Why Growth Matters: Chapter 2 – Where does money come from?

British Columbia is a province rich in natural beauty, talent, and opportunity. But what truly drives our prosperity? The answer, simply put, is the private sector: the businesses and entrepreneurs that power our economy and connect us to the rest of the world.

To understand how we create wealth and improve our quality of life, it helps to step back and look at the basic mechanics of an economy, particularly through the lens of a closed versus an open economy.

Imagine British Columbia as a self-contained economy, closed off from the rest of the world. In this scenario, we would need to produce everything we consume ourselves, food, clothing, technology, services, etc., using only the resources and skills available within our borders.

Without trade, our economy would be forced to stretch scarce resources across every sector, leaving less room for specialization. Any increase in one area would come at the cost of resources taken from another.

Trade changes that. And British Columbia has been an open, trading economy since the beginning. 

When we engage with the rest of the world, we can specialize. We can focus our labour, capital, and creativity on sectors where we have an advantage, and trade for the things others produce more efficiently. This expands opportunities, raises incomes, and grows the overall size of our economy. In other words, the pie actually gets bigger.

Every time a business in British Columbia sells something to a customer outside the province, whether it’s a high-tech product, goods flowing through the port, lumber, our natural gas, or a world-class tourism experience, new wealth flows into our economy. That money gets reinvested into jobs, wages, services, and infrastructure, and it circulates within our communities.

Historically, our exports were rooted in natural resources like lumber, minerals, and fish. But over time, B.C. diversified. Today, our economy is still anchored by resources, but we’ve also diversified through a wide mix of industries: education, financial services, agri-food, tourism, clean technology, film and television, and more.

In B.C., trade is not just a nice-to-have. It is a must. With a relatively small domestic population, our prosperity depends on selling to the world. That’s why the companies that operate on the front lines of international commerce - our exporters - are so important. They bring in fresh capital and stimulate economic activity across every region and sector.

This principle holds true whether it’s cherries sold to South Korea, a fintech startup serving clients in New York, or a resort welcoming tourists from Europe. These activities inject money into our economy. They increase our collective wealth.

Government plays a key role in enabling this growth by investing in infrastructure, education, and services. But it’s the private sector that drives the engine forward.

Some old ideas have re-emerged thanks to powerful proponents, including one south of the border. One of these is mercantilism, an old idea that promotes economic nationalism by seeking to protect domestic industries and boost national wealth by limiting imports and promoting exports.

Much like a closed economy, mercantilism sees imports as bad and exports as good. But in doing so, it ignores the benefits of free and open trade and denies citizens access to lower prices, greater choices, and a more dynamic and innovative economy.

The best way to grow sustainably is to create a level playing field and an environment where businesses want to invest and compete on a global scale. This means reducing barriers to trade, attracting investment, scaling innovation, and nurturing the industries that connect B.C. to the world. This will help our economy growth, allow us to invest in improving public services, and raise our standard of living.

British Columbia’s future prosperity depends on staying open—open to trade, open to talent, open to innovation.

The private sector is our prosperity engine. The more we understand how it works and how to keep it running smoothly, the better off we will all be.

Thanks for reading, and if you found this helpful, consider sharing it so we can all better understand the engine behind B.C.’s prosperity. Stay tuned for Chapter 3: Understanding B.C.'s Economy.

Ready to learn more? Explore our Agenda for Economic Growth.