Economic growth is a crucial factor in every country; hence, many resources are channelled towards the improvement of the economy. With economic growth, the citizenry of a given nation stand to benefit as their lives are improved in all spheres, since they are able to secure jobs more easily, save for the future and live a decent life[ CITATION Aut01 \l 1033 ].
The paper is focused on the economic growth of Canada with specific reference to the staple theory of economic growth. The theory is of the idea that, economic growth is dependent on the primary means of production that is exported to other countries. This idea has elicited arguments especially among the economic authors who each hold different beliefs on the driving forces of the economy[ CITATION Aut01 \l 1033 ].
For instance chamber and Gordon’s strongly belief that it is through the export of the primary means of production that a countries economy is able to grow, since revenues earned from the export are invested into other areas of the economy. On the other hand Kyee holds the conviction that, there exist other factors in the economy that influence the growth of the economy with regards to the export of the primary means of production. Primary products exported to foreign countries are limited by other global market factors such as price fluctuation as well as international police that govern trade[ CITATION Ait83 \l 1033 ].
This paper will attempt to evaluate the different debates that have emanated from the theory in an attempt to address the thesis problem. Findings from the articles of the different authors will first be highlighted followed by a comparison and consequent integration of the ideas in the different articles. Critiques shall also be discussed and analyzed before an objective and critical conclusion is drawn.
Chambers and Gordon agreed that for the economy of a country to set a base of growth, most of them do start with the exportation of the primary resources[ CITATION Aut01 \l 1033 ]. Chambers and Gordon agree that their various multipliers, linkages and demonstrations and leakage effects, in these cases the dependency on the primary product for an economic growth setoff is always positive, but due to some of the inhibitors like the fluctuation in the international market in terms of prices, too much concentration to the primary product to spur development in a country always result in the vice versa of retarding the development of an economy.
Through from the evidence of most if the countries, their economic growth was spurred by the primary product for exportation, e.g. in the case of wool in Australia, and Grain in the case of the United States. Which means the dependence on primary product or staple for economic setoff is essential as was in the case of Canada too[ CITATION All13 \l 1033 ].
However, Chambers and Gordon try to argue whether to depend on one or a few primary products for economic growth to take place. In the case here, Canada had the primary product as wheat which they used to export, although the export of wheat boosted the rise of other agricultural produce like animal products which boosted the per capita output of the economy, hence, economic growth[ CITATION Buc58 \l 1033 ]. They also recognize other factors like land and labour that also influences much in the per capita output to be able to spur the economic growth of the economy.
From the study of the history of Canada, most of their economic historians have long held their ideology of economic growth as rising from the exportation of the ‘staple’ primary product. Although from the research of Chambers and Gordon, they try to argue by offering an advice to the developing countries not to incline their development only on the increase of the per capita output for the increase of per capita output in Canada was much of an assumption, and also the reliance on one industry to generate or increase the GNP yield much less than 1.5% of increase in per capita income of the previous figure[ CITATION Buc58 \l 1033 ]. Hence from their study they realized that many of the countries whose economy rose as a result of increase in exportation has also other hidden factors that spurred the rise in per capita output in the economy. Chambers and Gordon based their argument from the study of data available during the economic golden age of Canada (1901-1911) which was one of the periods of the wheat export boom in Canada. They analysed
Gross domestic verses gross National product, effect of increasing and decreasing cost industries, Method of comparative ethics.
(New estimates) Compare, contrast, and combine the ideas of the article(s) with CG’s
What was similar between the two authors (economic historians) is that they all relied on the staples theory to analyze their data and argue out their thought on then factors responsible in spurring the economic growth of an economy.
Both economic historians argue that without the primary product, the alternative application of the resources would have occurred and as a result other exports would have been available at the expense of the primary product.
They had similar arguments on the relevance of the population and the labour elasticity demand in their participation to the economic growth of the economy.
Although most of the authors also rose up to agree and disagree with what Chambers and Gordon argued for as responsible for the development of the economy, most of them agreed that the dependence of the primary commodity in terms of export in the beginning of the countries outgrowth is essential for setting the pace for outgrowth. But in addition, other like Keay added other factors like employment as part of the contributing factors to the economy.
He argued that from the export of the primary commodity, the per capita income as a result of the revenue gained from the export will trigger the rise of the /exploitation of the economy or other resources which will intern increase the per capita income and eventually economic growth.
