Canada should specialize in resource development

By Stephen Gordon
National Post
November 13, 2017
Category: Business & Politics
Region: Canada

Canadian governments have long accepted that manufacturing jobs are better for the economy than resource exports. But what if it was wrong all along? …This question — asked by Simon Fraser University’s Nancy Olewiler in the lead article of the latest issue of the Canadian Journal of Economics — is more controversial than it sounds. …The standard staples thesis narrative has an obvious starting point: economies like Canada’s that are rich in natural wealth have a comparative advantage in resources, so commodities will form the bulk of our exports. But specialization in resources carries risks. For one thing, commodity prices are volatile, and result in destabilizing cycles of booms and busts. …Olewiler concludes that Harold Innis did get it wrong: resource wealth has contributed to Canada’s long-term economic growth. …This won’t settle the debate, of course; the manufacturing sector continues to have a powerful hold on the imaginations of non-economists — and of politicians.

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