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TODD TALKS It's a big world out there. In an Economics 101 university class, the professor might use the old-timey example of a baker and a cobbler to explain why trading goods and services makes sense. The baker is good at making bread. The cobbler is good at making shoes. Instead of also trying to make shoes, the baker trades bread for shoes. The cobbler, in turn, trades shoes for bread. Introducing money into the equation makes it relatively easy to exchange all sorts of goods and services on a local, national and global scale. That's the essence of trade! In Alberta's case, it's not quite as simple as trading crude oil and wheat for wine and running shoes, but the basic premise holds true – you sell what you have to offer and you buy what you need. It just doesn't make sense for us to grow oranges or make cars when other countries and regions have a comparative advantage in producing those goods. So we trade – and we are better off overall as a result. Albertans are lucky because we have an abundance of natural resources that other places want and need. We've built a prosperous province selling our oil, natural gas, food, fertilizer, wood, plastic and other resource-based commodities—mostly to our rich neighbour, the United States. But we have to do better. Other countries can only dream of our economic ties with the United States. But only having one customer for our oil and gas means we can't get top dollar for our most important product. And, unlike oranges, good jobs don't grow on trees so we need to be constantly looking for ways to sustain our prosperity and create new opportunities. Notwithstanding the bog that has engulfed the process for building new energy pipelines to tidewater, there is good news on the trade front. First, market diversification – at least for products other than our oil and gas – is within our reach. The global middle class is growing and eager to improve its standard of living. This is a market of billions of people in which, if we are savvy and aggressive, we can prosper. This does not mean abandoning the US but rather expanding our customer base. This will require excellent infrastructure, expert diplomacy, investors willing to take calculated risks and Alberta businesses – both new and old – to up their international game. Second, while our bread and butter is clearly natural resources, the opportunity to expand the products and services we sell to the world is limited only by our ingenuity. Alberta is chock full of creative, smart, entrepreneurial, experienced and skilled people. This is our greatest resource and it is the one that will enable us to add to the products and services we have to offer the world. It won't happen overnight and it won't magically replace petroleum as the golden goose, but Albertans can, and should, be much bigger players in global markets. Our future prosperity hangs in the balance. Todd Hirsch, ATB Chief Economist Subscribe to Perch Did you enjoy the read? Subscribe to future editions of Perch where we'll continue exploring ideas about Alberta's quality of life at atb.com/economics Read The Owl Written by ATB's economists, The Owl focuses on the day's top economic news. Keep a close eye on Alberta's economy by subscribing at atb.com/economics Todd Talks ATB's Chief Economist Todd Hirsch is one of our country's most sought-after speakers on the economy. In clear and energetic talks, Todd breaks down what is happening in Alberta's economy. Request Todd to come speak at your event at toddhirsch.com Rob Talks ATB's Director of Insight Rob Roach is available to speak about Alberta's exports and other topics explored in Perch. Request Rob to speak by emailing him directly at rroach@atb.com

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