We apply modern growth accounting based on the semi-endogenous growth theory of Jones (2002) to determine the sources of Canadian economic growth between 1981– 2013. This framework allows us to distinguish between transition dynamics and steadystate growth, and quantify their respective contributions. We find that over 80% of the total average growth rate of output per worker of 1.24 percentage points has been due to transitional factors. Among these, the bulk of the contribution is attributed to domestic human capital growth driven by educational attainment, and global research and development (R&D) intensity. These two factors have been the primary sources of Canadian economic growth. The growth in capital-output ratio contributed a small share of 0.14 percentage points suggesting a limited role of capital accumulation. The steady-state growth over is attributed to population growth indicating modest scale effects of about 16% of the total average growth. Our results highlight that the future of Canadian productivity growth and the standard of living are closely tied to sustained growth in both domestic human capital and global R&D intensity.

Modern Growth Accounting, Economic Growth
Measurement of Economic Growth; Aggregate Productivity (jel O47), U.S.; Canada (jel O51)
Department of Economics
Carleton Economics Working Papers (CEWP)
Department of Economics

Khan, H.U, & Hasanzadeh, S. (2016). Sources of Canadian Economic Growth (No. CEP 16-02). Carleton Economics Working Papers (CEWP). Department of Economics.