Anyone who is interested in studying the Canadian economy invariably ends up spending a great deal of time poring over productivity numbers. The reason is simple: they stink. And no-one seems to know what’s causing the smell.
Over the period 1984-2002 (the data are from the OECD, and that’s the longest available), Canada’s GDP per hour worked increased by 28%. That sounds pretty good, except that it’s one of the lowest growth rates in the OECD. In the G-7, Japan (66%), France (52%), the UK (47%), the US (37%) and even Italy (32%) all have higher growth rates in output per hour worked (German reunification makes their data not comparable).
Total Factor Productivity (aka the ‘Solow residual’) measures that take out the effects of capital accumulation look even worse. TFP rose by only 8% in Canada over 1984-2002; Italy (13%) is the only other G-7 country not to have an increase of at least 20%.
This is puzzling. Standard growth theory says that sustained economic growth is not possible without technical progress. How does Canada do it?
I’ll be coming back to this question more than once.
Worthwhile Canadian Initiative 
“I’ll be coming back to this question more than once.”
I hope so. Though I might not agree with your analysis, I wonder, and the developing world wonders, how such a passive, lackadaisical country like ours maintains such a high standard of living.
Perhaps the reason one may not be able to see Canada’s productivity increases based on technical progress is that the productivity data being used is aggregated data in which extensive and intensive growth and development are lumped together. My guess is that when the Greater Toronto Area is disaggregated from the rest of the Canadian data considereable technical progress and import replacement will be revealed.