Research & Publications

Independently developed by renowned economists, Robert Alexander Mundell (legendary Canadian economist, also known as “father of the Euro”) and John Marcus Fleming, the impossible trinity is a concept in international economics. It states that it is impossible to have all three at the same time – an open capital account, a fixed exchange rate and an autonomous monetary policy. The idea of impossible trinity has subsequently been widely used to elucidate other sectoral concepts and theories.

In this research publication, we decided to buck the trend and talk about a possible trinity – where all three events can happen simultaneously. We are talking about enhancing productivity, boosting manufacturing and providing a fillip to exports in Canada. Given the deleterious effects of the pandemic and other geopolitical shocks, we should not look at this as a mere possibility but as an immediate priority for sustainable long-term growth.

We provide an overview of the manufacturing and export ecosystem in Canada, including a comparison with G7 countries. We have delved into the key drivers that are transforming the manufacturing sector worldwide and in Canada. We take a closer look at the huge impact of digital transformation on this sector and how all these factors are influencing consumer demand patterns and adaptability of businesses.

We then take a deep dive into the productivity conundrum – the current productivity trends and their impact on manufacturing and exports. We have done a diagnostic analysis of the reasons of falling productivity across three key factors – capital intensity, labor productivity and multifactor productivity.

The report then looks into the current reforms undertaken in Canada and US to boost productivity in the manufacturing sector and the tangible results. We finally explore the roadmap for the sector to boost productivity and also export competitiveness through upskilling, investments and digital transformation.