Canada’s Oil Economy Through the IMF Lens

The International Monetary Fund has weighed in on the economic benefits of oil sands development in Canada, in a background report written in January 2014 but only released in April. Using Input-Output analysis based on 2009 data, the IMF report notes that overall the unconventional oil and gas industry make a small, positive contribution to Canada’s economy: for every $1 invested in the oilsands, Canada’s GDP rises 90 cents – of which 82 cents goes to Alberta. The report states “employment in the energy sector increased by less than 13,000 over 2007-12, against a total 752,000 jobs created over the same period in Canada”. To measure broader spilloever effects across Canada and across industries, the report uses a General Equilibrium Model which takes into account the “infrastructure constraints” – i.e. pipeline and transportation capacity. The report concludes “that the potential output gain for Canada’s energy products would reach only about 2 percent of GDP” over a ten year horizon, and that is conditional on construction of infrastructure (pipelines) for export to non-U.S. markets and for interprovincial energy integration, and if inter-industry linkages are encouraged across Canada to more widely distribute economic benefit.

LINKS

IMF Country Report 14/28: Canada: The Unconventional Energy Boom in North America; Macroeconomic Implications and Challenges for Canada is at: http://www.imf.org/external/pubs/ft/scr/2014/cr1428.pdf

Summary and commentary are at the DeSmog Blog at: http://desmog.ca/2014/04/09/benefits-canadas-energy-boom-remain-energy-sector-alberta-reports-imf, or in an article by Andrew Jackson at the Broadbent Institute at: http://www.pressprogress.ca/en/blog/imf-oil-exports-aren%E2%80%99t-so-key-canada%E2%80%99s-economic-future-after-all

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