Comment on Three Suggestions to Improve Multi-Factor Productivity Measurement in Canadian ManufacturingŽ

1Comment on “Three Suggestions to Improve Multi-Factor Productivity Measurement inCanadian Manufacturing” by Serge Coulombe, paper presented at the CSLS Conference on theCanada-U.S. Manufacturing Productivity Gap, January 22, 2000, Ottawa Ontario.Erwin Diewert,Department of Economics,University of British Columbia,Vancouver, Canada, V6T 1Z1.Email: diewert@econ.ubc.ca1. IntroductionSerge Coulombe reviewed the methodology used by Statistics Canada to compute the total factorproductivity (or multifactor productivity) of Canadian industries. He has three specific criticismsof the Statistics Canada methodology. We review his criticisms and suggestions forimprovement in section 2 below.In the remaining sections of this comment, we broaden our focus and discuss a number ofgeneral problems that are associated with the measurement of industry productivity performance.In section 3, we note that in order to measure industry total factor productivity accurately, werequire reliable information not only on the outputs produced and the labour input utilized by theindustry but we also require accurate information on eight additional classes of input used by they. One of these additional classes of input is intermediate input; i.e., inputs that areutilized by the industry but which are produced by other industries. Information on the real andnominal purchases of intermediate inputs by industry comes from the system of input-output published by Statistics Canada. ...