia, and New Zealand. Strong competition to Canada in the Asian agri-food import market came from countries like China, Indonesia and Thailand. If Asia is considered to be a target region for the Canadian agri-food exports and Canada wants to maintain or improve its competitive position, one needs not only to know the exporting strategies that were adopted by the countries such as the United States, Europe, Australia, and New Zealand but also those adopted by the countries such as China, Indonesia and Thailand. Compared with its strong competitors in the Asian market, Canada lacked the general competitiveness in the Asian agri-food market. In order to maintain and improve its export performance in Asia in the future, it will be beneficial if Canada could increase its market shares in commodities or regions, for which the level of demand is not large in the Asian market. REFERENCES Agriculture Canada. Growing Together. Report to Ministers of Agriculture Task Force on Competitiveness in the Agri-food Industries, 199. Ahmadi-Esfahani, F. Z. Wheat Market Shares in the Presence of Japanese Import Quotas. Journal of Policy Modeling 17(1995): Ahmadi-Esfahani, F. Z. and P. H. Jensen. Impact of the US-EC Price War on Major Wheat Exporters Shares of the Chinese Market. Agricultural Economics 1(1994): Bowen, H. and J. Pelzman. US Export Competitiveness: Applied Economics 16(1984): Fagerberg, J. and G. Sollie. The Method of Constant Market Shares Analysis Reconsidered, Applied Economics 19(1987): Feldman, R. A. Measures of External Competitiveness for Germany. WP/94/113, Research Department, International Money Fund, Jepma. C. J. Extensions and Application Possibilities of the Constant Market Shares Analysis: The Case of the Developing Countries Exports. University Press Groningen. The Netherlands, Lloydm P. J. and H. Toguchi. East Asian Export Competitiveness: New Measures and Policy Implications. Asian Pacific Literature 1(1996): Wang, Z. China s Agricultural Trade in 1996: Commodity Structure, Geographical Distribution, and Its Role in U.S. and World Agricultural Trade. In International Agriculture and Trade Page 12 Joint Series of Competitiveness No. 18, November 1999

15 Report. No. WRS-97-3, China: Situation and Outlook Series, pp. 6-15, World Trade Analyzer. Ottawa: International Trade Division, Statistics Canada, Joint Series of Competitiveness No. 18, November 1999 Page 13

16 APPENDIX 1 4-DIGIT SITC CODES UNDER EACH OF THE FOUR CATEGORIES Bulk Commodities Processed Intermediates Goods Consumer-ready Goods Horticulture Products 411-2, 41X, 421, 42X, 11-5, 19, 1X, 422, 46, 47, 111-6, 118, 11X, 121, 129,12X,141-2, 149, 341,343, 34X, 36, 542, 43, 44, 451, 452, 481-2, 711, 721-3, 811-4, 819, 14X, 1XX, 223-4,22X, 23, 24, 251-2, , 571-6, 579, 616, 459, 45X, 1211, 121X, 81X, 913-4, , , 2114, 25X, 2XX, 341-4, 34X, 35, 371, 372, 37X, 2221, , 2929, 292X , 222X, , , 2119, 211x, 212, 21XX, 3XX, 483, 484, 488,, 48X, 4XX, 541, 546, 9, 223X, 22XX, 232, 2631, 2632, 2633, 2634, 2652, , 548, 54X, 561, 564-5, 56X, 577, 57X, , , , , 268X, 2911, 3, 585-6, 589, 58X, 5XX, 611-2, 615, 619, 2819, 291X, , 4111, 4113, 61X, 62, 6XX, 712, 71X, 73, 741, 742, 411X, , 4239, 423X, , 74X, 751, 752, 7XX, 98, 9XX, 111, , 4249, 424X, 42XX, 4311, , 112X, 11XX, 1221, 1222, 1223, 122X, 12XX, X. Page 14 Joint Series of Competitiveness No. 18, November 1999

