Some Comments on the National Economic Conference

Abstract

Chapter 8, the final chapter in the Review, contains disaggregated projections of average annual growth in output, productivity, employment, and capital stock for the periods 1973-77 and 1977-82. A significant feature of these projections is that while productivity growth for the economy as a whole is expected to fall from an annual average of 2.6 per cent in the 1948-70 period to 2.0 per cent in 1977-82, no significant declines are expected in any of the eleven sectors examined (Table 8-1). The fall in aggregate productivity, therefore, is the result of an increase in the share of relatively lowproductivity sectors in total economic activity. It is possible that even the 2.0 per cent productivity estimate for 1977-82 may be too optimistic. In five of the eleven sectors, including manufacturing, productivity in this period is expected to exceed the 1948-70 average, even though productivity in these sectors fell between 1960-64 and 1969-73 (Table 8-1). In any event, a drop of 0.6 percentage points in productivity would have important implications in terms of personal income growth and prospects for price performance, and possibilities for moderating this decline should be explored with some urgency. The Council's projections for growth in the capital stock in the private sector (Table 8-2) suggest a strong expansion, from an annual average of 5.0 per cent in 1948-70 to 6.5 per cent in 1973-77 and 6.8 per cent in 1977-82. These rates of growth will be required to achieve the overall performance targets for the Canadian economy, but there is not much attention paid to the difficulties many firms are having, or expect to have, in financing their current and anticipated investment needs. Some of these difficulties were presented to the Council by the sixteen industry committees participating in the 1973 National Economic Conference. Brief reviews of the reports of these committees make up about half of this chapter. It is not clear what, if any, adjustments have been made by the Council in its projection and target-setting exercise as a result of the industry input, but this exercise requires a considerable amount of judgment, and the opportunity exists to refine that judgment in the light of reactions from those operating in the various sectors. One does not get the impression from the Review that this refinement is taking place in any systematic way, and the industry summaries in this chapter therefore appear as disjointed vignettes.