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What Explains the Canada-US ICT Investment Gap?

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Author Info

  • Andrew Sharpe

Abstract

It is widely recognized that machinery and equipment investment intensity is less in Canada than in the United States. What is less well know is that it is information and communications technology (ICT) investment that largely accounts for this gap. The author documents trends in ICT investment in both Canada and the United States and attempts to explain why ICT investment per worker in the Canadian business sector in 2004 was only 45 per cent of that in the US business sector. While no definitive explanation emerges, among the factors he identifies as playing a role are industrial structure, firm size distribution of employment, the price of labour compared to ICT investment goods, and the underestimation of ICT investment in official statistics.

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File URL: http://www.csls.ca/ipm/11/IPM-11-sharpe-e.pdf
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Bibliographic Info

Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 11 (2005)
Issue (Month): (Fall)
Pages: 21-38

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Handle: RePEc:sls:ipmsls:v:11:y:2005:4

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Related research

Keywords: Productivity Growth; Productivity; Labour Productivity; Industrial Organization; United States; Canada; ICT; Information Technology; Information Communications Technology; Investment; Investment Gap;

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References

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  1. Bruce T. Grimm & Brent R. Moulton & David B. Wasshausen, 2002. "Information Processing Equipment and Software in the National Accounts," BEA Papers 0020, Bureau of Economic Analysis.
  2. Silvia Fabiani & Fabiano Schivardi & Sandro Trento, 2005. "ICT adoption in Italian manufacturing: firm-level evidence," Industrial and Corporate Change, Oxford University Press, vol. 14(2), pages 225-249, April.
  3. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January.
  4. Elad Gafni, 2005. "The Diffusion and Adoption of Advanced Technologies in Canada: An Overview of the Issues," CSLS Research Reports 2005-05, Centre for the Study of Living Standards.
  5. Andrew Sharpe, 2004. "Ten Productivity Puzzles Facing Researchers," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 15-24, Fall.
  6. Someshwar Rao & Jianmin Tang & Weimin Wang, 2004. "Measuring the Canada-U.S. Productivity Gap: Industry Dimensions," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 3-14, Fall.
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Citations

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Cited by:
  1. Kevin Girdharry & Elena Simonova & Rock Lefebvre, 2012. "Investment in Machinery and Equipment is Essential to Canada's Future," Working Papers 120401, Certified General Accountants Association of Canada.
  2. Andrew Sharpe, 2007. "Lessons for Canada from International Productivity Experience," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 20-37, Spring.
  3. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.

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