economic outlook, “ chapter 3, understanding the downward trend in labor income shares, ” ( washington, april 2017 ). 9 p. david, “ the dynamo and the computer : an historical perspective on the modern productivity paradox, ” american economic review, 80, no. 2 ( january 1990 ) : 355 – 361. 10 c. d ’ souza and d. williams, “ the digital economy, ” bank of canada review ( spring 2017 — forthcoming ). 11 recent work at the organisation for economic co - operation and development ( oecd ) suggests that gross domestic product ( gdp ) remains a good measure of the sum of all market transactions. nevertheless, gdp is an imperfect measure, and many of the challenges are more prevalent in a digital and services - oriented economy, such as the distinction between quality and price change, consumers acting as producers, and price measurement. investment and productivity estimates are also becoming more problematic. while digitalization intensifies these challenges, it could also provide useful data that will help solve them. in addition, gdp statistics are often criticized in the context of digitalization because they do not account for the related welfare gain, but it is important to bear in mind that gdp is not a measure of welfare. that said, digitalization has probably widened the gap between gdp and welfare, which reinforces the importance of complementing gdp with indicators of well - being, like the united nations development program ’ s human development index and the canadian index of wellbeing produced by the university of waterloo. 12 w. dong, j. fudurich and l. suchanek, “ the digital economy — insight from a special survey with it service exporters, ” bank of canada staff discussion paper no. 2016 – 21 ( november 2016 ). 13 see j. jacobs, t. poutanen, r. zemel, g. hinton and e. clark, “ artificial intelligence is the future, and canada can seize it, ” the globe and mail, 7 january 2017. 14 the creative destruction lab program targets early - stage, science - based technology companies. it also offers a specialized machine - learning stream for companies that focus on machine learning or artificial intelligence. the program expanded to vancouver in collaboration with the university of british columbia ’ s sauder school of business. 15 for a history of how canada has benefited from trade openness, see s. s. poloz, “ canada at 150 : it takes a world to raise a nation, ” (

years to develop. 9 for similar reasons, it could take many years for selfdriving vehicles to completely displace human - driven taxis, trucks and buses. the length of the transition will depend on how fast existing vehicles depreciate, prices for the new technology decline, and required infrastructure is updated. what does all of this mean for the bank of canada ’ s economic projections? it is simply impossible to quantify the impact of these innovations before they happen. that is why the bank assumes no additional boost from automation. while the bank is projecting a rebound in trend 3 / 6 bis central bankers'speeches labour productivity growth from 0. 6 per cent in 2016 to 1. 1 per cent in 2020, this mainly reflects a cyclical pickup in investment spending from the lows witnessed following the oil price shock. our work to date suggests the greatest productivity benefits will occur in firms with high - quality people - management and decision - making processes and high levels of human capital. with big data, smart contracts and robo advisors, financial companies could be at the head of the pack. 10 the bank of canada has a research program to better understand these issues. we have created a new digital economy team that focuses on how automation is unfolding and affecting the economy, including inflation dynamics and the transmission of monetary policy. we are reviewing the measurement issues that are exacerbated by the proliferation of digital and services - oriented technologies. 11 we are also developing our macroeconomic models to better account for changes in the distribution of income and wealth. proactive beats reactive let me now turn to my final point. canada is well positioned to succeed in a digital world, and we should embrace it. canada has a flourishing information technology sector and is becoming an important player in the ai field. 12 major canadian firms have teamed up to provide funding for the development of ai start - ups through a program called nextai. and some international companies are moving their ai divisions to canada. 13 to get the most out of the new technologies, we will need to work together to proactively mitigate the more harmful side effects that i have mentioned : the transition period and the potential effects on the distribution of income. there are many promising approaches to managing the first side effect — the transition period. let me highlight just one. as with previous technological transitions, education, skills training and continuous learning will be key. universities across canada are working with students and businesses to bring the best ideas in science, machine learning and