Growth effects of recent structural changes in the Canadian economy: some empirical evidence

Abstract

A structural change marked by deindustrialization/servicization in most western economics and the nature and extent of its influence on economic growth continues to be a major topic of interst. The paper rests heavily the presumption of the deindustrilization/serviciation hypothesis and focusses on the growth implications of such structural changes. Using Canadian data, the paper first explores a casual relationship between goods and service sectors by running Granger-causality tests. It then tests an econometric model to quantify the growth effects of changes in both shares and growth rates of the industrial and the manufacturing sectors. The findings, based on empirical testing of the model over the period 1961–89, suggest that recent structural changes in Canada hava had significant negative implications.