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Ontario's Productivity Performance, 2000-2012: A Detailed Analysis

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  • Andrew Sharpe

Abstract

It is widely recognized that productivity growth is the key driver of long-run increases in living standards. Therefore, a slowdown in productivity growth is a major cause for concern. This has in fact been the situation in Ontario since 2000. After advancing at a 1.9 per cent average annual rate between 1987 and 2000, business sector productivity growth has fallen to 0.5 per cent per year between 2000 and 2012, the second lowest growth rate among the provinces. Indeed, given the relative size of Ontario’s economy, the province’s weak productivity growth has largely been responsible for Canada’s overall poor productivity performance. The objective of this report is to explain the slowdown in productivity growth in Ontario since 2000. The report provides an overview of the productivity performance of the Ontario economy, with a focus on the 2000-2012 period. The report also examines both the supply-side and demand-side factors that influenced Ontario’s productivity performance. The main cause of Ontario’s lackluster productivity growth is found to be the deterioration of external demand conditions. The drop in international exports, due to weak demand growth in the United States, loss of cost competitiveness linked to the appreciation of Canadian dollar and increasing international competition, played a direct role in the slowdown in Ontario’s productivity growth.

Suggested Citation

  • Andrew Sharpe, 2015. "Ontario's Productivity Performance, 2000-2012: A Detailed Analysis," CSLS Research Reports 2015-04, Centre for the Study of Living Standards.
  • Handle: RePEc:sls:resrep:1504
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    File URL: http://www.csls.ca/reports/csls2015-04.pdf
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    References listed on IDEAS

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    Cited by:

    1. James Uguccioni, 2016. "Estimating Total Factor Productivity Growth: Canadian Freight Railways, 1986 to 2009," International Productivity Monitor, Centre for the Study of Living Standards, vol. 30, pages 77-97, Spring.

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    More about this item

    Keywords

    Ontario; Canada; Productivity; Cost Competitiveness; International Trade;
    All these keywords.

    JEL classification:

    • 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
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N52 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: 1913-
    • N62 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: 1913-
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-

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