The second factor relates to the low and declining total factor productivity encompassing land, capital and labour. The third one is the relatively large public sector, including state-owned enterprises, with the resulting sub-optimal delivery of services and utilities, compared to middle-income peers.
What I want to do today is look briefly at how the Canadian economy has adjusted so far and talk about what public policies - including monetary policy - can do to promote economic flexibility. Let me start by listing the main global developments since 2000. First, China and India have emerged as economic powerhouses. Second, global economic growth has been extraordinarily strong.