If Canada's productivity had matched that of the U.S. between 1988 and 2008, individual Canadians would be much wealthier, corporate profits would be much higher, and all levels of government would have raked in billions more dollars over that 20 year period.
Those are among the conclusions of a Conference Board of Canada study examining how much Canada has lost as a result of two decades of sluggish productivity growth.
According to data, real GDP per capita would have been $8,500 higher in 2008, personal disposable income would have been $7,500 higher, corporate profits would have been 40% higher and federal government revenues would have been 31% higher, if Canada's labour productivity had matched the U.S. between 1988 and 2008.
Mario Lefebvre, director, Centre for Municipal Studies, said, “Putting it plainly, increasing our productivity growth performance over the past two decades to equal that of our neighbour would have significantly increased Canadian wealth and improved our standard of living.
“These results should impress upon policymakers, as well as average Canadians, just how vital it is for Canada to improve its productivity performance.”
Based on 2008 figures, Americans were $13,000 richer than Canadians when measured in purchasing power parity.
Under a scenario in which Canada's productivity growth matched that of the U.S., the gap would have been less than $7,000.
The conference board has argued that productivity growth is based on three principal factors: labour quality, capital intensity and innovation.
Since the 1980s, Canada’s performance in both innovation and capital intensity has been sluggish relative to the U.S. performance, while labour quality has been relatively stable.
Previous conference board research found that Canada's relatively well-educated workforce does not have the physical capital required to maximize productivity performance.
Jennifer Harrison
@JHarrisonBIV