Free trade boosts productivity

Most of us realise that the macro-economic climate has a big effect on productivity at the national level ... but, of course, this is only because it has its effects at company level. To confirm this, a recent study on Canada's free trade experience suggests that eliminating more trade barriers inside and outside Canada could lead to big leaps in Canadian productivity, which in turn would allow Canada to better fund its social programs.

The study by economics researchers Daniel Trefler and Alla Lileeva, shows that Canadian companies that had low productivity levels before the Canada-U.S. Free Trade Agreement (FTA) was signed increased their productivity significantly after the Agreement came into effect in 1989.