"The paper examines the role of multinationals and reallocation in productivity growth in the Canadian manufacturing sector for the period from 2001 to 2010, a period of significant change in this sector. It finds that foreign-controlled enterprises were more important than domestically controlled enterprises in overall labour productivity growth for this period, but that their contribution declined after 2006 because of an increase in the exits of large and productive foreign-controlled firms in that period. Restructuring in the manufacturing sector intensified after 2006. During that period, there was an increase in reallocation toward enterprises that are more productive, as well as an increase in reallocation of labour toward industries that are more capital and intermediate input intensive. The effect of new enterprises displacing exiters also increased after 2006, mostly because of the increased effect of domestic entrants displacing exiters, while the effect of foreign entry and exit declined. Offsetting the positive effects of reallocation on labour productivity growth is the effect of reallocation of labour toward the firms with lower relative capital and intermediate intensities within the same industries, which contributed negatively to aggregate input deepening and aggregate labour productivity growth. Overall, the paper finds that the decline in labour productivity growth after 2006 was mostly due to a decline in labour productivity growth within domestically controlled enterprises. There were some sizeable reallocation effects, such as the negative effect of the exit of large and productive foreign-controlled enterprises, but this was offset by aspects of reallocation that had a positive impact on productivity growth."--Abstract.