Canadian Productivity Growth: Stuck in the Oil Sands

We study the behaviour of Canadian total factor productivity growth over the past 60 years. We find that the observed stagnation during the last 20 years is entirely accounted for by the Oil sector. Higher oil prices made capital-intensive sources of oil like the oil sands viable to extract on a commercial scale. However, the greater input required per barrel of oil slowed productivity growth. Comparing Canadian TFP growth to that of the United States reinforces these results. However, our result should not be interpreted to carry any welfare implications.