Template-Type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Title: Editor’s Overview Abstract: THIS MARKS THE 20th issue of the International Productivity Monitor (IPM). The Centre for the Study of Living Standards would like to thank Industry Canada for the financial support that has made the publication of the IPM possible over the past decade. This issue contains five articles on: the impact of the economic crisis on potential output and productivity growth in Canada; the sensitivity of estimates of Canada-U.S. capital intensity and multifactor productivity gaps to depreciation assumptions; a sectoral and provincial decomposition of Canada’s post-2000 labour productivity slowdown; the role of creative destruction in Finnish productivity performance; and the influence of public policy on manufacturing productivity growth in India. Classification-JEL: Y2 Keywords: productivity, potential output, growth, capital intensity, multifactor productivity, depreciation, labour productivity, creative destruction, public policy Journal: International Productivity Monitor Pages: 1-2 Volume: 20 Year: 2010 Month: Fall File-URL: http://www.csls.ca/ipm/20/IPM-20-editoroverview.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:20:y:2010:0 Template-type: ReDIF-Article 1.0 Author-Name: Marcello Estevão Author-Email: mestevao@imf.org Author-Name: Evridiki Tsounta Author-Email: etsounta@imf.org Title: Canada's Potential Productivity and Output Growth: A Post-Crisis Assessment Abstract: This study investigates the impact of the current financial crisis on Canada’s potential GDP growth. Using a simple accounting framework to decompose trend GDP growth into changes in capital, labour services, and total factor productivity, we find a sizeable drop in Canadian potential growth rate in the short term. The estimated decline of about 1 percentage point originates from a sharply decelerating capital stock accumulation (as investment has dropped steeply). However, over the medium term, we expect Canada’s potential GDP growth to gradually rise to around 2 per cent, below the pre-crisis growth rate, partly reflecting the effects of population aging. Classification-JEL: D24, J24, O47, E32 Keywords: productivity, potential output, growth, Canada Journal: International Productivity Monitor Pages: 3-21 Volume: 20 Year: 2010 Month: Fall File-URL: http://www.csls.ca/ipm/20/IPM-20-Estevao-Tsounta.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:20:y:2010:1 Template-type: ReDIF-Article 1.0 Author-Name: Jianmin Tang Author-Email: jianmin.tang@ic.gc.ca Author-Name: Someshwar Rao Author-Email: someshwar6@gmail.com Author-Name: Min Li Author-Email: min.li@stat-can.gc.ca Title: Sensitivity of Capital Stock and Multifactor Productivity Estimates to Depreciation Assumptions: A Canada-U.S. Comparison Abstract: This article provides consistent estimates for capital stock and multifactor productivity (MFP) for Canada and the United States across major industries for the 1987-2007 period. For this purpose, capital stock estimates are developed for Canadian and U.S. industries using the same asset depreciation rates (either from the U.S. Bureau of Economic Analysis or from Statistics Canada) for the two countries. The results show that on an hours worked basis Canadian industries invest more in total capital than their U.S. counterparts. This situation reflects much greater investment in structures, with less in machinery and equipment (including information and communications technologies). The results imply that all of the Canada-U.S. labour productivity gap arises from the multifactor productivity gap. Classification-JEL: J24, D24, E22, O57 Keywords: multifactor productivity, capital stock, depreciation rate, labour productivity Journal: International Productivity Monitor Pages: 22-47 Volume: 20 Year: 2010 Month: Fall File-URL: http://www.csls.ca/ipm/20/IPM-20-Tang-Rao-Li.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:20:y:2010:2 Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Author-Name: Eric Thomson Author-Email: info@csls.ca Title: Insights into Canada’s Abysmal Post-2000 Productivity Performance from Decompositions of Labour Productivity Growth by Industry and Province Abstract: The Centre for the Study of Living Standards has released new estimates of labour, capital and multifactor productivity growth and levels at the market sector, two-digit, and three-digit NAICS industry level for the Canadian provinces during the 1997-2007 period. This article exploits this database to shed light on the nature of the slowdown in labour productivity growth in Canada after 2000. It identifies manufacturing as the sector that has accounted for most of the slowdown. Within manufacturing, transportation equipment and computers and electronics are found to be the industries that accounted for the lion’s share of the sector’s fall-off in labour productivity growth. Ontario was the province that contributed proportionately the most to the slowdown because of the concentration of manufacturing in this province. A fall in manufacturing output growth is identified as the factor most responsible for the decline in productivity growth in the sector. Classification-JEL: J24, D24, O47, R11 Keywords: labour, capital, multifactor productivity, growth, province, industry, manufacturing Journal: International Productivity Monitor Pages: 48-67 Volume: 20 Year: 2010 Month: Fall File-URL: http://www.csls.ca/ipm/20/IPM-20-Sharpe-Thomson.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:20:y:2010:3 Template-type: ReDIF-Article 1.0 Author-Name: Mika Maliranta Author-Email: mika.maliranta@etla.fi Author-Name: Petri Rouvinen Author-Email: petri.rouvinen@etla.fi Author-Name: Pekka Ylä-Anttila Author-Email: pekka.yla-anttila@etla.fi Title: Finland’s Path to the Global Productivity Frontier through Creative Destruction Abstract: The marked acceleration of Finnish productivity growth since the mid-1980s is attributable to intensifying creative destruction, understood as the joint effect of market entry and exit as well as resource reallocation between continuing plants and firms. This acceleration coincided with the economy-wide deregulation, liberalization, and the opening up of Finland, which provided new incentives and opportunities, thus enabling individuals and businesses to capitalize on intangible capital accumulated via sustained investment since World War II. The “Nokia effect” was particularly important in the latter half of the 1990s, but productivity enhancing restructuring has been more widespread. Developments in Finland are contrasted to those in Japan, Sweden, and the United States. Classification-JEL: O31, O38, O47 Keywords: creative destruction, productivity, growth, public policy, Finland Journal: International Productivity Monitor Pages: 68-84 Volume: 20 Year: 2010 Month: Fall File-URL: http://www.csls.ca/ipm/20/IPM-20-Maliranta-Rouvinen-Yla-Anttila.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:20:y:2010:4 Template-type: ReDIF-Article 1.0 Author-Name: Abhay Gupta Author-Email: abhayg@abhayg.com Title: Indian Manufacturing Productivity: What Caused the Growth Stagnation before the 1990s? Abstract: This article addresses the question of why productivity growth in Indian manufacturing was slow in the pre-reform period and analyzes how economic reforms in the 1990s accelerated productivity growth. The answer lies in two subtle but important distortion-inefficiency mechanisms, which affected productivity growth by distorting intermediate input allocation. The interaction of quantitative restriction policies and inflexible labour laws resulted in lower than optimal materials per worker usage. The combination of high inflation and unavailability of credit exacerbated this factor distortion and lowered productivity growth further. Using a panel dataset on Indian industries, this article finds widespread underutilization of materials compared to labour until recently, and this sub-optimal materials per worker usage lowered productivity growth. Classification-JEL: D24, J24, O47, E65, J58, F16 Keywords: productivity, growth, materials, labour, quotas, labour laws, public policy, India Journal: International Productivity Monitor Pages: 85-102 Volume: 20 Year: 2010 Month: Fall File-URL: http://www.csls.ca/ipm/20/IPM-20-Gupta.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:20:y:2010:5