United States Leads Canada in Productivity Growth and Technological Progress

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Statistics Canada reports a 30% decline versus the US in multi-factor productivity growth (MFPG) in 2006. Slower MFPG explains 92% of the Canada--US productivity gap between 2000 and 2006.

Andrew Milivojevich of http://www.tkmg.org states, "In Canada, the dominant source of productivity growth is investment in equipment and structures. In the US, the dominant source is in MFPG; a measure of technological progress and organizational change. This signals a shift in productivity thinking favoring the US."

Andrew notes that productivity through investment in new production equipment is not without risk since the user's base knowledge in such equipment is minimal. When new equipment cannot meet customer expectations, companies rely on the supplier of such equipment to resolve their problems. This results in higher operating costs to replenish sub-standard product and contributes to poor productivity.

Andrew argues that MFPG can be realized through advancements in current production equipment. Often, these advancements are the result of new knowledge acquired through systematic investigations that resolved technical problems and eliminated the need for new equipment. Since 1995, Andrew sees a positive shift in US productivity improvement. Today, US companies favor a disciplined approach. Increasingly, systematic investigations are used to resolve equipment productivity problems before expenditures in new equipment are approved.

Unfortunately, Andrew observes an undisciplined approach to productivity improvement in Canada that favors investment in new production equipment as a solution to current equipment problems. Since productivity growth is a crucial contributor to a countries standard of living, a continued decline in MFPG may affect Canada's long term standard of living and will impede competition with the US and other countries.

Andrew Milivojevich is a principal with The Knowledge Management Group (TKMG). Through TKMG's rigorous educational and certification program, company employees apply what they learn in a disciplined and systematic manner to improve productivity, reduce operating costs, and increase earnings. This approach improves the technical competencies of key employees, assures problems are resolved systematically, generates technical content that can be knowledgeably leveraged, and reduces expenditures in new equipment. Additional benefits are realized through tax incentives where up to 68% of project costs, including consulting fees, may be recovered. To learn more, contact TKMG at 905.290.1440 or 1.888.964.7729.

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Andrew Milivojevich

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