IDEAS home Printed from https://ideas.repec.org/p/ott/wpaper/0905e.html
   My bibliography  Save this paper

Total Factor Productivity growth, Technological Progress, and Efficiency Changes: Empirical Evidence from Canadian Manufacturing Industries

Author

Listed:
  • Mahamat Hamit-Haggar

    () (Department of Economics, University of Ottawa)

Abstract

As productivity (growth) appears to be the single most important determinant of a nation’s living standard or its level of real income over long periods of time, it is important to better understand the sources of productivity growth. In Canada, total factor productivity (TFP) growth is the major contributing factor (relative to changes in capital intensity) to labour productivity growth, particularly in manufacturing sector. However, the TFP gap is also the main source of labour productivity gap between Canada and other industrialized (OECD) countries in recent years. In this paper, a stochastic frontier production model is applied to Canadian manufacturing industries to investigate the sources of TFP growth. Using a comprehensive panel data set of eighteen industries over the period 1990-2005 and the approach proposed by Kumbhakar et al. (1991) and Kumbhakar and Lovell (2000), we decompose TFP growth into technological progress, changes in technical efficiency, changes in allocative efficiency and scale effects. The decomposition reveals that during the period under study, technological progress has been the main driving force of productivity growth, while negative efficiency changes observed in certain industries have contributed to reduce average productivity growth. In addition, our empirical results show that research and development (R&D) expenditure and information and communications technology (ICT) investment, as well as trade openness exert a positive impact on productivity growth through the channel of efficiency gains. We argue that the decomposition carried out in this study may be very helpful to elicit the correct diagnosis of Canada’s productivity problem and develop effective policies to reverse the situation, and thereby reduce Canada’s lagging productivity gap.

Suggested Citation

  • Mahamat Hamit-Haggar, 2009. "Total Factor Productivity growth, Technological Progress, and Efficiency Changes: Empirical Evidence from Canadian Manufacturing Industries," Working Papers 0905E, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:0905e
    as

    Download full text from publisher

    File URL: http://sciencessociales.uottawa.ca/economics/sites/socialsciences.uottawa.ca.economics/files/0905E_000.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Melaku T. Abegaz, 2013. "Total Factor Productivity and Technical Efficiency in the Ethiopian Manufacturing Sector," Working Papers 010, Ethiopian Development Research Institute.

    More about this item

    Keywords

    Canadian manufacturing; Stochastic frontier; TFP growth; Efficiency changes.;

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ott:wpaper:0905e. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Diane Ritchot). General contact details of provider: http://edirc.repec.org/data/deottca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.