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Canadian productivity growth: Stuck in the oil sands

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  • Oliver Loertscher
  • Pau S. Pujolas

Abstract

We study the behaviour of Canadian Total Factor Productivity (TFP) growth over the past 60 years. We find that the observed stagnation during the last 20 years is accounted for entirely by the oil sector. Higher oil prices made capital‐intensive sources of oil like the oil sands viable to extract on a commercial scale. However, the greater input required per barrel of oil slowed TFP growth. Comparing Canadian TFP growth with that of the United States and Norway reinforces these results. However, our result should not be interpreted to carry any welfare implications. Croissance de la productivité au Canada : Coincée dans les sables bitumineux. Nous étudions le comportement de l'augmentation de la productivité totale des facteurs (PTF) au Canada au cours des 60 dernières années. Nous trouvons que la stagnation observée au cours des 20 dernières années est entièrement imputable au secteur pétrolier. La hausse des prix du pétrole a rendu viables les projets d'extraction pétrolière à forte intensité de capital, comme les sables bitumineux. Toutefois, la hausse de facteurs de production requis par baril de pétrole a ralenti l'augmentation de la PTF. La comparaison de l'augmentation de la PTF canadienne à celle des États‐Unis et de la Norvège renforce ces résultats. Cependant, notre résultat ne doit pas être interprété comme ayant des implications sur le bien‐être.

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  • Oliver Loertscher & Pau S. Pujolas, 2024. "Canadian productivity growth: Stuck in the oil sands," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(2), pages 478-501, May.
    • Handle: RePEc:wly:canjec:v:57:y:2024:i:2:p:478-501
    DOI: 10.1111/caje.12707
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    1. Thomas H.W. Ziesemer, 2024. "Internal rates of return for public R&D from VECM estimates for 17 OECD Countries," Economic Change and Restructuring, Springer, vol. 57(5), pages 1-16, October.
    2. James (Jim) C. MacGee & Joel Rodrigue, 2024. "The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps," Staff Working Papers 24-49, Bank of Canada.
    3. Jonathan Barr & Peter Foltin & Jianmin Tang, 2023. "Recent Productivity Trends in Canada: Navigating the Twin Transitions of Green and Digitalization," International Productivity Monitor, Centre for the Study of Living Standards, vol. 45, pages 93-119, Fall.
    4. Thomas H. W. Ziesemer, 2024. "Public R&D and Growth: A dynamic Panel Vector-Error-Correction Model Analysis for 14 OECD Countries," Economies, MDPI, vol. 12(8), pages 1-33, August.
    5. Delalibera, Bruno R. & Pereira, Luciene & Rios, Heron & Serrano-Quintero, Rafael, 2024. "Capital misallocation and economic development in a dynamic open economy," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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