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Introduction The measure of productivity is extremely important in determining growth performance of a country After two decades of high productivity growth in the 1950s and 1960s we observed a significant slowdown of productivity growth following the oil crisis in 1973 The debate on the causes of the worldwide slowdown has turned into a vital concern for economists and policymakers Several explanations of the slowdown have been suggested such as the low investment and savings rate the energy crisis in the 1970s and the low rate of public investment in infrastructures However none of these explanations has been found to be fully satisfactory Economists define productivity as the difference between labour plus capital costs and economic outputs Salgado p9 It is generally acknowledged that over time rising levels of productivity are necessary conditions to rising standards of living Also the slowdown of output growth is related to the slowdown of labor productivity growth This is because output growth comprises the growth of the number of hours worked and the growth of output per hour worked labor productivity Productivity is determined by the efficiency with which resources are combined to produce a given output It is usually measured by calculating the ratio of a weighted index of outputs to a weighted index of inputs In a simple economy with only one type of output and one type of input productivity is the ratio of output to input However since most economies have a variety of outputs and inputs productivity can be measured in a number of different ways For example the fixed-weight system or the chain-weight method can be used Productivity in Canada and the United States An examination of the recent growth performance in Canada and the United States across sectors and industries suggests that the reasons for slower growth are not identical in both countries According to Slifman and Corrado a major reason for the slowdown in Canada appears to be diminishing
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