Canada: One Hundred and Forty-Seven Years of Economic Growth

Well Canada Day is once again upon us – we now have 147 years of Confederation to celebrate– and what better way to celebrate than with a brief retrospective of economic performance as measured by per capita GDP.  For your viewing pleasure, I present real per capita GDP in $2002 for each of the main census years since 1867 as well as a calculation of the average annual growth rate of real per capita GDP for each decade.

The data for the 1870 to 1960 period is from the historic GDP estimates and work done by the late Mac Urquhart and Alan Green at Queen’s University Kingston while the post 1960 data is from Statistics Canada.  Figure 1 plots the real per capita GDP numbers and shows that from an estimate of $2,104 in 1871, real per capita GDP in Canada grew to $39,560 by 2011.  Real per capita GDP in 2011 is 19 times what it was in 1871.

Figure 2 plots the decade average growth rates in real per capita GDP and the results here are quite interesting.  The period prior to World War I shows rising average growth rates with a drop during the decade of World War I. The 1920s were very strong and were followed by of course the dismal Great Depression decade.  Growth in real per capita GDP in the post war era is quite robust until the 1960s and then the rates begin to decline.  This is a pretty graphic illustration of the slowdown that has afflicted Canada and other economies since the 1970s and from which we have yet to emerge.  In retrospect, the 1970s don’t look so bad at least in terms of real per capita income growth.  On the other hand, despite the Great Recession of 2009, the first decade of the twentieth century was not akin to the Great Depression of the 1930s.  At least based on this data, that period was indeed unique. However, the period since 1990 actually has lower per capita income growth than the 1870s - which until the 1930s - were sometimes referred to as the Great Depression.  For those who argue that we are at the end of growth and growth rates will return to nineteenth century norms, we may be already there.  The last few decades of per capita GDP growth do not look much different from the 1870s and 1880s which are often seen as an age of economic stagnation in Canada - compared to the boom periods of the 20th century.

What is also of interest is the difference in the impact of world war with the 1940s being a period of high growth while the decade of WWI being one of very low growth.  It suggests that war need not always be the economic stimulus it is sometimes portrayed as in popular discussion.  However, WWI era starts with a crash that followed the western expansion boom of prairie settlement in Canada whereas the WWII era was a rebound after the crash of the Great Depression. On the other hand, these numbers have been presented in a pretty aggregated form and specific annual differences are quite important.  While not plotted here, what is also interesting is that variability in annual growth rates really drops in this data after 1960.  On the one hand, this may mean the economy has become more stable over time.  Or, it simply means that the data after 1960s is simply better with fewer outliers when it comes to GDP (for example 1922 and 1925-26 have some pretty big growth differentials). 

Happy Canada Day et Bonne Fête du Canada!  And for those of you with a more historical disposition, have a Happy Dominion Day.

Comments

[Frances Woolley]

Livio - interesting post.

Here's a hypothesis: the decades with very high per capita GDP growth were characterized by the movement of activities that were formerly done in the home into the market. So people started going to hair dressers instead of cutting their hair at home, for example, and started buying bread and pies and cookies instead of making their own at home. Also, the decades with high growth saw the development of new forms of stuff: cars, dishwashers, microwaves, stereos, TVs, etc.

What we're seeing now is a trend back the other way. There is more "home production", in the sense that we have more of a do-it-yourself-economy. There's no need for travel agents, or customer service representatives, or stock brokers; people can do it themselves on line. 21st century stuff is making 20th century stuff obsolete - my beloved Samsung galaxy, sitting beside me on the sofa as I write, is a pen and pencil and telephone and radio and library and music collection and newspaper and photo album and camera and so much else all wrapped into one. I don't need to buy stuff any more.

Plus there's the demographic stuff we've talked about on WCI before.

[Livio Di Matteo]

Frances:
That is intriguing. Given GDP measures market activity, then if more is shifting to "own production" then it suggests standard growth measures are missing a large chunk of activity. On the other hand, a lot of what we used to do for ourselves is still shifting to the market if you look at the growth of food preparation and personal services. Have a Happy Canada Day!

[Jacques René Giguère]

Never understood that hooopla about Canada Day being the "birth of a new nation.". From 1608,whatever the regimerench or British, the place was known as Canada and most of their inhabitants (habitants)as Canadiens. 1st July merely marks the annexation of New-Brunswick and Nova Scotia by the Chateau Clique and the Family Compact...

