Canadian Economic History The Staple Thesis - Essay Example

Economic base, staple, sector, growth pole, neoclassical growth, inter-region trade, product cycle, entrepreneurship and flexible production are a few existing theories that explain economic development1. The economic history of Canada shows its dependence on fur trade, fisheries and lumbering industries, dependent on waterways transport till mid nineteenth century. Later, with the advent of steam and rail transportation, wheat and flour, paper and pulp, mining and timber industries became significant.

However, the industries depended basically on natural resources with limited or without any processing. Staple thesis, as formulated by economic historians like Harrold A Innis and WA Makintosh, provides significant insight to the economic development of Canada. The thesis defines export-oriented economic growth of staple or natural products like furs, fisheries and timber and contributes towards political and cultural structuring. The works of Harold A Innis (1894-1952), a political economist, have been inspiring in the field of economic history and communication.

His initial works related to the expansion and establishment of staple theory, originally conceived by Makintosh. Innis's literal works include thesis on 'History of Canadian Pacific Railways', 'The Fur Trade in Canada' (1930), 'The Cod Fisheries' (1940) and 'Empire and Communication' (1950).In the subsequent paragraphs, the thesis would be extensively discussed with regard to its definition, dynamics, merits and demerits and application to Canadian economic growth. Further, the paper would cover economic impact of the theory on other countries, followed by its critical analysis highlighting theory's credibility and relevance in past and present.

Staple Theory A staple can be defined as a commodity that forms significant constituent of export material. The thesis dwells on the extent of processing of the commodities being marginal or absent. The major Canadian staple products included fur, fish, timber, grain, oil etc. The theory focuses on staple exports contributing towards economic growth. Therefore, it is necessary that the home market for the staples be negligible or limited to achieve a large export base. The theory is associated to a number of factor dependent determinants like the production function, external market demand, transportation function and staple characteristics2.

The production function is the outcome of the resource base of a country and the available technologies while transportation depends on the public investments and existing communication infrastructure. External demand base is the central determinant around which the theory revolves. Staple characteristics are the measure of economic development related to its production, depending on the linkages that induce further investments. It is important to note that demand drives the model; external demand base further creates derived demand through linkages.

The commodity is the centre of importance in the model and its character stimulates other activities setting up a positive or negative pace. With the known production function and assumed external demand, a number of related aspects like income distribution, additional processing