This paper presents a measure of effective multifactor productivity (MFP) growth for Canada, the U.S., Australia, Japan and selected EU countries. The measure differs from the standard MFP growth as it measures productivity growth in the production of different types of products instead of by industry and it captures the effect of productivity gains in both foreign and domestic upstream industries. The paper finds that the increase in effective MFP is closely associated with the decline in output price and improvement in international competitiveness. Multifactor productivity growth for small, open economies and for the production of manufacturing, investment and export goods is partly attributable to productivity gains in the production of intermediate inputs in foreign countries.