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Accounting for Slower Productivity Growth in the Canadian Business Sector after 2000: The Role of Capital Measurement Issues

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  • Wulong Gu

Abstract

Labour productivity growth and multifactor productivity (MFP) growth slowed in Canada and other advanced economies after 2000. This article focuses on the issues that are associated with measurement of capital and examines the roles of intangible capital, natural capital, public infrastructure capital and capacity utilization in explaining slower productivity growth. To do that, the article presents an extended growth accounting framework that is used to examine the role of the different types of capital in labour and multifactor productivity growth. It finds that about one quarter of the decline in multifactor productivity growth in the Canadian business sector between 1980-2000 and 2000-2015 was due to an increase in the use of produced capital required to extract natural resources in the oil and gas and mining sector and a decline in the utilization of capital in the manufacturing sector. The decline in labour and multifactor productivity growth after 2000 is not related to intangible capital and public infrastructure capital.

Suggested Citation

  • Wulong Gu, 2018. "Accounting for Slower Productivity Growth in the Canadian Business Sector after 2000: The Role of Capital Measurement Issues," International Productivity Monitor, Centre for the Study of Living Standards, vol. 34, pages 21-39, Spring.
    • Handle: RePEc:sls:ipmsls:v:34:y:2018:2
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    File URL: http://www.csls.ca/ipm/34/Gu.pdf
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    References listed on IDEAS

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    1. John R. Baldwin & Wulong Gu & Beiling Yan, 2013. "Export Growth, Capacity Utilization, and Productivity Growth: Evidence from the Canadian Manufacturing Plants," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 665-688, December.
    2. Marcel P. Timmer & Robert Inklaar & Mary O'Mahony & Bart van Ark, 2011. "Productivity and Economic Growth in Europe: A Comparative Industry Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 21, pages 3-23, Spring.
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    Cited by:

    1. Jeff Mollins & Pierre St-Amant, 2018. "The Productivity Slowdown in Canada: an ICT Phenomenon?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 95-112, Fall.
    2. Wulong Gu & Michael Willox, 2023. "The Post-2001 Productivity Growth Divergence between Canada and the United States," International Productivity Monitor, Centre for the Study of Living Standards, vol. 45, pages 27-60, Fall.
    3. Oliver Loertscher & Pau S. Pujolas, 2023. "Canadian Productivity Growth: Stuck in the Oil Sands," Department of Economics Working Papers 2023-01, McMaster University.
    4. Wulong Gu & Michael Willox, 2018. "Productivity Growth in Canada and the United States: Recent Industry Trends and Potential Explanations," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 73-94, Fall.

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    More about this item

    Keywords

    Canada. Productivity; Productivity Slowdown; Capital Measurement; Measurement;
    All these keywords.

    JEL classification:

    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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