Note: We would like to thank Isabelle Amano, Claude Lavoie, Alla Lileeva, Annette Ryan, Jianmin Tang, Ben Tomlin, and seminar participants at Industry Canada and Statistics Canada for comments, and Danny Leung for his help with GMM estimation. We would also like to thank two anonymous referees and an editor for their helpful comments.
Export Growth, Capacity Utilization, and Productivity Growth: Evidence from the Canadian Manufacturing Plants
Article first published online: 13 MAR 2013
© 2013 International Association for Research in Income and Wealth
Review of Income and Wealth
Volume 59, Issue 4, pages 665–688, December 2013
How to Cite
Baldwin, J. R., Gu, W. and Yan, B. (2013), Export Growth, Capacity Utilization, and Productivity Growth: Evidence from the Canadian Manufacturing Plants. Review of Income and Wealth, 59: 665–688. doi: 10.1111/roiw.12028
- Issue published online: 4 NOV 2013
- Article first published online: 13 MAR 2013
- excess capacity;
- export growth;
Aggregate labor and multifactor productivity growth slowed substantially post-2000 in the Canadian manufacturing sector. To examine the source of the decline, this paper proposes a decomposition method that delves deeper into the two micro-components of aggregate productivity growth: a within-plant component and a between-plant component. The decomposition builds on earlier work by Jorgenson and his collaborators that decomposes aggregate productivity growth into its industry components, but applies it to the plant level and introduces non-neoclassical features of the plant-level economic environment. It finds that the preponderance of the aggregate labor and multifactor productivity growth slowdown is due to the pro-cyclical nature of productivity growth arising from capacity utilization. Almost all of the aggregate productivity growth slowdown is driven by exporters, as exporters experienced large declines in labor productivity growth in the post-2000 period as a result of large declines in their capacity utilization.