Report quashes Dutch disease claims, reveals improvement in Canadian manufacturing sector

CALGARY, Sept. 5, 2013 /CNW/ - A report published today by The School of Public Policy suggests that Canadians may want to scrap the term "Dutch disease" as a means for describing how the country's flourishing resource sector and high dollar has caused a decline in the manufacturing sector.

"The term Dutch disease is a misnomer; the Canadian manufacturing sector was arguably healthier in 2008 than it was in 2002," writes Stephen Gordon, the report's author.

Gordon examines employment numbers in the Canadian manufacturing sector between the years 2002-2008. He finds that in those years manufacturing employment fell by 328,000 jobs; however, real wages in the sector increased over the period and "the jobs that were lost were generally low paying."

The author contends that Canadians should not be concerned about the fall in job numbers because the "transition of employment out of manufacturing was largely achieved by attrition, and job creation in other sectors more than offset those losses."

To put things in a global perspective, Gordon indicates that Canada is the only G-7 country in which manufacturing employment is on par with what it was 40 years ago. Other industrialized countries have seen steady declines for decades.

As further evidence that the manufacturing sector is not facing its demise, Gordon's analysis reveals an increase in the stock of hi-tech technology in the sector. "The manufacturing sector continued to invest in information and communications technology (ITC) machinery and equipment, the sort of investment that is most closely linked to technical progress."

Gordon also indicates that R&D activity in manufacturing appears to have held its own after 2002.

The report can be found at http://www.policyschool.ucalgary.ca/?q=content/canadian-manufacturing-sector-2002-2008-why-it-called-dutch-disease

SOURCE: The School of Public Policy - University of Calgary

Media Contact:
Morten Paulsen
Phone: [phone]
Email: [email protected]