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Stats Can study: public infrastructure raises economic productivity

Between 1962 and 2006, one half of private sector productivity the result of public works.

Stats Can study: public infrastructure raises economic productivityJanuary 14, 2009 — Between 1962 and 2006, roughly one-half of the total growth in multifactor productivity in the private sector was the result of growth in public infrastructure.

Public capital (the nation's roads, bridges, sewer systems and water treatment systems) constitutes a vital input for private sector production. It enables concentrations of economic resources and provides wider and deeper markets for output and employment.

The contribution of public infrastructure to productivity growth has not been constant over time. The largest contributions to productivity growth occurred during the 1960s and early 1970s, when it contributed up to 0.4 percentage points to average annual productivity growth.

During the 1980s and 1990s, its contribution to productivity averaged only 0.1 percentage points a year. The slower growth in the stock of public capital after 1980 occurred as decades of cross-country highway expansion came to an end.

Analysts studying productivity growth have long been faced with the problem of explaining why growth was much higher before 1980 than afterwards. A substantial portion of the difference came from the much higher growth in public infrastructure in the period preceding 1980. . .

To read further. . .

Privatization vs. Public Values Frame
  Shrink government to see productivity rise / Public spending raises private sector productivity

Links and sources
  Study: Impact of public infrastructure on productivity, 1962 to 2006, Statistics Canada website, January 14 2009
  The Impact of Public Infrastructure on Canadian Multifactor Productivity Estimates, Wulong Gu and Ryan Macdonald, The Canadian Productivity Review, from Statistics Canada website, January 14 2009

Posted: January 15, 2009

  Public services
  Voices of privatization

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