These shifting trade-offs need to be well understood in order to frame appropriate policy choices. We will explore these policy issues using a state-of-the-art macro model of the Canadian economy. Trade Evolution and Economic Integration We begin by describing the various ways in which trade has evolved in North America during the past 30 years.
The concept of “trade penetration” is one useful proxy for the importance of international trade for the domestic economy since it goes beyond the traditional concept of exports. We use a country’s nominal exports plus its imports as a share of nominal GDP to measure the importance or “penetration” of trade into domestic value creation, focusing on trade in goods for convenience.