Second, government support could be shifted away from manufacturing toward encouraging servicesector development, which has typically lagged behind in these economies. Services tend to have a higher non-traded component, so faster growth of this sector would help rebalance growth toward domestic demand.
In all cases, the Canadian dollar appreciates, but its adverse impact on our non-commodity exports is partially offset by the fact that a stronger currency reduces the cost of productivity-enhancing machinery and equipment and imported inputs to production. 2  R. Issa, R. Lafrance and J. Murray, “The Turning Black Tide: Energy Prices and the Canadian Dollar,” Working Paper No.