MGMT 1030 Lecture Notes - Lecture 4: Staples Thesis

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20 Jul 2016
Study Questions for Norrie’s “The Staples Thesis”
1) What are staple products and what is the “staples thesis”?
Staple products are the high natural resources or primary products such as fur, cod,
timber and wheat which are produced for export. The “staples thesis” describes economic
growth and diversification arising from exports of natural resources.
2) What are some of the difficulties associated with a country’s reliance on staple
The exporting country or region thus faces a price set in the world market. Growing
world demand increases the price of the primary product enough to stimulate Canadian
3) What are “linkages” and how are they important in the study of a staples economy?
The pace of economic growth, and economic diversification, depends upon the strength
of economic linkages, or spreading effects, arising from staple production. Backward
linkages to staple exploitation are inputs to the production of staples. Forward linkages
are activities where the staple is processed or manufactured into other products prior to
export. Lateral linkages are non-staple economic activities that are stimulated by the
staple production. Final demand linkages, or consumer goods, are the stimuli for
domestic manufacturing to produce consumer products in demand by workers employed
in staple production, or by population draw to the economy by staple production.
4) What are the limitations of the staples thesis?
The staples thesis provides little guidance for understanding why an endowment of a
given natural resource will, in one case, result in high incomes and economic
diversification; and in another, a poor and non-diversified economy- a situation offered to
as a “staples trap”.
5) What is the “modified staples thesis” proposed by John McCallum?
Exploitation of natural resources always generates wealth and linkage benefits. Staples
episodes are distinguished by who captures the linkages and wealth.
6) What are “initial endowments”?
Initial endowments are a region’s prior accumulation of population, financial capital,
productive capacity, entrepreneurial class, and political power. All else equal, linkages
from a new staple episode will tend to flow to and political power.
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