[Determinant]

Or as New Burswickers would say, what a D**m Lower Canadian attitude! Seriously Jacques, you say that south of the Restigouche and you'll wind up with a fist in your face. New Brunswick and Nova Scotia had nothing to do with Canada until July 1, 1867, thank-you-very-much.

Usually it's D**n Upper Canadian but Jacques is a geographic exception.

And need I remind you that Nova Scotia invented separatism in Canada? Quebec is a Jean-come-lately on the scene. ;)

In an unusually provincialist tone for me, July 1st is the birth of a new nation because it was also the divorce and dissolution of the United Province of Canada of late and unhappy memory. Upper and Lower Canada couldn't stand each other for one more minute shackled together in a Legislative Union that neither wanted.

"Dominion" was as far apart as Westminster would let us get. And there was that pesky fact that we either hang together or the Americans would annex us separately. And with no Dominion we'd have never made it to the Pacific.

[Jacques René Giguère]

Determinant: I knew I would rise you up but your point is mine: NB and NS never had anything to do with the concept of "Canada" until July 1867. Even under the French regime, there was no political, economic and even ethnic ties between Acadia and the St-Lawrence system (Quécois originate from Normandy mostly and the Acadians from the southwest, hence the different languages).
Nova Scotians invented separatism as soon as they realized the bad deal forced on them. We never wanted "to separate" as we never wanted it in the first place. Remember how we fought for two centuries to prevent the Conquest? And the 1760's guerilla in the Bas-du Fleuve? And the Patriot war? The fall 1867 election was the most rigged in Canadian history, even worse than the Newfoundland referendum.
The Union was an abomination: how the Clique and Compact, whose behavior had provoked the 37-38 wars, tried to keep power by offering the anglo middle class a crumb of power plus the satisfaction of not being a french-popist. The same deal offered by Jackson in the 1830's "Democratic revolution": power to the white elite, nominal rights for all whites (including the poors), disenfranchisement for all free blacks (including the rich).
We are still paying the price for those "deals".

[Majromax]

> Here's a hypothesis: the decades with very high per capita GDP growth were characterized by the movement of activities that were formerly done in the home into the market.

Indeed. The 1940s-1970s period also featured the widespread introduction of women to the paid-labour market, a trend that reached saturation in the 90s.

I wonder what an equivalent "real productivity" graph would look like, with real-GDP divided by the number of workers (or work-hours, but that might not be recoverable from the historical data). If this hypothesis is correct, those graphs would show less variability than per-capita GDP.

[Determinant]

Now you're going off the deep end, Jacques. We still have much in common. And need I remind you that after the French Revolution, Canadiens were singing "God Save the King" (and by that they meant Farmer George, not Headless Louis) louder than the English were?

What can I say, Canada is the ultimate "Odd Couple" nation, we argue with each other constantly but deep down, there's love there.

Besides, I am interviewing for a position with the Federal NDP which would essentially entail me spending the next 15 months sticking the knife in the Bloc and twisting. Bwahahahaha! }:)

Not that they need help with that, their recent leadership election shows they aren't a serious party anymore. Really, those Convention expenses should count as a political contribution to the NDP!

[Bob Smith]

"Quécois originate from Normandy mostly"

You mean from the people who invaded and colonized England? And 948 years later, they're still living peaceably together.

The irony is palpable.

[Jacques René Giguère]

Noblemen (former Viking pirates...) from Normandy invaded you. As soon as we could , we escaped here. The guillotine had net yet been invented...

[Determinant]

Uh, the actual Viking Normans were 100 years previous. The Normans in 1066 spoke Norman French, not a Scandinavian language. They were French, at a time when "France" was a more an idea than a reality. It took the French kings most of the Middle Ages to assemble France's modern borders.

As you will proudly know Jacques, most French people did not actually speak French until the French Revolution. Instead they spoke a variety of regional variants from Norman to Angevin to outright different languages like Occitan and Provencal.

Quebec French is what resulted when Norman and Breton French met the educated French of the Royal Court, Church and the Royal Army, three groups which did not survive the French Revolution very well, if at all.

[Bob Smith]

"The Normans in 1066 spoke Norman French, not a Scandinavian language."

And contributed much to the gloriously mongrel language that is English.

[Determinant]

"English does not borrows words from other languages -- English chases other languages into the corners of dark alleys, beats them senseless and then rifles through their pockets for loose bits of vocabulary."