The Canada-Atlantic Canada Manufacturing Productivity Gap: A Detailed Analysis
The objectives of this report are to examine the characteristics of manufacturing in Atlantic Canada and to shed light on the factors behind the productivity gap between Atlantic Canada and Canada in the context of the manufacturing sector. A number of possible factors contributing to the Atlantic Canada-Canada manufacturing productivity gap are examined, including innovative activity, capital intensity, quality of human resources, economies of scale and the seasonality of production. Of these, innovation is found to be the most important. Since research and development activity has been historically much lower in Atlantic Canada relative to Canada, it is possible that the level of technology embedded in the capital stock in Atlantic Canada is much lower than in Canada. In the end four factors are identified as contributing the most to the Atlantic Canada-Canada manufacturing productivity gap, namely less innovative effort, particularly in high-tech industries; fewer economies of scale; lower educational attainment of the workforce; and greater seasonality of production.
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