Renewing Canada's Manufacturing Economy: A Regional Comparison, 1973‐1996

Regional economies are continually undergoing adjustment as their firm populations react to changing tastes, technologies, and the challenges of outside competition. Adjustment typically takes place as the stock of jobs is renewed in each industry. This micro‐dynamic process of renewal has a substantial impact on the structure of national and regional economies. The primary objective of this paper is to measure the degree of renewal within the Canadian manufacturing economy as whole and within individual provinces. Using a longitudinal micro‐data set—which covers the population of manufacturing plants in Canada from 1973 to 1996—the study shows that the manufacturing sector experienced considerable job renewal. Two‐thirds of jobs in 1996 were newly created since 1973. There was considerable variation in provincial renewal rates. A decomposition analysis suggests this variation is not purely an artifact of the types of industries found in provinces, but reflects other characteristics of provincial economies.