Public Capital and its Contribution to the Productivity Performance of the Canadian Business Sector

41 Pages Posted: 16 Apr 2009

See all articles by Faouzi Tarkhani

Faouzi Tarkhani

Government of Canada - Analytical Studies Branch

Tarek M. Harchaoui

Statistics Canada - Microeconomic Analysis Division

Date Written: November 12, 2003

Abstract

This paper quantifies the contribution of public capital to productivity growth in the Canadian business sector. The approach developed here incorporates demand and supply forces, including the contribution of public capital, which may affect productivity performance. We estimate the model using disaggregated data composed of 37 industries in the Canadian business sector for the period 1961-2000. The results indicate that the main contributors to productivity growth, both at the industry and aggregate levels are technical change and exogenous demand (representing the effect of aggregate income and population growth). Public capital contributed for about 18% of the overall business sector multi-factor productivity growth over the 1961-2000 period. This is somewhat lower than the figures reported in the literature. However, the magnitudes of the contribution of public capital to productivity growth vary significantly across industries, with the largest impact occurring in transportation, trade and utilities.

Keywords: public capital, productivity, infrastructure, externalities

JEL Classification: H50, H54, D24, O47

Suggested Citation

Tarkhani, Faouzi and Harchaoui, Tarek M., Public Capital and its Contribution to the Productivity Performance of the Canadian Business Sector (November 12, 2003). Available at SSRN: https://ssrn.com/abstract=1387842 or http://dx.doi.org/10.2139/ssrn.1387842

Faouzi Tarkhani

Government of Canada - Analytical Studies Branch ( email )

120 Parkdale Avenue
24th Floor, R.H. Coats Building
Ottawa, Ontario K1A 0T6
Canada

Tarek M. Harchaoui (Contact Author)

Statistics Canada - Microeconomic Analysis Division ( email )

24 Floor - R.H.Coats Building
Tunney's Pasture
Ottawa, Ontaria K1A 0T6
Canada
613-951-9856 (Phone)

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