How Canadian exporters can win a greater share of global value chains

While Canadian exporters remain focused on finding new global markets to diversify their business and gain more customers, research shows they could capture more value from trade and strengthen Canada’s economy through innovation, strategic investment and more complex goods and services.

“Canada possesses powerful sources of economic gravity within its own borders: Abundant natural resources, leading research institutions, innovative companies, a highly skilled workforce and a stable investment environment,” Alison Nankivell, president and CEO of Export Development Canada (EDC), writes in the foreword of EDC’s new white paper, From resources to resilience: How Canada can capture more value through trade.

“If we scaled these capabilities to produce unique, complex products that give Canada a competitive advantage, we could make a tangible difference for the economy—a nearly $100-billion addition to gross domestic product (GDP) in today’s dollars by the next decade, along with increased capabilities and higher productivity,” Nankivell explains.

Countries, including Japan, Germany and South Korea, have shifted into higher-value activities over the past several decades, while Canada has moved in the opposite direction, focusing more on producing and selling raw commodities. The country’s economic complexity has declined since the mid-1990s, leading to lower productivity and roughly a 3% loss in real GDP per capita over a decade.

According to the EDC Economics report, Canadian exporters can help reverse this decline by offering more sophisticated products and services. Rather than simply exporting raw commodities, they can build on their strengths by taking on higher value-chain activities such as design, production, marketing, distribution and delivery.

This will, in turn, lead to greater potential for margin growth, recurring revenue from new business streams and differentiation in domestic and global markets.

What does capturing more of the global value chain look like? Consider the success story behind AGT Food and Ingredients Inc., a food company based in Saskatchewan that’s been a strategic EDC client for more than 25 years.

Since its launch in 2001, AGT Foods has grown from a bulk trader of pulses—peas and lentils—into a vertically integrated producer of packaged foods, pulse-based ingredients and plant-based proteins.

The company’s higher-value products include pasta made from peas or red lentils and breadcrumbs made from peas. These products build on its pulse-processing infrastructure and expertise. The company has also expanded its bulk loading and transportation capabilities through strategic acquisitions and investments.

Like AGT Foods, more EDC clients are succeeding in global markets by capturing greater value from trade. These success stories are characterized by:

• Investments in advanced manufacturing and machinery, equipment and technologies to develop more sophisticated products. For example, some engineered wood producers have started using advanced systems such as cutting-edge robotics to enhance precision and innovation in their manufacturing processes.
• A move from commodities to value-added products. In agri-food, businesses are transitioning from selling primary agricultural products to manufacturing branded and processed food products.
• Development of critical minerals capabilities beyond extraction. More Canadian firms are investing in processing and refining capabilities for critical minerals such as rare earth elements, graphite and lithium. This has expanded opportunities in industries, including automotive, defence and aerospace.
• Participation in large-scale, international cleantech developments that combine renewable energy, critical minerals, processing and advanced manufacturing. These projects connect Canadian companies with global supply chains, creating opportunities to export technology, expertise and specialized products.

For many businesses, lack of capital makes it difficult to act on opportunities that could allow them to capture more value from trade. EDC solutions, like the Export Guarantee Program, Trade Expansion Lending Program and Account Performance Security Guarantee, can help Canadian exporters unlock additional financing through their banks. Learn more about EDC’s working capital guarantees.

How Apera AI is capturing more value from global trade

Apera AI, a technology startup based in Vancouver, BC, has turned its homegrown artificial intelligence (AI) and advanced manufacturing expertise into high-value exports for global markets. The company’s 4-D vision technology combines cameras, AI and machine learning to help industrial robots perform complex tasks more accurately and efficiently. It’s being used in manufacturing facilities on multiple continents, including Europe. By 2026, Apera AI was generating the majority of its revenue from exports.

A key factor in the company’s success is its commitment to ongoing investments in innovation, advanced technology and specialized expertise. EDC has helped Apera AI sustain this commitment through two programs: Export Guarantee Program (EGP), which provided access to working capital to support inventory and fulfill international orders, and the Account Performance Security Guarantee (APSG), which helped the company meet bonding requirements without tying up collateral. Both programs have supported Apera AI’s ability to continue investing in research and development (R&D) to drive business growth and expand sales in international markets.

