Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: csls@csls.ca Title: Editor's Overview Abstract: This seventh issue of the International Productivity Monitor produced by the Centre for the Study of Living Standards contains seven articles. Topics covered include the long-run economic performance and prospects in Canada, the impact of capital accumulation on productivity growth in Canada, differences between Gross Domestic Product and Net Domestic Product, future productivity growth in Canada, and the OECD growth study. Classification-JEL: O51, O47, J24, D24 Keywords: Canada, Europe, Labour, Productivity, Outlook, Growth, Information, Communication, Technology Journal: International Productivity Monitor Pages: 1-2 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/overview-e.pdf File-Format: Application/pdf File-Size: 84 KB File-URL: http://www.csls.ca/ipm/7/overview-f.pdf File-Function: version en francais, pp:1-3 File-Format: Application/pdf File-Size: 102 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:0 Template-type: ReDIF-Article 1.0 Author-Name: Peter J. Nicholson Author-Email: pnicholson@paulmartin.ca Title: The Growth Story: Canada's Long-run Economic Performance and Prospects Abstract: In this lead article, Peter Nicholson, who until recently served as advisor to the Secretary General at the OECD and is currently serving as policy advisor to the Prime Minister, Paul Martin, discusses the long-run economic performance, prospects in Canada, and policy priorities based on the framework and insights that emerged from the recent study of economic growth released by the OECD. He argues that Canada has performed remarkably well since the mid-1990s, and that by the pro-growth policy prescriptions developed by the OECD, Canada is doing most things right. However, Nicholson points out that our productivity gap relative to the United States is still large and growing and that finding ways to increase productivity growth is an increasing social and political necessity. Nicholson develops a scorecard on Canada's economic performance based on a three-star rating scheme. He gives Canada three stars for sound macro policies, human capital, and exposure to trade; two stars for productive investment; and one star, or perhaps a little better, for innovation. Despite this strong performance, Nicholson cautions against complacency, particularly given the demographic challenge the country will be facing in the years to come. Classification-JEL: E66, O51, J24, H50 Keywords: Productivity, Canada, Outlook, Macroeconomic Policy, Capital Investment, Trade Exposure, Human Capital, Research and Development, Economic Efficiency Journal: International Productivity Monitor Pages: 3-23 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/nicholson-e.pdf File-Format: Application/pdf File-Size: 201 KB File-URL: http://www.csls.ca/ipm/7/nicholson-f.pdf File-Function: version en francais, pp:5-28 File-Format: Application/pdf File-Size: 212 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:1 Template-type: ReDIF-Article 1.0 Author-Name: Someshwar Rao Author-Email: rao.someshwar@ic.gc.ca Author-Name: Jianmin Tang Author-Name: Weimin Wang Title: Canada's Recent Productivity Record and Capital Accumulation Abstract: In this article, Someshwar Rao, Jiamin Tang and Weimin Wang of Industry Canada examine the impact of capital accumulation on Canada's recent productivity record. A key finding is that the widening of the Canada-U.S. labour productivity gap in both the business sector and in manufacturing in the second half of the 1990s was largely due to the widening of the capital intensity gap between the two countries. Indeed, the authors find that in the business sector multifactor productivity growth in the two countries was virtually identical at around 2 per cent per year in the 1995-2000 period. This situation is explained by the marked slowdown in the pace of capital intensity growth in Canada after 1995. This development reflected the increased cost of capital relative to labour in Canada, in turn the result of higher prices for investment goods because of the depreciation of the Canadian dollar and low wage increases due to high unemployment. With the recent appreciation of the Canadian dollar and the expected decline in unemployment, the authors project in the medium-term a narrowing of Canada's capital intensity gap with the United States and hence a reduction in the labour productivity gap. Classification-JEL: O51, O57, J24, E22 Keywords: Capital Accumulation, Canada, United States, Labour Productivity, Gap, Capital Intensity, Translog, Growth Accounting Journal: International Productivity Monitor Pages: 24-38 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/raoetal-e.pdf File-Format: Application/pdf File-Size: 224 KB