In this paper, we examine how changes in tariff rates and industry-specific real exchange rates affect the entry/exit process to export markets and productivity growth. Using the experience of the Canadian manufacturing sector over three decades, we find that firms in export markets enjoy faster productivity growth than non-participants. The size of the growth advantage depends on whether real exchange rates are increasing or decreasing. The increase in the value of the Canadian dollar during the post-2000 period almost completely offset the productivity growth advantages enjoyed by new exporters during this period.

La version française de cette publication est disponible (no 11F0027M au catalogue, n o 061). Note of appreciation:Canada owes the success of its statistical system to a long-standing partnership between Statistics Canada, the citizens of Canada, its businesses, governments, and other institutions. Accurate and timely statistical information could not be produced without their continued co-operation and goodwill. Standards of service to the publicStatistics Canada is committed to serving its clients in a prompt, reliable, and courteous manner. To this end, Statistics Canada has developed standards of service that its employees observe. To obtain a copy of these service standards, please contact Statistics Canada toll-free at 1-800-263-1136. The service standards are also published on www.statcan.gc.ca under "About us" > "Providing services to Canadians."We examine the simultaneous effects of real-exchange-rate movements and of tariff reductions on plant death in Canadian manufacturing industries between 1979 and 1996. We find that both currency appreciation and tariff cuts increase the probability of plant death, but that tariff reductions have a much greater effect. Consistent with the implications of recent internationaltrade models involving heterogeneous firms, we further find that the effect of exchange-rate movements and tariff cuts on exit are heterogeneous across plants-particularly pronounced among least efficient plants. Our results reveal multi-dimensional heterogeneity that current models featuring one-dimensional heterogeneity (efficiency differences among plants) cannot fully explain. There are significant and substantial differences between exporters and nonexporters, and between domestic-and foreign-controlled plants. Exporters and foreign-owned plants have much lower failure rates; however, their survival is more sensitive to changes in tariffs and real exchange rates, whether differences in their efficiency levels are controlled or not.

Tariffs, Exchange rates, Plant exit, Survival, D2, F1, F3, L2, L6,

One of the defining features of the Canadian Economy in the last two decades has been an increasing wage gap between the more skilled and the less skilled workers. Over the same period, there have been dramatic increases in expenditures on information and communication technologies (ICT) and in purchases of foreign intermediate inputs. This raises an obvious and important question: what is the role of ICT and foreign outsourcing in the increased demand for skilled workers? Using 84 Canadian manufacturing industries over 1981-96, we find that both ICT and foreign outsourcing are important contributors to the demand for skills. JEL classification: F16 O33Demande de qualifications au Canada: le roˆle de la sous-traitance a`l'e´tranger et des technologies d'information et de communication. L'une des caracte´ristiques importantes de l'e´conomie canadienne au cours des deux dernie`res de´cennies a e´te´l'e´cart croissant entre les niveaux de salaires des travailleurs plus et moins qualifie´s. Au cours de la meˆme pe´riode, il y a eu un accroissement important dans les de´penses pour les technologies de l'information et de communication (TIC) et dans les achats d'intrants interme´diaires al 'e´tranger. Voila`qui pose une question e´vidente et importante: quel est l'impact des TIC et de la sous-traitance a`l'e´tranger sur la demande de travailleurs qualifie´s? A l'aide de donne´es pour 84 industries manufacturie`res canadiennes pour la pe´riode 1981-1996, on de´couvre que les TIC et la sous-traitance a`l'e´tranger contribuent de manie`re importante a`la demande de qualifications.

This paper presents a measure of effective multifactor productivity (MFP) growth for Canada, the U.S., Australia, Japan and selected EU countries. The measure differs from the standard MFP growth as it measures productivity growth in the production of different types of products instead of by industry and it captures the effect of productivity gains in both foreign and domestic upstream industries. The paper finds that the increase in effective MFP is closely associated with the decline in output price and improvement in international competitiveness. Multifactor productivity growth for small, open economies and for the production of manufacturing, investment and export goods is partly attributable to productivity gains in the production of intermediate inputs in foreign countries.