Comment 72615

By ScreamingViking (registered) | Posted December 30, 2011 at 18:53:44 in reply to Comment 72533

Doubt there's a causative relationship there despite the apparent correlation, but the fact businesses have not invested more in technological improvements as the dollar strengthened has been a conundrum (even acknowledged as such by our financial leaders).

You'd also think that during the ongoing restructuring of many of our manufacturing subsectors the more productive firms would survive, pushing up the average rate of productivity growth. Perhaps they have, and it would otherwise be a lot worse.

Since the end of 2007 I don't doubt firms have been reluctant to invest, given the economic climate. But they weren't doing so in the years leading up to that as the dollar rose, during a period of relative prosperity.

The Conference Board did a report not too long ago about Canada lagging behind the US in productivity growth. Been meaning to read it but haven't had the chance.

Anyway, with so many other production inputs being foreign sourced - not just machinery and equipment - I think a very weak dollar would still hurt. There's a sweet-spot where a lower valued dollar helps make our exports more attractive, but at some point the import costs must erode that benefit.

Comment edited by ScreamingViking on 2011-12-30 18:56:03

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