What they agree is that no matter the level of the economic growth of an economy (Wealthy, industrial, diverse economy) they all depend on the exploitation of the countries resources to develop (intensive resource production). In the case of Canada, he added other estimates a part from the exploitation of the staple product as the major booster in the economic growth, he indicated that the exploitation of other resources i.e. energy, fishing, forestry, mining industry, which he analysed the data collected from their produce and added to the per capita produce of the economy.
What was not relative to Chambers and Gordon argument was that there was a fallout in the aggregate employment in terms of labour, where the increase in the per capita income, lead to the reduction in fixed capital and output falling in terms of employment, while to the contrary other sectors maintained their positions or even improved in their positions in terms of output[ CITATION Aut01 \l 1033 ].
Critiques
Linkages and effects to CG’s findings
Chambers and Gordon concluded that the rents paid to specialised natural resources are critical for those exports. This will be linked to the backward linkage of the inducement to invest in the home production inputs, including capital goods, for expanding export sector. This is because of the investment in the domestic inputs which are relevant for the exports[ CITATION Buc58 \l 1033 ].
Chambers and Gordon argued that the staples model was applicable in the Canadian context when it experienced the major boost. This is related top almost much of the linkages; both backward, forward and the demand linkage. Because for an economy to experience the major boost it has to have invested in the production of a product in terms of capital goods for expanding export sector. The use of the output of the export e.g. the application of machines, building of roads, which will increase the value added in the transport sector. This will be dependent on the condition of the international market[ CITATION Ait83 \l 1033 ].
Chambers and Gordon also agrees that in case there is an increase in the per capita output of the economy, there are also other contributing factors that must have contributed to that increment a part from the primary product. This is majorly inclined to the extent of market coverage domestically, the income that is generated through the paying of employees, and the aggregate and coverage distribution of the same[ CITATION All13 \l 1033 ].
Possible Impacts of the wheat boom on savings
The impact of the wheat boom on savings is that the increase in the export of the wheat itself meant that there needed to be an increase of wheat production due to demand. This meant that in the local industry, the primary production for wheat needed a lot of other factors like, production inputs, what needed to be processed to meet the international standards as determinants of the processing, and also the domestic market, the income increase and the aggregate and average distribution[ CITATION All13 \l 1033 ]. This implied that the income that was generated lead to increase in the per capita income of the economy hence savings for other sectors of the economy, hence, spurring development of the Canadian economy.
Role of resource industries in promoting Canadian economic growth
Resource industries are majorly the alternative of the staple product for the economy. Despite the dependence of the staple food for the per capita income of the economy, resource industries also contribute to other factors leading to the increase in the per capita income. In the case of Canada, the manipulation of other factors of the economy like forest, energy, fish, lead to an increase in the economic growth of the economy[ CITATION Buc58 \l 1033 ].
Hence, the resource through the manipulation of the natural resources they boost the per capita output of the economy through the dependency majorly on the domestic market which are geared towards exportation. Hence they play a major role in the development of Canada a part from the dependence on the staple product of the economy for exports.
Conclusion
In summary, the staple thesis is a theory that tries to explain the concepts behind the growth of an economy. Canada had a major boost from the economy due to the exportation of the primary product of the economy in the 17th, 18th and 19 century, although the primary product was the major factor in the economic growth, it is also evident that there were also other contributing factors that contributed to the economic growth of Canada, e.g. the manipulation of natural resources i.e. forest, energy and fishing. Different authors come out to defend the concepts behind staple product and its contribution to the economic growth, but they all come to the agreement that the development or growth of economy does not solely depend on the primary product but also their other factors that contribute to the growth of economy.
The future prospects implies that most of the economies wont majorly depend on the primary product as a major contributor towards economic setoff, but also the reliance on other natural resources can spur growth in an economy. And the underdeveloped nations who have inclined their ideology on the staple theory should also depend on other theories of development for determining the way of their economic prosperity.
References
Aitken, Hugh G.J. "The Role of staples industry in canadas economic dvelopment." Canadas Economy (1983): 90-99.
Allen, Robert C. "The peculiar productivity." History of canada economy (1913): 605-33.
Auty, R. "The political Economy of Resource Driven Growth." European economic Review (2001): 839-46.
Buckey, kenneth. "The role of staples industries in canadas economic Development." Economic development in Europe (1958): 439-50.
