Table of Contents
Abstract ............................................................................................................................... 2
Résumé................................................................................................................................ 2
Executive Summary ............................................................................................................ 4
Introduction......................................................................................................................... 8
I. The Context for the Productivity Debate in Canada ....................................................... 9
A. Basic Productivity Definitions and Concepts ............................................................ 9
B. Contribution of Productivity to Economic Growth, Living Standards, and Well-
being.............................................................................................................................. 10
1) Productivity and Economic Growth ..................................................................... 10
2) Productivity and GDP per capita .......................................................................... 12
3) Productivity and Economic Well-being ............................................................... 14
C. Productivity Measurement Problems ....................................................................... 14
D. Productivity Drivers................................................................................................. 15
E. Productivity Trends .................................................................................................. 17
II. Why Productivity is a Tough Sell ................................................................................ 23
A. Productivity myths and misconceptions .................................................................. 23
B. “There is More to Life Than Productivity” .............................................................. 25
III. Policies to Improve Productivity in Canada ............................................................... 27
A. General Principles for Productivity Policy .............................................................. 27
B. Policy One: More Rapid Diffusion and Adoption of Best Practice Technologies .. 28
1) Moving Toward the Frontier and Closing the Technology Gap .......................... 28
2) R&D Is Important, But There is More to Innovation than R&D.......................... 29
C. Policy Two: Removal of the Provincial Sales Tax on Purchases of Machinery and
Equipment ..................................................................................................................... 32
D. Policy Three: Promotion of the Geographical Migration of Workers ..................... 36
1) Provincial productivity and interprovincial mobility in Canada .......................... 36
2) Productivity gains from geographical mobility .................................................... 38
3) Policies to Foster Internal Migration in Canada ................................................... 42
IV. Conclusion .................................................................................................................. 44
V. Bibliography ................................................................................................................ 45