Information technology and economic growth in Canada and the U.S.

Monthly Labor Review

Volumn 125, Issue 10, 2002, Pages 3-12

  Harchaoui, Tarek M ^a   Tarkhani, Faouzi ^a   Jackson, Chris ^a   Armstrong, Philip ^a  

^a STATISTICS CANADA   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 11244325034     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (15)

1. See D. W. Jorgenson, and K. J. Stiroh, 2000, "Raising the speed limit: U.S. economic growth in the information age," Brookings Papers on Economic Activity, vol. 1, pp. 125-211; and for a Canada-U.S. comparison, see H. Khan and M. Santos, Contribution of ICT Use to Output and Labour-Productivity Growth in Canada, Bank of Canada Discussion Paper, 2002.
2. See D. W. Jorgenson, and K. J. Stiroh, 2000, "Raising the speed limit: U.S. economic growth in the information age," Brookings Papers on Economic Activity, vol. 1, pp. 125-211; and for a Canada-U.S. comparison, see H. Khan and M. Santos, Contribution of ICT Use to Output and Labour-Productivity Growth in Canada, Bank of Canada Discussion Paper, 2002.
3. The data used in this study are those available in March 2002. Therefore, they do not reflect the recent revisions that both Statistics Canada and the U.S. Bureau of Labor Statistics have incorporated in their estimates. A more recent Canada-U.S. comparison based on the last productivity figures can be found in The Daily of July 12, 2002, Statistics Canada's news release, on the Internet at: www.statcan.ca.
4. R. M. Solow, "Technical Change and the Aggregate Production Function," Review of Economics and Statistics, 1957, vol. 39, pp. 312-20.
5. Statistics Canada's new methodology for estimating the growth of capital services that is appropriate for an aggregate production function analysis is outlined in T. M. Harchaoui, and F. Tarkhani, "A Comprehensive Revision of the Capital Input Methodology for Statistics Canada Multifactor Productivity Program, " in J. R. Baldwin and T. M. Harchaoui, eds., Productivity Growth in Canada, ch. 4, Statistics Canada, 15-204XPE, 2002, forthcoming. The estimation procedure begins with estimates of real investment flows by detailed asset class, then calculates capital stock for each asset class by industry using the perpetual inventory technique. It then estimates the user cost of capital for each industry using input-output tables to derive rates of return at the industry level, micro-economic price data on more than 30,000 sales of used assets to obtain depreciation rates and detailed information on tax rates. The growth rates of the stock of capital by asset type of individual industries are then aggregated using the user cost of capital to derive an estimate of the growth in the flow of capital services by industry. See also G. Gellatly, M. Tanguay, and B. Yan, "An Alternative Methodology for Estimating Economic Depreciation: New Results Using a Survival Model," in Baldwin and Harchaoui, eds., Productivity Growth in Canada, ch. 2, 2002, forthcoming.
6. Statistics Canada's new methodology for estimating the growth of capital services that is appropriate for an aggregate production function analysis is outlined in T. M. Harchaoui, and F. Tarkhani, "A Comprehensive Revision of the Capital Input Methodology for Statistics Canada Multifactor Productivity Program, " in J. R. Baldwin and T. M. Harchaoui, eds., Productivity Growth in Canada, ch. 4, Statistics Canada, 15-204XPE, 2002, forthcoming. The estimation procedure begins with estimates of real investment flows by detailed asset class, then calculates capital stock for each asset class by industry using the perpetual inventory technique. It then estimates the user cost of capital for each industry using input-output tables to derive rates of return at the industry level, micro-economic price data on more than 30,000 sales of used assets to obtain depreciation rates and detailed information on tax rates. The growth rates of the stock of capital by asset type of individual industries are then aggregated using the user cost of capital to derive an estimate of the growth in the flow of capital services by industry. See also G. Gellatly, M. Tanguay, and B. Yan, "An Alternative Methodology for Estimating Economic Depreciation: New Results Using a Survival Model," in Baldwin and Harchaoui, eds., Productivity Growth in Canada, ch. 2, 2002, forthcoming.
7. Note that preliminary GDP data from 1998 onward are used in this analysis. These data were released in the Income and Expenditure Accounts, May 31, 2001.
8. The definition of information and communications technologies (ICT) assets, which includes computer hardware, software, and telecommunication equipment, is chosen to permit comparisons with the United States. See "Multifactor Productivity Trends, 1999," USDL 00-267 (Bureau of Labor Statistics Sept. 21, 2000), on the Internet at: http://www.bls.gov/mprhome.htm. There are currently efforts underway within the Organisation for Economic Co-operation and Development (OECD) to define a broader set of ICT commodities which include not only the investment assets used in our definition, but also intermediate goods and services, and final demand categories.
9. W. Gu, M. Kaci, J. P. Maynard, and M. Sillamaa, "The Changing Composition of the Canadian Workforce and Its Impact on Productivity Growth," in Baldwin and Harchaoui, eds., Productivity Growth in Canada, ch. 3, 2002, forthcoming.
10. D. W. Jorgenson, F. M. Gollop, and B. M. Fraumeni, Productivity and U.S. Economic Growth (Cambridge, Harvard University Press, 1987).
11. See the appendix to Harchaoui and Tarkhani, "A Comprehensive Revision of the Capital Input Methodology," in Baldwin and Harchaoui, eds., Productivity Growth in Canada, 2002, forthcoming, for the differences between these various concepts.
12. Harchaoui, and Tarkhani, "A Comprehensive Revision of the Capital Input Methodology, " in Baldwin and Harchaoui, eds., Productivity Growth in Canada, ch. 4, 2002, forthcoming.
13. "Multifactor Productivity Trends, 1999," 2000.
14. M. S. Ho, D. W. Jorgenson, and K. J. Stiroh, U.S. High-Tech Investment and the Pervasive Slowdown in the Growth of Capital Services, 1999 on the Internet at: http://www.post.economics.harvard.edu/faculty/jorgenson/ papers/hitech.pdf.
15. Solow, "Technical Change and the Aggregate Production Function," 1957.