Canadian food processing is an important manufacturing industry, accounting for 13 percent of shipments. By its nature food
processing depends on infrastructure capital. Our objective is to estimate infrastructure’s effects on input requirements,
cost and productivity. The increase in capital and decrease in materials were respectively 2.5 and 3 times greater than the
−0.07 infrastructure elasticity of labor. Infrastructure investment was cost-reducing by inducing reductions in employment
and intermediate inputs. A 1 percent increase caused cost to decline by 0.16 percent. Infrastructure capital was a major contributor
to productivity, annually contributing 0.5 percentage points. This was nearly double
TFP growth.
Keywords Food processing - Infrastructure capital - Productivity growth
JEL Classifications D24 - L66