The Contribution of ICTs to Productivity Growth in Canada and the United States in the 1990s

The slower productivity growth in Canada relative to that experienced in the United States in the second half of the 1990s has been a matter of great concern to Canadians, with a wide variety of explanations put forward to account for this development. A key issue is whether this slower productivity growth is broadly-based, which would imply a societal-level explanation, or narrowly-based, which would point to industry-specific factors. In this article in the issue, Someshwar Rao and Jianmin Tang of Industry Canada examine the contribution of the information and communications technology (ICT) sector to productivity growth in Canada and the United States in the 1990s. They find that the productivity growth gap in the 1990s at both the total economy and manufacturing level can be entirely accounted for by the greater size and faster growth of the ICT sector in the United States relative to that in Canada. They note that the Canada-U.S. productivity gap could widen in the medium term given the continued U.S. predominance in the crucial ICT sector.