Public infrastructure, input efficiency and productivity growth in the Canadian food processing industry
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Canadian food processing is an important manufacturing industry, accounting for 13 percent of shipments. By its nature food processing depends on infrastructure capital. Our objective is to estimate infrastructure’s effects on input requirements, cost and productivity. The increase in capital and decrease in materials were respectively 2.5 and 3 times greater than the −0.07 infrastructure elasticity of labor. Infrastructure investment was cost-reducing by inducing reductions in employment and intermediate inputs. A 1 percent increase caused cost to decline by 0.16 percent. Infrastructure capital was a major contributor to productivity, annually contributing 0.5 percentage points. This was nearly double TFP growth.
KeywordsFood processing Infrastructure capital Productivity growth
JEL ClassificationsD24 L66
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The authors would like to thank Sean Cahill for research assistance in developing the dataset used in this paper. In addition, we would like to thank two anonymous referees who provided very helpful comments and suggestions.
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