HALIFAX, NS – Trade is a fundamental ingredient to Nova Scotia’s economic success, as identified by the provincial government and the Ivany Commission. And yet there are numerous lingering examples of protectionism, which serve to impede the flow of goods to and from the province.
A new study, published today by the Atlantic Institute for Market Studies (AIMS), dispels newfound affections with protectionism and other barriers to trade. It is of interest to Nova Scotia readers, given the province’s maintenance of barriers to interprovincial trade and promoting the “buy local” trend in agriculture and other areas of the market.
In The Benefits of Trade, author Pierre Lemieux argues that protection policies hurt those they are intended to help. A primary advantage of free trade is lowering the standard of living through cheaper and more various goods for consumption. Dr. Lemieux is an economist affiliated with the University du Québec à Outaouais.
“Greater trade in food is a key ingredient to addressing food shortages, costs, and environmental sustainability,” said AIMS President Marco Navarro-Génie. “Trade pushes down prices and introduces competition for higher quality, creating a better opportunity to feed more people.”
While people are free to buy locally at higher prices if they wish, government subsidies to local agriculture and marketing are a misallocation of resources. Even though importing goods may seem intuitively inferior to domestic production, Lemieux explains that trade works better because of comparative advantage – where jurisdictions fabricate and export the goods they are best suited to make. For other places, it makes more sense to import those goods than to produce them locally.
Nova Scotia also maintains barriers to interprovincial trade, notably in the sale and transport of alcohol. With its neighbouring provinces, there are discrepancies in labour, safety and economic regulations that make trade in goods and services more difficult. The Benefits of Trade recommends that Canadian provinces treat each other as trading opportunities, much as the country does with foreign nations.
AIMS is Atlantic Canada’s only independent public policy research organization, publishing peer-reviewed studies on a wide range of topics, including healthcare, education, public finance, energy and trade. The Institute supports a free-market economy and sound public policy. Unique among regional think tanks, it operates entirely free from government subsidy.
>>> Read the study