EDC’s work with Canadian exporters has revealed several ways to capture a greater share of global value chains:

• Increased value is created by what companies do with resources and ideas after they’re produced. The largest gains in revenue and export competitiveness come from commercial activities such as processing, refining, product development, advanced materials production, branding and commercialization.
• Businesses must invest strategically in new capabilities to own more commercial activities across their value chains.
• Investing in the right capabilities will make a critical difference. EDC can help exporters identify which capabilities could yield the best return on investment. We offer market intelligence, financial solutions and advisory services to support business growth, innovation and international expansion.
   

Increasing Canada’s share of global value chains requires co-ordinated national effort by government, industries and investors. The EDC white paper has identified six priority actions for creating the right conditions for Canadian exporters:

1. Build an integrative trade framework that spans the broader ecosystem. Canadian businesses should look beyond goods exports. Services contribute a growing share of added value across manufacturing and knowledge-intensive industries while imports support innovation and productivity by connecting Canadian companies to global technologies and inputs. Direct investments abroad can also make it easier to establish commercial footholds in foreign markets.

2. Expand growth capital to create more Canadian global champions. Canada needs to build strong funding ecosystems that provide access to risk-tolerant capital. In Europe, for example, family offices, industrial foundations and sovereign wealth vehicles have become important sources of long-term capital for innovation and capability building.

3. Leverage high-value services and intellectual property (IP). Research and development, IP, engineering, professional services and technical consulting enable complexity and value creation. Canada needs to create more pathways for our IP to be commercialized domestically and activated in global value chains.

4. Grow our skilled human capital. Canada should build on its leading position as the G7 country with the highest share of working-age adults by pursuing a broader human capital strategy that complements STEM (science, technology, engineering, and mathematics) and technical training with entrepreneurial, managerial and commercial capabilities.

5. Strengthen our trade-enabling infrastructure. Efficient physical and digital infrastructures help exporters participate in more complex, higher-margin commercial activities by reducing costs at every stage of the value chain.

6. Increase trade diversification in higher-value markets. Canada should focus more on markets that demand advanced capabilities across a larger number of global value chains. Regional diversification is critical: Trading in a group of markets forces exporters to upgrade their products and processes to meet higher standards and different customer needs.

A reimagined trade strategy focused on producing unique, complex products and owning more of global value chains could significantly boost Canada’s economy. Canadian exporters can share in this growth by investing in innovations that will enable them to provide higher-value products and services to markets around the world.

“Canada already possesses many of the ingredients to build globally competitive industries. The opportunity now is to build on our strengths, attract investment, develop capabilities and create conditions for Canadian firms to capture more value from the ideas, resources and innovation they bring to the world,” Nankivell says.

Owning more of the commercial activities in your product or service value chain starts with an understanding of the capabilities you need to build:

1. Where in your value chain are the strongest margins earned?

If you’re a lumber exporter, you might find that engineered wood products command significantly more value than regular construction lumber. In-depth analysis of downstream activities tied to your product or service can help you identify opportunities to capture higher margins.

2. Which commercial activities in your product or service value chain are currently delivered by another provider?

Example: A food producer that relies on a third party for processing or packaging could bring those capabilities in-house. This could involve a strategic acquisition or investing in new facilities, equipment and employees with specialized skills.

3. What intellectual property (IP), data or expertise that already exists in your business could you commercialize?

Sell your proprietary technology or specialized production expertise to customers abroad. For example, an inventory platform you developed for the specific needs of your business might be of interest to a similar business in another country.

4. What adjacent products or markets could build naturally on what you’re already doing?

A pulse processor, like AGT Foods, could use its existing capabilities to develop higher-value ingredients, packaged foods or plant-based proteins. Similarly, a fish processor could seek a partnership with a medical company that uses fish skin for wound treatments.

5. What talent, partnership, or investment could you use to capture more value?

Example: A critical minerals producer could partner with a technology company or invest in processing capacity to move beyond extraction. Or, if you’re supplying advanced materials for small-scale manufacturing, investing in 3-D printing technology could expand your capabilities across the value chain.

Your answers to these questions could spark new ideas for unique and complex products or services that will enable you to capture more value from trade. EDC can help you drive your next stage of international growth with solutions that will help maximize your working capital and protect your cash flow. Contact EDC today.