File-URL: http://www.csls.ca/ipm/7/raoetal-f.pdf File-Function: version en francais, pp:29-45 File-Format: Application/pdf File-Size: 232 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:2 Template-type: ReDIF-Article 1.0 Author-Name: Roland Spant Author-Email: Roland.Spant@tco.se Title: Why Net Domestic Product Should Replace Gross Domestic Product as a Measure of Economic Growth Abstract: In the third article, Roland Spant, a Swedish trade union economist, argues that Net Domestic Product (NDP) should replace GDP as a measure of economic growth for a number of purposes. The key difference between GDP and NDP is depreciation. With the shift in investment toward information technology assets with relatively short service lives, the share of depreciation in GDP has increased in most OECD countries and GDP growth now exceeds NDP growth. Spant points out that this means that the use of GDP leads to the overestimation of real output growth as well as the potential for noninflationary real wage gains. Classification-JEL: O47, E22, O30 Keywords: Net Domestic Product, Alternative Growth Measurement, GDP, Depreciation, Capital Consumption, Service Life, Sustainable Growth, ICT, Information, Communication, Technology, Assets Journal: International Productivity Monitor Pages: 39-43 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/spant-e.pdf File-Format: Application/pdf File-Size: 127 KB File-URL: http://www.csls.ca/ipm/7/spant-f.pdf File-Function: version en francais, pp:46-51 File-Format: Application/pdf File-Size: 129 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:3 Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: csls@csls.ca Title: Symposium on Future Productivity Growth in Canada: An Introduction Abstract: In this introduction, Andrew Sharpe provides the context for the Symposium on Future Productivity Growth in Canada, a panel organized by the CSLS at the Canadian Economics Association Meetings, June 2003 at Carleton University. He provides a context for the presentations by highlighting certain issues related to the topic not directly addressed in the symposium. Total hours worked is a more accurate measure of labour input than persons employed, so that when data on hours are available, an hours-based aggregate labour productivity measure is preferable to a worker-based measure. An important reason for choosing the total economy as the appropriate measure of aggregate labour productivity is that the potential for real income gains is determined by economy-wide aggregate productivity increases, but the business sector accounts for only around three quarters of total economy output. Small increases in productivity over long time periods and the real income gains these generate have extremely favourable consequences for the affordability of social programs. Finally, while the contributors to the symposium reach a consensus of 2 per cent per year labour productivity growth in Canada over the next 25 years, there is no such consensus in the broader economics profession, with some forecasters alternatively predicting labour productivity growth as low as 1.6 per cent per year. Classification-JEL: O51, E66, O47 Keywords: Labour Productivity Growth, Canada, Forecast, Fiscal Balances, Sustainability, Social Programs, Business Sector, Total Economy, Output Per Worker, Output Per Hour Pages: 44-45 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/sharpe-e.pdf File-Format: Application/pdf File-Size: 100 KB File-URL: http://www.csls.ca/ipm/7/sharpe-f.pdf File-Function: version en francais, pp:52-54 File-Format: Application/pdf File-Size: 101 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:4 Template-type: ReDIF-Article 1.0 Author-Name: Thomas A. Wilson Author-Email: twilson@chass.utoronto.ca Title: A Perspective on Future Productivity Growth in Canada Abstract: In the first contribution to the Symposium included in this volume on Future Productivity Growth in Canada, Thomas Wilson of the University of Toronto presents forecasts based on the FOCUS macroeconometric model of the Canadian economy. This model projects labour productivity growth to grow at an average annual rate of 1.7 per cent over the 2002-2025 period. Wilson is somewhat more optimistic, seeing labour productivity growth of around 2 per cent per year. Reasons behind his more rosy scenario include a greater pace of capital deepening due to much slower labour force growth, the realization of productivity gains from past investments in information and communications technologies, a mitigation of future business cycles due to greater use of automatic stabilizers, and continued benefits from trade liberalization. Classification-JEL: O51, E66, E17 Keywords: FOCUS Model, Macroeconomics, Simulation, Forecast, Long Term Growth, Total Factor Productivity, Labour