Export Growth, Capacity Utilization and Productivity Growth: Evidence from Canadian Manufacturing Plants

Economic Analysis (EA) Research Paper No. 075

42 Pages Posted: 28 Feb 2012

See all articles by John R. Baldwin

John R. Baldwin

Statistics Canada - Microeconomic Analysis Division

Wulong Gu

Government of Canada - Micro-Economic Analysis Division

Beiling Yan

Statistics Canada

Date Written: December 12, 2011

Abstract

Labour productivity growth in the Canadian business sector slowed substantially after 2000. Most of the slowdown occurred in the manufacturing sector. This paper examines how this slowdown was associated with the restructuring that occurred in manufacturing as a result of the increase in excess capacity, the dramatic increase in the Canada – U.S. exchange rate and a slowdown in export growth. The paper finds that at least half of the slowdown in aggregate productivity growth is because of the pro-cyclical nature of productivity growth arising from capacity utilization. Almost all of the aggregate productivity growth slowdown is driven by exporters, who had large declines in labour productivity growth in the post-2000 period.

Keywords: business sector, capacity utilization, exchange rates, exports, labour productivity, manufacturing, productivity growth

JEL Classification: O47, J24, D24, F43, L60

Suggested Citation

Baldwin, John R. and Gu, Wulong and Yan, Beiling, Export Growth, Capacity Utilization and Productivity Growth: Evidence from Canadian Manufacturing Plants (December 12, 2011). Economic Analysis (EA) Research Paper No. 075, Available at SSRN: https://ssrn.com/abstract=2011846 or http://dx.doi.org/10.2139/ssrn.2011846

John R. Baldwin

Statistics Canada - Microeconomic Analysis Division ( email )

24 Floor - R.H.Coats Building
Tunney's Pasture
Ottawa, Ontaria K1A 0T6
Canada
613-951-8588 (Phone)
613-951-5403 (Fax)

Wulong Gu (Contact Author)

Government of Canada - Micro-Economic Analysis Division ( email )

24 Floor - R.H.Coats Building
Tunney's Pasture
Ottawa, Ontaria K1A 0T6
Canada

Beiling Yan

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-5403 (Phone)

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