Canada’s manufacturing productivity growth outpaces U.S.
C.D. HOWE INSTITUTE CHART
In some rare good news on Canadian productivity, the C.D. Howe Institute highlighted in its Graph of the Week how, since the Great Recession of 2007–09, manufacturing productivity growth has steadily improved, outpacing the U.S. performance, which has been mysteriously weak. However, the longer-term gap persists, and Canada will need to achieve stronger gains to attract manufacturing investment — especially as U.S. protectionist measures continue to raise the cost of Canadian goods in that market.
In an earlier report, C.D. Howe Institute noted that part of the gap is because of lower Canadian investments in tangible capital and intellectual property. “Canada invests less in tangible capital per worker, largely because the cost of capital is high relative to labour,” the report said. “Fixing Canada’s underinvestment in intellectual property (mainly R&D and software) will help create ideas that fuel innovation. But we also must improve the overall environment for innovation. Achieving these objectives requires improving the SR&ED program, encouraging more commercialization of Canadian inventions here, and enhancing access to risk capital.”
