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<p>This research analyzes the effect of the North American Free Trade Agreement (NAFTA) and its predecessor, the Canada-USA Free Trade Agreement (CUSFTA), on the evolution of the export composition of Canada. This research applies a multivariate time series model to measure Canada’s export composition using 11 indices including diversification, extensive margin, intensive margin, product sophistication, and economic complexity. These measures are crucial in assessing the trade risk and economic development potential of a country. This study extends the literature by computing and assessing a comprehensive set of measures of export performance (11 measures) and using a long time series spanning five decades (1970–2019). The results indicate that, for Canada, higher economic integration through a free trade agreement with the USA is associated with a positive change in export diversity estimated by the Herfindahl-Hirschman and intensive margin index.</p>

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The Effect of CUSFTA and NAFTA on Canada’s Export Composition

  • 期刊论文

  • 发表日期：

    2025年5月13日

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  • Manouchehr Barjesteh Maleki,
  • Hamed Samarghandi,
  • Joel Bruneau

摘要

This research analyzes the effect of the North American Free Trade Agreement (NAFTA) and its predecessor, the Canada-USA Free Trade Agreement (CUSFTA), on the evolution of the export composition of Canada. This research applies a multivariate time series model to measure Canada’s export composition using 11 indices including diversification, extensive margin, intensive margin, product sophistication, and economic complexity. These measures are crucial in assessing the trade risk and economic development potential of a country. This study extends the literature by computing and assessing a comprehensive set of measures of export performance (11 measures) and using a long time series spanning five decades (1970–2019). The results indicate that, for Canada, higher economic integration through a free trade agreement with the USA is associated with a positive change in export diversity estimated by the Herfindahl-Hirschman and intensive margin index.