Staples Thesis Canada
In countries with weaker governance, resource revenues are usually expropriated by well-connected elites, but Canada’s political culture has avoided that.
To be sure, the income generated by (say) Alberta’s oil wealth during the last boom was not uniformly distributed across Canada, but it did show up as increased tax revenues for the federal government, and all households benefited from the increased purchasing power of the Canadian dollar.
And if the profits from resource exports are captured by foreign investors, then commodity exporters would have very little to show for their natural wealth.
Such an economy would be caught in a “staples trap,” unable to export anything but resources, and unable to use resource export revenues to finance economic development.
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Moreover, if economic development is driven by capital accumulation and technical progress, and if those are more likely to occur in the manufacturing sector than in the resources sector, the prospects for long-term growth are weakened.Many of the problems that Innis identified can be put down to bad choice for an exchange rate policy.A depreciating currency can go a long way to mitigating the effects of a bust, and to moderating a boom.The staple approach to the study of economic history is primarily a Canadian innovation; indeed, it is Canada's most distinctive contribution to political economy. For helpful comments on earlier drafts of this paper, I am indebted to J. It is undeveloped in any explicit form in most countries where the export sector of the economy is or was dominant. The specific terminology—staple or staples approach, or theory, or thesis—is Canadian, and the persistence with which the theory has been applied by Canadian social scientists and historians is unique. The leading innovator was the late Harold Innis in his brilliant pioneering historical studies, notably of the cod fisheries and the fur trade; others tilled the same vineyard3 but it is his work that has stamped the “school.” His concern was with the general impact on the economy and society of staple production. The staple approach became a unifying theme of diffuse application rather than an analytic tool fashioned for specific uses. This question — asked by Simon Fraser University’s Nancy Olewiler in the lead article of the latest issue of the Canadian Journal of Economics — is more controversial than it sounds.Harold Innis may not be a household name today, but he was one of Canada’s most influential economists in the 1930s and 1940s, and he’s still honoured for his role in establishing many of the institutions supporting economic research in Canada.Innis’ thinking was motivated by the collapse of wheat prices in the 1930s and the economic devastation it inflicted on western Canada, particularly in Saskatchewan.To give some idea of the scale of the crisis, Saskatchewan was the third most populous province in 1931, but lost 10 per cent of its population over the next decades.