Staple Theory on Canadian Economic Development

Topics: Natural resource, Economics, Economic growth Pages: 5 (1436 words) Published: April 10, 2006
Canada's Ability to Upgrade in the 21st Century with Respect to the Staple Theory

Gibril Sallah – 100283064


Canada is a extremely resourceful country and one of the largest exporters of natural resources worldwide. With the increase in technology and the increase in the depletion of natural resources and uncertain demand fluctuations in the economic world, natural resource based economies will need to find solutions to upgrading their economies with or without staple product dependency. This essay will investigate the staple theory and whether or not it is recommendable for Canada to depend on its staple for further economic development. Reasons to why or why not Canada should rely on its natural resources will be analysed and a conclusion provided.


Canada is indeed a blessed land with a diverse and highly multicultural society and a vast treasure of natural resources. Mother nature has particularly endowed Canada's soil with a wide range of highly demanded natural resources in the world market thereby giving it a competitive edge over other countries; The World Bank rated Canada fourth among 92 countries in the world in 1997 with respect to its stock of natural resources(subsoil assets and timber Resources)falling behind only to oil giants Saudia Arabia, Norway and Venezuela(see fig 1.1).[1]. Canada also boasts a large variety of minerals and is a large exporter both forestry related and subsoil assets a such as uranium, potash, gold, oil, softwood lumber, and even platinum to mention a few(see fig 1.2 & 1.3).[1]. Further more, it is worthy to note that Canada's huge pool of energy resources and their respective exports have resulted in Canada being a large producer and net exporter of oil, natural gas, coal, uranium and electricity. In 1997 only, the total value of energy production was $77.1 billion dollars, with net exports of about $18.3 billion.(see fig1.4).[1]. Primary industries which involve on subsoil extraction such as mining also contribute largely to the Canadian economy; in 1999 alone Canada mined minerals and exported $22.9 billion to the USA and a total of $6.5 billion to other trading partners.(see fig 1.5).[1]. As we have observed, we can undoubtedly conclude that Canada is a wealthy nation with regards to its natural resources.

2.Staple Theory
The Staple Theory or theory of Natural Resources was developed by two brilliant Canadian historians namely Harold Innis and W.A. Mackintosh. It was developed as a tool to investigate the role of natural resources in the economic development process of the Canadian economy. The basic and fundamental concept of the Staple theory is that export of natural resources(staples), from Canada to more advanced economies has a thorough affect on the economy which in turn affect the social and political frameworks within Canada; simply put, the staple theory is a theory of export-led growth based on staple products[2]. Staples are basically any valuable and exportable natural resources(land and subsoil assets requiring very little processing) which can bring in income for an economy. Staple generated economic growth is created by the direct investment in the extraction of the staple and the "spread effects" or economic reaction effects; forward linkages involving processing of the staple prior to export; backward linkages involving the production of inputs such as resource machinery and transportation infrastructure that are required to extract the staple; final-demand linkages involving the production of consumer goods and services to meet the regional needs of those who are employed in the staple industry; and fiscal linkages involving the expenditure of rents and profits generated by resource production.[5]. The question for concern however is can canada foresee a comparative advantage in its staples to enhance and stimulate economic growth?This shall be investigated further within the essay.

3.Reasons Canada Can...

References: [1].
[5]. Watkins, M. H. 1963. A staple theory of economic growth. Canadian Journal of Economics and Political Science 29:141-58.
[6]. Auty, R. M., and Mikesell, R. 1998. Sustainable development in mineral economies. Oxford, U.K.: Clarendon Press.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • economic development Essay
  • Theories of Economic Development Essay
  • China’s Economic Growth and Development Essay
  • Term paper of economic development
  • The Schumpeterian Theory of Economic Growth and Development Essay
  • Essay about Economic Development
  • Rostows Theory of Economic Development Essay
  • Marxian Theory of Economic Development Essay

Become a StudyMode Member

Sign Up - It's Free