What Is the Staple Thesis?
The staple thesis is a theory of economic growth that emphasizes the role of traditional commodities, or staple products, and the impact they have on shaping a resource-rich economy. It argues that national economies are linked to the production and export of staple goods.
- The staple thesis is a theory of economic growth that emphasizes the role of traditional commodities, or staple products, and their impact on the shaping of a resource-rich economy.
- The staple thesis argues that the degree to which economies rely on the export of staples for their development positively affects their economic, social, and political development.
- The staple thesis was created by Canadian economic historian Harold Innis and economist W.A Mackintosh in 1923 to model Canada's economic history.
Understanding Staple Thesis
The staple thesis, created by Canadian economic historian Harold Innis and macroeconomic W.A Mackintosh in 1923, looks at how societies evolve in relation to economic production. 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. Although 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.
Innis and Watkins argued that different regions in Canada developed differently based on 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.
The basic framework of the staple thesis is potentially applicable to any economy whose development is dependent on the export of 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.
Staple Thesis Example: Brazil
Another contemporary application of the staple thesis could involve the influence of the petroleum industry on economic growth in a country that exports crude 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.
Critique: The Staple Thesis Trap
The authors of the staple thesis held somewhat opposing views regarding the impact of 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 over-dependence 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 that provide raw materials.
The core-periphery structure suggests that the relative success of economies dependent on staples is contingent upon the development of economic activity linked to staple products themselves. Therefore, economies capable of developing related industries become more prosperous, according to the theory.