--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-26/explaining-slower-productivity-growth-the-role-of-weak-demand-growth/" title: "Explaining Slower Productivity Growth: The Role of Weak Demand Growth" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:37:49+00:00" date_modified: "2026-07-13T07:37:49+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2013" ipm_keyword: - "Canada" - "demand" - "economies of scale" - "exchange rate" - "investment" - "manufacturing" - "OECD" - "productivity" - "R&D" - "Verdoorn Law" ipm_research_theme: - "Productivity trends and comparisons" ipm_country_focus: - "Canada" - "International" - "OECD" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # Explaining Slower Productivity Growth: The Role of Weak Demand Growth Canonical URL: https://csls.ca/ipm-archive/ipm-issue-26/explaining-slower-productivity-growth-the-role-of-weak-demand-growth/ # Explaining Slower Productivity Growth: The Role of Weak Demand Growth [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-26-1-Rao-Li.pdf) Cite this article × Cite this article as: Rao, Someshwar, and Jiang Li. 2013. “Explaining Slower Productivity Growth: The Role of Weak Demand Growth.” International Productivity Monitor, No. 26 (Fall 2013): 3–19. https://www.csls.ca/ipm-archive/ipm-issue-26/explaining-slower-productivity-growth-the-role-of-weak-demand-growth/ ## Authors: - Someshwar Rao Innovation, Science and Economic Development Canada - Jiang Li University of Victoria ## IPM Issue 26 Fall 2013 pp. 3–19 ## Related IPM articles [Is the SNA Still Useful? 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The findings suggest that most of the post-2000 slowdown in business sector labour productivity growth was the result of weak demand growth, which impacts productivity directly by reducing economies of scale and scope and by affecting key productivity drivers such as investment and R&D. With an expected slowdown in both domestic demand growth in Canada and external demand growth for Canadian exports, the medium- to long-term outlook for productivity growth, and hence for real income growth of Canadians, is expected to be weak. CANADA’S BUSINESS SECTOR labour productiv- À l’aide de données de panel sur les industries canadiennes et les pays de l’OCDE, cet article examine empiriquement le rôle de la croissance de la demande intérieure et extérieure dans la croissance de la productivité du travail. Les conclusions suggèrent que l’essentiel du ralentissement post-2000 de la croissance de la productivité du travail dans le secteur des entreprises résulte de la faiblesse de la croissance de la demande, qui influe sur la productivité directement en réduisant les économies d’échelle et de gamme et en affectant des facteurs clés de productivité comme l’investissement et la R-D. Avec un ralentissement attendu de la croissance de la demande intérieure au Canada et de la demande extérieure pour les exportations canadiennes, les perspectives à moyen et long terme pour la croissance de la productivité, et donc pour la croissance du revenu réel des Canadiens, devraient être faibles. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-26-1-Rao-Li.pdf)