Template-Type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Title: Editor’s Overview Abstract: THE 24TH ISSUE OF THE International Productivity Monitor (IPM) published by the Centre for the Study of Living Standards contains ten contributions. Topics covered include the World KLEMS initiative, the new concept of human capital productivity, a symposium on the measurement of multifactor productivity in Canada, the long-term outlook for productivity growth in Canada, methodologies for the estimation of industry contributions to aggregate labour productivity growth, and the political economy of economic and productivity growth. Classification-JEL: Y2 Keywords: Journal: International Productivity Monitor Pages: 1-4 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-editoroverview.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:0 Template-type: ReDIF-Article 1.0 Author-Name: Dale W. Jorgenson Author-Email: djorgenson@fas.harvard.edu Title: The World KLEMS Initiative Abstract: The objective of this article is to provide an overview of the World KLEMS Initiative, which brings together EU KLEMS, Latin America KLEMS, and Asia-KLEMS. This project generates KLEMS data sets, consisting of inputs of capital (K) and labour (L) at the industry level, together with inputs of energy (E), materials (M) and services (S), for countries around the world. Growth of output, inputs, and productivity at the industry level is critical to understanding changes in the structure of an economy, especially the relative importance of different industries and different inputs. The article illustrates the insight into the growth process provided by the KLEMS framework by analyzing the sources of economic growth in the United States over the 1947-2010 period, including contributions to growth from ITproducing and IT-using and non-IT-using industries as well as college and non-college labour. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 5-19 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Jorgenson.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:1 Template-type: ReDIF-Article 1.0 Author-Name: Barbara M. Fraumeni Author-Email: bfraumeni@usm.maine.edu Title: Human Capital Productivity: A New Concept for Productivity Analysis Abstract: The concept of human capital, defined as the discounted value of future earnings, has a long history in economics. But human capital has never been directly linked to productivity. This article makes an attempt to bring the concepts of human capital and labour productivity together by introducing a new term, human capital productivity, which is defined as the ratio between an index of discounted future output and an index of human capital. While still in its very early stages of conceptual development and without empirical estimates, the concept of human capital productivity may contribute significantly to our understanding of the role human capital plays in potential output growth. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 20-26 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Fraumeni.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:2 Template-type: ReDIF-Article 1.0 Author-Name: W. Erwin Diewert Author-Email: diewert@econ.ubc.ca Author-Name: Emily Yu Author-Email: emily.yu@international.gc.ca Title: New Estimates of Real Income and Multifactor Productivity Growth for the Canadian Business Sector, 1961-2011 Abstract: Using new data from Statistics Canada, this article shows that the multifactor productivity (MFP) performance of the Canadian business sector has been reasonably satisfactory over the past half century. In particular, traditional gross income MFP growth averaged 1.03 per cent per year over the 1961-2011 period. This compares with the official Statistics Canada estimate of 0.28 per cent. The difference was mostly due to significantly higher capital input growth recorded by Statistics Canada. The study finds that quality adjusted labour input growth was the main driver of real income growth, followed by MFP growth, capital input growth, and finally by falling real import prices. The study encountered many data problems which should be addressed in future work on Canadian business sector productivity performance. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 27-48 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Diewert-Yu.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:3 Template-type: ReDIF-Article 1.0 Author-Name: Wulong Gu Author-Email: wulong.gu@statcan.gc.ca Title: Estimating Capital Input for Measuring Business Sector Multifactor Productivity Growth in Canada: Response to Diewert and Yu Abstract: Diewert and Yu estimate that multifactor productivity grew at a 1.0 per cent average annual rate in the Canadian business sector from 1961 to 2011, compared to Statistics Canada’s Canadian Productivity Program estimate of 0.3 per cent. The major reason for this difference is that Diewert and Yu find capital services grew at 3.0 per cent per year, compared to Statistics Canada’s estimate of 4.8 per cent. This article identifies and discusses the three reasons for this discrepancy. First, while the Canadian Productivity Program aggregates capital services across industries to derive the capital input measure at the level of the business sector, Diewert and Yu use a top-down approach and directly compute capital and labour input series at the business sector level. Second, there are differences in the way the price of capital services is computed. Third, the Canadian Productivity Program bases its capital measures on a more detailed list of assets than Diewert and Yu. Statistics Canada estimates follow international guidelines and practices adopted by other statistical agencies in order to make estimates internationally comparable. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 49-62 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Gu.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:4 Template-type: ReDIF-Article 1.0 Author-Name: W. Erwin Diewert Author-Email: diewert@econ.ubc.ca Title: Rejoinder to Gu on "Estimating Capital Input for Measuring Business Sector Multifactor Productivity Growth in Canada" Abstract: This rejoinder responds to the comments of Wulong Gu (2012) on the article by Diewert and Yu (2012). The paper lays out the algebra behind the Diewert-Yu capital services methodology and the corresponding methodology used by the Statistics Canada Canadian Productivity Program. The large differences in the estimates can mainly be explained by different treatments of the expected capital gains term in user costs and the use of sectoral balancing rates of return versus economy-wide balancing rates of return. