What affects MFP in the long-run? Evidence from Canadian industries

Using data on 12 Canadian industries for 1976-2003, this study employs a dynamic panel error correction model to establish the relative importance of potential determinants of Multifactor Productivity (MFP). The model restricts the long run coefficients of these factors to be the same across industr...

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Bibliographic Details
Published inApplied economics Vol. 44; no. 6; pp. 727 - 738
Main Authors Leung, Danny, Zheng, Yi
Format Journal Article
LanguageEnglish
Published London Routledge 01.02.2012
Taylor and Francis Journals
Taylor & Francis Ltd
SeriesApplied Economics
Subjects
Canada
Coefficients
Economic models
Error correction models
Industrial productivity
Industrial structure
Information technology
International trade
Outsourcing
Panel data
Production capacity
Productivity
Statistical analysis
Studies
Subcontracting
Canada
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Summary:Using data on 12 Canadian industries for 1976-2003, this study employs a dynamic panel error correction model to establish the relative importance of potential determinants of Multifactor Productivity (MFP). The model restricts the long run coefficients of these factors to be the same across industries, but allows industry heterogeneity in the short-run coefficients. After controlling for capacity utilization, Information and Communications Technologies (ICT) capital, outsourcing and global trade openness are found to have a statistically significant positive effect on MFP. The long run impact of ICT is small, but its recent contribution to MFP growth is sizeable for some industries, possibly reflecting the delayed benefits of the ICT investment surge in the late 1990s due to adjustment costs. Global trade openness and industry outsourcing generally raises MFP.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2010.522522