Failure to add value to resource wealth chains Canada to its colonial past – Harry Nelson and Ngaito Hotte (Globe and Mail – December 5, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Canada, a country founded on its natural resources, possesses more natural wealth, per capita, than any other any other nation in the world. Our natural resources sustained our First Nations and catalyzed settlement, from east to west.

While Canada has changed considerably since its early days, natural resources still drive our economy. Yet, some suggest that by providing raw resources to the global economy, Canadians are pursuing lower-value, less-innovative and less-sophisticated activities, and that we should be shifting toward a more modern, knowledge-based economy. Are our resource industries mere relics, distracting us from more profitable, even civilized, pursuits?

With several controversial resource projects on the table across the country, Canadians and their governments are confronted with choices about the kind of future they want, and the role resources will play. But the options – to remain rooted in the past or embrace a greener economy by eschewing the use of our resources – are not as black and white as they first appear. To understand questions about our future, we must look to our past.

European settlement was motivated by the desire to exploit fisheries; exploitation of fisheries created the need for wood for shipbuilding. Inland exploration followed in pursuit of beaver pelts, which commanded high prices in Europe due to the fashions of the day. Large-scale agriculture came next. As production increased, the need for goods to supply workers gave rise to simple, then more complex, manufacturing sectors.

Harold Innis, a professor of political economy at the University of Toronto, described Canada’s origins as a “marginal” colony to Europe and later, to the United States. The colony’s efforts were relegated to producing raw materials, or “staples,” while manufacturing and industrial development occurred elsewhere. So, too, were First Nations manipulated to produce goods that were in high demand overseas. This caused wild swings in activity, as resources were alternately decimated or abandoned along with changing preferences in Europe.

In 1969, Peter Drucker, a professor in economics at New York University, first wrote about witnessing a fundamental economic shift from producing goods to producing ideas and information. The idea provided a glimmer of hope that the Canadian economy would break free of its shackles of servitude, and emerge as a more industrialized and productive nation.

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