What is Staple Thesis
The staple thesis is a theory of economic growth which emphasizes the role of traditional commodities or staple products and their impact on the shaping a resource-rich economy.
Though its original purpose was to model Canada's historical economic evolution, the staple thesis can be applied to any country with an export-heavy economy.
BREAKING DOWN Staple Thesis
The staple thesis, created by Canadian economic historian Harold Innis and economist W.A Mackintosh in 1923, looks at how societies evolve. The thesis was presented as an explanation for how the pattern of settlement and economic development of Canada was influenced by the exploitation and export of natural resources.
Innis and Watkins argued that different regions in Canada developed differently based upon their primary exports. For example, they related Atlantic Canada to the fishing industry, particularly the harvest of cod. Central and northern parts of the country depended heavily upon the fur trade, while Western Canada’s primary export was wheat. The theory builds on these linkages to explain the different “personalities” of each region, for example, regarding their attitudes toward government authority.
Brazil as an Example of Staple Thesis
The basic framework of the staple thesis is potentially applicable to any economy which developed by exporting raw materials. The theory argues that the degree to which economies rely upon the export of staples for their development affects their economic, social and political development.
Another contemporary application of the staple thesis could involve the influence of the petroleum industry on economic growth in a country which exports oil, such as Brazil. An increase in demand for oil exports yields profits for large oil producers. In Brazil, the government holds over half the voting shares of Petrobras, the nation’s largest oil producer. Therefore, the income from oil influences the development of infrastructure, technological innovation and human capital both inside and outside the petroleum industry as it helps to drive the nation’s economy.
The Staple Thesis Trap
The authors of the staple thesis held somewhat opposing views regarding the impact of a dependence on staple commodities on economic development. In Mackintosh’s view, mature economies could successfully continue to rely upon staple production. Innis took a more pessimistic view, believing that as countries develop, their economies typically need to transition from an overdependence on the production of staples for export. Innis posited a core-periphery structure in which metropolitan areas with manufacturing capabilities exercise a certain amount of control over peripheral areas which provide raw materials.
The core-periphery structure suggests that the relative success of economies dependent on staples is contingent upon development of economic activity linked to staple products themselves. Therefore, economies capable of developing related industries become more prosperous, according to the theory.