Since 2001, Canadian productivity has grown at the same rate as in the U.S. once the oil sector is excluded from the calculations
A de-commissioned pumpjack sits at a well head on an oil and gas installation near Cremona, Alta., on Oct. 29, 2016.Pau S. Pujolas is an economics professor at McMaster University, where Oliver Loertscher is a doctoral student. The following draws from their research published in theBut there’s one issue we haven’t talked about much: since 2001, Canadian productivity has grown at the same rate as in the U.S. once the oil sector is excluded from the calculations of productivity.
“Productivity” should refer to total-factor productivity , which measures output relative to the inputs used . TFP is consistent with national accounts, vastly used in modern macroeconomic theory, and provides a useful benchmark: In healthy economies it grows at 2 per cent per year. Since the late 1990s, the proportion of Canadian capital invested in the oil sector has increased to more than 30 per cent, up from 15 per cent, coinciding with an oil price boom and the commercialization of oil sands technology.
In terms of absolute levels, Canadian productivity has consistently been lower than that of the U.S. This indicates that there is a need to consider measures to close the productivity gap. Effective strategies include fostering more competition and providing the necessary means for knowledge creation and transfer to flourish.
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