Study: Productivity growth in Canadian and US infrastructure industries

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Most of Canada's main infrastructure industries experienced faster gains in labour productivity than the business sector as a whole between 1977 and 2003, and had similar or higher rates of growth than their counterparts in the United States.

The main infrastructure industries include transportation services, including rail and air; broadcasting and telecommunications; and financial services, including financial intermediation and insurance.

They provide the foundational networks on which other industries rely. They are also industries that have traditionally faced regulation in terms of the pricing of products and the supply of industry outputs. In recent years, they have undergone varying degrees of deregulation and experienced increases in competition.

In Canada, the growth in productivity ranged from an annual average rate of 1.4% in transportation services, to 2.9% in financial services to 4.4% in broadcasting and telecommunications during this 27 year period. These growth rates were higher than the Canadian business sector average.

Between 1977 and 2003, growth in labour productivity in the business sector as a whole was slower in Canada than in the United States. In Canada, labour productivity in the sector increased at an annual average rate of 1.3%, compared with 2.0% in the United States.

In contrast to the Canadian business sector, most infrastructure industries in Canada had higher, or comparable, growth in labour productivity than their American counterparts. These include rail transportation, financial intermediation, insurance as well as broadcasting and telecommunications.

For example, the 2.7% rate of growth in financial intermediation in Canada was much higher than the gain of 0.5% in the United States. The gain in insurance was 3.5% in Canada but zero in the United States. Growth in rail transportation was about the same in the two countries.

On the other hand, productivity increased 4.6% in air transportation in the United States, well above the 0.2% rate in Canada.

In infrastructure industries where labour productivity growth was higher in Canada than in the United States, growth in both multifactor productivity and capital intensity was also higher than that in similar American industries, or comparable with it.

The research paper "Productivity growth in Canadian and US regulated industries" is now available as part of The Canadian Productivity Review (15-206-XWE2008020, free) series, from the Publications module of our website.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Amélie Lafrance (613-951-0060), Microeconomic Analysis Division.