17 APPENDIX 2 THE CMS FORMULAS The formula in the first level is: q = (1) q = (2) s Q + ij ij i j Structural Effect Q s + ij ij i j Competitive Effectl s Q ij ij i j Second-order Effect The formula (1) can be further decomposed into the following components: Growth Effect i i s Q s Q s i s Q + ( s Q Q ij ij i Market Effect Structural Interaction Effect sq ij ij i j Specific Competitive Effect i ( Q 1 ij ij i j i j DynamicStructural Residual j s Q + ( Q / Q ij ij i j j 1 / Q 1) s Q ) + ( i s Q 1) i ij ij j ij i j Pure Second-order Effect s Q i j s Q j s Q s Q ij ij ij j Commodity Effect + j sq s Q ) GeneralCompetitive Effect j where q is an exporting region s total exports of agri-food products to Asia; s is an exporting region s market share of agri-food exports in total Asian market; s j is an exporting region s market share of agri-food exports in destination j; s i is an exporting region s market share of commodity i in total Asian market; s ij is an exporting region s market share of commodity i in destination j; Q is total Asian imports of agri-food products; Q j is total agri-food imports in destination j; Q i is total Asian imports of commodity i; Q ij is total imports of commodity i in destination j; represents the change in the two periods; superscript is the initial year; 1 is the terminal year; subscript i represents export commodities (here, bulk commodities, processed intermediate goods, horticultural products and consumer-ready goods); and j represents export destinations (here, Japan, Hong Kong and Taiwan, Korea, Asia7, and South Asia). Joint Series of Competitiveness No. 18, November 1999 Page 15

18 APPENDIX 3. INTERPRETATIONS FOR THE TWO-LEVEL CMS DECOMPOSITION ITEMS Decomposition Items Change in Export Value The First-level Decomposition Structural Effect Interpretation The change in an exporting region s export value in agri-food product The change in exports due to the change in the level and structure of Asian agri-food imports, assuming that an exporting region had maintained its market shares in the Asian markets. Competitive Effect Second-order Effect The Second-level Decomposition The change in exports due to the change in the exporting region s competitiveness. It shows the ability or inability of an exporting region to maintain its market shares in exports of each commodity to each destination as well as of total agri-food to total Asian agri-food market. A positive sign implies that the competitiveness of the exporting region is strong in Asian markets. A negative sign means that the exporting region lacks competitiveness in Asian markets. The change in exports due to the interaction of the change in an exporting region s export structure with the change in the level and structure of Asian agri-food imports. Growth Effect Market Effect Commodity Effect The change in exports due to an increase in the level of total Asian agri-food imports, given that the market share of an exporting region s agri-food exports to the Asia agri-food market is unchanged. The change in exports due to the market distribution effect, reflecting the extent of the concentration of exports in faster-growing (slowergrowing) markets than total Asian market. A positive value indicates that Canada has concentrated its exports on faster-growing markets than total Asian market, whereas a negative value implies that Canada has concentrated its exports on slower-growing markets than total Asian market. The change in exports due to the commodity composition effect, reflecting the extent of the concentration of exports in faster-growing (slower-growing) commodities than total agri-food. A positive value demonstrates that Canada has concentrated its exports on commodities that are growing in demand at a faster rate than the average rate of total Asian agri-food imports, while a negative value indicates that Canada has concentrated its exports on commodities that are growing at a slower rate than the average rate of total Asian agri-food imports. Page 16 Joint Series of Competitiveness No. 18, November 1999

19 Structural Interaction Effect General Competitive Effect Specific Competitive Effect Pure Second-order Effect Dynamic Structural Residual The change in exports due to the interaction of the specific commodity and market effects of an exporting region, given that the markets shares of an exporting region in each commodity to each destination and in total agri-food to the Asian agri-food market are unchanged. The change in exports due to the change in the market share of an exporting region in total agri-food exports to the Asian agri-food market given that the level of total Asian agri-food imports is unchanged. The change in exports due to changes in the market shares of an exporting region s exports in specific commodities to specific markets, given an unchanged level and structure of Asian agri-food imports. A positive value indicates that the change in Canada s specific competitiveness has a favorable impact on its export performance; a negative value indicates otherwise. The change in exports due to the interaction of changes in an exporting region s export structure with the change in the level of Asian imports, given that the Asian import structure is unchanged. A positive value indicates that the changes in Canada s export structure are adaptable to changes in the level of Asian imports; a negative value indicates otherwise. The change in exports due to the interaction of changes in Canada s export structure and changes in the Asian import structure. A positive value indicates that Canada has a rapidly growing share in markets (commodities) in which Asian imports are growing relatively rapidly; a negative value indicates otherwise. Joint Series of Competitiveness No. 18, November 1999 Page 17