I am a big natural resource policy guy and after reading Jeffrey Simpson’s article in the Globe and Mail today, I am bit concerned about Canada's dependence on the U.S.
Simpson writes “In fields from border security to trade, from energy and the environment to Afghanistan, from economic recovery to university research, we Canadians are now following along or simply dependent on what happens in America.” In these very capricious times, it is hard to say where Canada stands on energy and the environment specifically. The “recapitalization” of the U.S. economy will have to overcome massive indebtedness and declining economic activity, and until that happens, Canada will be holding on to America's tail.
The Staples thesis was developed by an economist named Harold Innis in the 1920s. He said that Canada developed as it did because of the nature of its staple commodities: raw materials such as fish, fur, lumber, agricultural products and minerals that were exported to Europe and subsequently to the US of A. The search for and exploitation of these staples led to the creation of institutions that defined the political culture of the nation and its regions. With regards to contemporary Canada, has this dependence of exports returned? After all, ~86% of our exports go to the U.S. We are still exporting massive quantities of lumber, oil and minerals to the states and this will continue unabated until total economic recovery for both nations is complete, which will take a number of years.
Key message: the staples thesis allowed Canada’s economy to grow and establish educational, political and social institutions. Natural resource wealth has always been a catalyst for our economy, but how economically sustainable is this? Let’s hope that we continue to diversify our economy to avoid another staples trap, and to lessen our dependence on the Yankees.
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