Study: Productivity and Economic Growth in the Canadian Provinces, 1997 to 2010
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Growth in economic output and labour productivity in the business sector slowed considerably in every province between 2000 and 2010 compared with the late 1990s.
The slowdown was largely the result of two sectors: manufacturing in Central Canada and mining and oil and gas extraction in some provinces, including Alberta.
From 1997 to 2000, economic output in Canada's business sector as a whole increased at an annual average rate of 5.9%. During the same period, labour productivity rose 3.1% a year.
In contrast, from 2000 to 2010, the pace of growth slowed considerably. Economic output rose at an average rate of 1.6% a year, while labour productivity increased 0.8% a year.
The manufacturing sector underwent major changes as a result of several factors, including exchange rate movements, increased global competition and slower growth in the United States, Canada's main export market. Those changes led to slower export growth and slower growth in output and productivity from 2000 to 2010.
In the mining and oil and gas extraction sector, both conventional and non-conventional oil and gas extraction activities underwent expansion, accompanied by higher unit costs and lower levels of productivity.
Indeed, the slowdown in aggregate output and productivity growth was concentrated in the goods-producing sector in every province, with the impact in specific industries differing from province to province.
In general, the slowdown in aggregate output and productivity growth was more pronounced in Central Canada and the Atlantic Provinces than in Western Canada.
Note to readers
This paper provides a provincial perspective on the deceleration in productivity and economic growth that occurred in Canada's business sector between 2000 and 2010 relative to the late 1990s.
The paper uses an experimental multifactor productivity database at the provincial level. The database provides time series data for multifactor productivity, capital input and labour input at the industry level according to the North American Industry Classification System (NAICS) back to 1997. This is the first year for which the provincial gross domestic product data are available at the NAICS industries.
The provincial multifactor productivity database is constructed using a growth accounting framework that allows analysts to isolate the effects of higher capital intensity, skills upgrading, and increases in multifactor productivity on growth in labour productivity.
The research paper "Productivity and Economic Growth in the Canadian Provinces, 1997 to 2010," part of The Canadian Productivity Review (Catalogue number15-206-X), is now available from the Browse by key resource module of our website under Publications.
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