Defence Innovation Stock and Total Factor Productivity.

This study explores the impact of defense industrial production on the productivity of four Canadian three-digit SIC industries. A Tornqvist index of the annual change of total factor productivity is calculated. A defense production "innovation stock" is constructed from new data on defense industrial production in Canada between 1961 and 1985. Seemingly unrelated regression estimation multiple regression analysis shows that military production has a negative impact on total factor productivity for the four industries.