Tutorial 4 Norrie Article Study Questions

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29 Mar 2012
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Study Questions for Norrie’s “The Staples Thesis
1)What are staple products and what is the “staples thesis”?
Staple products are commodities that have a high natural resource content produced
for export.
Canadian economic development is driven by several episodes of natural resource
exploitation.
oCodFurTimberwheat
Explain how developed Canada based on the staples
2)What are some of the difficulties associated with a country’s reliance on staple products?
(Too dependent on the world market for the staple products resulting lack of diversification
and unstable economy)
Fluctuation based on the business cycle and demand for staples
3)What are “linkages” and how are they important in the study of a staples economy?
Spreading effects arising from staple production
Diversification
Backward linkage: inputs to the production
Forward linkage: activities when staples are processed
Lateral linkages: non-staple activities stimulated by staples production
Final demand: produce products by workers employed in staples production, e.g.
service, consumer goods
Not all regions captures all linkages
4)What are the limitations of the staples thesis? Not theory, no predictive power
[Other non-staple sources of economic growth such as industrialization
Fail to apply to Canada after some critical date]
Little guidance for understanding why an endowment of a given natural resource
will result in high incomes and economic diversification while others falls into
staples trap (poor and non-diversified)
E.g. wheat trade, Ontario vs. Prairies
5)What is the “modified staples thesis” proposed by John McCallum?
Staple episodes, diversification distinguished by who captures the linkages and
wealth
oDepend on complex laws or rules that govern trade, gov policies,
institutions
E.g., Ontario over coming Montreal merchants in wheat trade
oGood population political centre development of local financial sector
and entrepreneurial class manufacturing
oVs. railway policies and high tariffs westerners purchased goods from
Ontario and Quebec, central Canada no linkages
6)What are “initial endowments”?
A region’s prior accumulation of population, financial capital, productive capacity,
entrepreneurial class, and political power
Canada is still tied to staples today.