(^294) THE WEALTH AND POVERTY OF NATIONS
The pursuit of this strategy by a number of fledgling economies has
led to a staples theory, or "vent for surplus" argument. The idea: one
starts with earnings from export of primary products, which raise in
comes at home. Higher incomes in turn promote a market for manu
factures while financing the development of an industrial sector and a
more balanced economy. (Much depends on the distribution of in
come in the staples producer. The less equal, the smaller the market for
manufactures. Thus a plantation economy will not generate much in
dustrial demand: the estate owners will buy luxury goods for them
selves and spend a minimum to clothe and house their slaves.)
The staples model was first put forward by Harold Innes to explain
Canadian performance in terms of a succession of export staples: first
furs (seventeenth and eighteenth centuries), then timber (late eigh
teenth and nineteenth), and finally cereals (mid- and late-nineteenth
century). Similar schémas have since been put forward for Sweden
(timber, copper, iron), the United States (tobacco and cotton, then
wheat), Australia (wool, meat, wheat), Argentina (hides, tallow, meat,
grain), Meiji Japan (silk), even medieval England (wool).^2 And one
could conceive of parallel developments taking place in oil-producing
nations today.
But like most good economic theories, vent for surplus models have
a tautological aspect: they explain best what fits best. Just because an
economy earns by export of primary products does not mean that it
will then use this income well to promote development. There's the
rub: invest or spend? And even if one decides to invest, who says that
the money will go to the right activities? Besides, what is right? Stay
with staples and maximize comparative advantage? Or aim at balanced
development, that is, take less now for more later?
The history of frontier economies in the Americas and their success
in industrialization is a case study in the power and weakness of staples
theory. On the one hand, we have the United States and Canada—
high-income, developed economies; on the other, the fragments of
the old Spanish empire plus the former Portuguese colony of Brazil. In
the beginning these southern countries were richer and more popu
lous; today they lag far behind, and although they are finally beginning
This should not be confused with classical doctrines of comparative advantage, which
are essentially static and provide no reason for economic development. On the con
trary, they were used from the start to justify the prevailing international division of
labor.
nora
(Nora)
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