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 63-72 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Diewert.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:5 Template-type: ReDIF-Article 1.0 Author-Name: Paul Schreyer Author-Email: paul.schreyer@oecd.org Title: Comment on "Estimating Capital Input for Measuring Business Sector Multifactor Productivity Growth in Canada" Abstract: This article shows that the large difference of 0.8 per cent percentage points per year between top-down estimates of capital input growth obtained by Diewert and Yu and the bottom-up estimates produced by Statistics Canada for the Canadian business sector over the 1961-2011 period can be interpreted as an reallocation effect due either to inefficiencies in production and or a measurement issue. It is also noted that although user costs of capital are officially recognized in the System of National Accounts, there is no single recommendation on the details of implementation and that moving towards such a recommendation is an objective worth pursuing. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 73-75 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Schreyer.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:6 Template-type: ReDIF-Article 1.0 Author-Name: Michael J. Harper Author-Email: mike-harper.econ@gmail.com Author-Name: Alice O. Nakamura Author-Email: alice.nakamura@ualberta.ca Author-Name: Lu Zhang Author-Email: lu.zhang@ualberta.ca Title: Difficulties Assessing Multifactor Productivity for Canada Abstract: In 2011, Canada's business sector multifactor productivity (MFP) index, as estimated by Statistics Canada, was below that for 1977, a third of a century earlier. Over these years, public policies were enacted to try to improve Canada's productivity. Yet the nation's MFP continued to fall, relative to both the past and Canada's main trading partners. Policymakers and business decision makers need to know whether Canada's MFP statistics accurately reflect the nation's productivity. We argue that they do not. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 76-84 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Harper.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:7 Template-type: ReDIF-Article 1.0 Author-Name: Peter Jarrett Author-Email: peter.jarrett@oecd.org Title: The Long-term Outlook for Productivity and Per Capita Income Growth for Canada: A Comparison with Selected G-20 Countries Abstract: This paper describes a possible long-run scenario for selected OECD and major emerging market economies. It compares outcomes for Canada against these countries' performance in a variety of dimensions that together determine productivity and output growth based on a production-function approach. It concludes that Canada should enjoy reasonable productivity and output growth in the coming half century, despite the less favourable outlook for the age structure of the population. It goes on to suggest three areas where policymakers should focus their attention: seeking more vigorous product market competition; reforming the tax system with a view to removing unnecessary distortions and emphasising the importance of tertiary education and innovation across a broad range of policy areas. It finishes with a call for the establishment of a publicly funded productivity commission, to assess existing policies and proposed changes through a productivity, innovation and competitiveness lens. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 85-96 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Jarrett.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:8 Template-type: ReDIF-Article 1.0 Author-Name: Ricardo de Avillez Author-Email: ricardo.avillez@csls.ca Title: Sectoral Contributions to Labour Productivity Growth in Canada: Does the Choice of Decomposition Formula Matter? Abstract: Using three decomposition formulas (TRAD, CSLS, and GEAD), this article estimates sectoral contributions to business sector labour productivity growth in Canada during the 2000-2010 period. Although at the aggregate economy level there was substantial agreement among the three formulas, contribution estimates varied widely at the sectoral level. In particular, there were significant differences in the estimated contributions of construction, manufacturing, and mining and oil and gas extraction. Ultimately, these differences reflect the fact that traditional decomposition formulas (TRAD and CSLS) and the GEAD formula measure different economic phenomena. Instead of seeing estimates constructed by the GEAD and traditional formulas as “competing” narratives, the article concludes it is more useful to see them as providing complementing stories about the role of different sectors in driving aggregate labour productivity growth. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 97-117 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Avillez.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:9 Template-type: ReDIF-Article 1.0 Author-Name: Christopher Ragan Author-Email: christopher.ragan@mcgill.ca Title: The Political Economy of Economic and Productivity Growth: An Interview with Daron Acemoglu and James Robinson, Authors of "Why Nations Fail" Abstract: In fast-growing developing countries, rapid productivity growth is largely driven by economic growth. Consequently, an understanding of the reasons for this strong productivity growth requires a broader perspective on the dynamics of the overall growth process. In early 2012 Daron Acemoglu, an economist at MIT and James A. Robinson, a political scientist and economist at Harvard University, published "Why Nations Fail: The Origins of Power, Prosperity, and Poverty". With great historical detail, the book makes the case that it is man-made economic and political institutions that underlie economic success by creating incentives for wealth creation, rewarding innovation and allowing widespread participation in economic opportunities. This article is an edited transcript of an interview with the two authors on the major issues addressed in their book. Classification-JEL: Keywords: Journal: International Productivity Monitor Pages: 118-125 Volume: 24 Year: 2012 Month: Fall File-URL: http://www.csls.ca/ipm/24/IPM-24-Ragan.pdf File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:24:y:2012:10