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Canadian Productivity Growth, Secular Stagnation, and Technological Change

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  • Michelle Alexopoulos and Jon Cohen

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Abstract

In this article, we show first that the recent slowdown in productivity growth in Canada, similar to that in the United States, can be attributed at least in part to the fall-off in the commercialization of new technologies. Using our bookbased indicators of technological change, we are able to show that this is true for both aggregate measures of technology and, at the disaggregate level, for mechanical/manufacturing and electrical technologies. Our results also indicate that the productivity impact of the slowdown in Canada is much greater on goods-producing industries than it is on services. Second, our latest results suggest that, contrary to the concerns of some that we are entering a new period of secular stagnation characterized by low productivity and economic growth, we are actually on the threshold of significant new technological breakthroughs, associated largely, but not only, with advances in artificial intelligence (AI) and robotics. Provided that Canadian firms adopt these innovations, we can anticipate not a continuation of slow productivity growth but an acceleration.

Suggested Citation

  • Michelle Alexopoulos and Jon Cohen, 2018. "Canadian Productivity Growth, Secular Stagnation, and Technological Change," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 113-137, Fall.
  • Handle: RePEc:sls:ipmsls:v:35:y:2018:6
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    File URL: http://www.csls.ca/ipm/35/Alexopoulos-Cohen.pdf
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    References listed on IDEAS

    as
    1. Robert J. Gordon, 2016. "The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War," Economics Books, Princeton University Press, edition 1, number 10544.
    2. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, vol. 96(5), pages 1418-1448, December.
    3. Robert J. Gordon, 2016. "Perspectives on The Rise and Fall of American Growth," American Economic Review, American Economic Association, vol. 106(5), pages 72-76, May.
    4. Baldwin, John R. & Liu, Huju & Tanguay, Marc, 2015. "An Update on Depreciation Rates for the Canadian Productivity Accounts," The Canadian Productivity Review 2015039e, Statistics Canada, Economic Analysis Division.
    5. repec:sls:ipmsls:v:35:y:2018:4 is not listed on IDEAS
    6. Alexopoulos, Michelle & Cohen, Jon, 2009. "Measuring our ignorance, one book at a time: New indicators of technological change, 1909-1949," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 450-470, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    productivity; technological; growth; AI;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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