Four Decades of Creative Destruction: Renewing Canada's Manufacturing Base from 1961 - 1999

Abstract

In this paper, we present measures of the extent of renewal in Canada’s manufacturing sector over a four decade period (1961-1999); a period that roughly represents the productive lifetime of a worker. We measure turnover over periods of one, two, three and four decades. For each timeframe, we ask what proportion of jobs in the first year was lost by the last, either because of plant closures or downsizing. We also ask what proportion of jobs in the last year was new, either because of investments in new plants or the expansion of incumbent plants. The former is a measure of the extent to which jobs are fading away, at the level of individual business units; the latter is a measure of the extent to which the economy is being renewed, again at the level of individual business units. This paper indicates that job turnover in the manufacturing sector has a substantial long term component. Moreover, it quantifies the size of this process decade by decade. Over a decade, almost 40% of jobs are renewed. Using a 20-year time frame, over 65% of the economy is renewed; over a 30 year period, renewal amounts to just over 75%; and by 40 years, just over 85% of jobs are new.