Has Trend Productivity Growth Increased in Canada?

Trend productivity growth is a crucial determinant of future living standards as well as fiscal balances. In this article, Benoit Robidoux and Bing-Sun Wong from Finance Canada examine the issue of whether trend productivity growth has increased in Canada and conclude that in fact it has. If correct, this is indeed a very positive development for Canadians. They point out that business sector output per hour growth in Canada accelerated 0.9 percentage points from 1.1 per cent per year in the 1988-1996 period to 2.0 per cent in 1996-2001, virtually the same acceleration as in the United States. The authors find that Canada experienced a greater pick-up in total factor productivity growth than the United States. Increased production and use of information and communications technologies (ICTs) accounted for more of the U.S. productivity growth acceleration.