Productivity, Canada Journal: International Productivity Monitor Pages: 46-49 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/wilson-e.pdf File-Format: Application/pdf File-Size: 135 KB File-URL: http://www.csls.ca/ipm/7/wilson-f.pdf File-Function: version en francais, pp:55-59 File-Format: Application/pdf File-Size: 137 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:5 Template-type: ReDIF-Article 1.0 Author-Name: Tiff Macklem Author-Email: tmacklem@bank-banque-canada.ca Title: Future Productivity Growth in Canada: Comparing to the United States Abstract: In this second contribution to the Symposium included in this volume on Future Productivity in Canada, Tiff Macklem of the Bank of Canada compares sources of recent productivity growth in Canada and the United States. Macklem sees aggregate labour productivity growth in Canada advancing at around a 2 per cent average annual rate in the medium term. This view is based on the increased share of machinery and equipment investment in GDP, Canada's high degree of exposure to international trade and investment, the supportive macro-economic environment of low inflation and improved fiscal positions, increased spillovers from rapid and sustained U.S. productivity growth, and the significant gap between Canadian and U.S. productivity levels, which suggests potential for catch-up. Classification-JEL: O51, E66, O57, J24 Keywords: Canada, Labour Productivity Growth, United States, Machinery, Equipment , Investment, Human Capital, Growth Accounting, Openness, Trade, Research, Development Journal: International Productivity Monitor Pages: 50-57 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/macklem-e.pdf File-Format: Application/pdf File-Size: 142 KB File-URL: http://www.csls.ca/ipm/7/macklem-f.pdf File-Function: version en francais, pp:60-67 File-Format: Application/pdf File-Size: 144 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:6 Template-type: ReDIF-Article 1.0 Author-Name: Benoit Robidoux Author-Email: robidoux.benoit@fin.gc.ca Title: Future Productivity Growth in Canada: The Role of the Service Sector Abstract: In the third and final article in the Symposium included in this volume on Future Productivity Growth in Canada, Benoît Robidoux from Finance Canada observes that there has been a structural improvement in labour productivity growth in Canada since 1996 and that it is likely that this stronger productivity growth of around 2 per cent per year will continue. He points out that future productivity growth in Canada will increasingly depend on productivity trends in the expanding service sector, and in particular on the ability of this sector to incorporate information and communication technologies into the production process. Classification-JEL: O51, E66, L80 Keywords: Information, Communication, Technology, Service Sector, Growth Accounting, Canada, Labour Productivity Growth Pages: 58-65 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/robidoux-e.pdf File-Format: Application/pdf File-Size: 139 KB File-URL: http://www.csls.ca/ipm/7/robidoux-f.pdf File-Function: version en francais, pp:68-76 File-Format: Application/pdf File-Size: 142 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:7 Template-type: ReDIF-Article 1.0 Author-Name: Martin Neil Baily Author-Email: mbaily@iie.com Title: The Source of Economic Growth in OECD Countries: A Review Article Abstract: In early 2003, the OECD released a major report entitled The Sources of Growth in OECD Countries. In the seventh and final article, Martin Neil Baily from the Institute for International Economics, and former Chairman of the U.S. Council of Economic Advisers reviews the report. Baily notes that key findings include: the diversity in GDP per capita growth across OECD countries, largely reflecting differences in labour utilization; the importance for growth of exposure to international trade, sound macro policies and investment in physical and human capital; and the high returns to growth from business sector R&D activities, in contrast to a lack of any positive effect from government R&D. Baily observes that the report fails to discuss ways to improve employment growth, concluding that combining full employment with high productivity is the key challenge currently facing policymakers. Classification-JEL: O40, O57, E62, J23 Keywords: Sources, Growth, Firm Dynamics, Industry, Econometric Growth Model, Europe, United States, Survival, Initial Size, Regulation Pages: 66-70 Volume: 7 Year: 2003 Month: Fall File-URL: http://www.csls.ca/ipm/7/bailyreview-e.pdf File-Format: Application/pdf File-Size: 55 KB File-URL: http://www.csls.ca/ipm/7/bailyreview-f.pdf File-Function: version en francais, pp:77-82 File-Format: Application/pdf File-Size: 149 KB Handle: RePEc:sls:ipmsls:v:7:y:2003:8