ABSTRACT
The central proposition of this chapter is that the staple theory of economic growth, originally based on the oeuvres of Canadian economic historians, remains an important contemporary model and framework for economic analysis. This is in spite of the forceful critiques of the staple theory put forth from the 1950s. I argue that the staple theory helps explain the causes of different real per capita gross domestic product (GDP) growth rates through time in a particular region or country and patterns of differential per capita growth rates between regions and countries. This is achieved by identifying the necessary conditions for exports to increase real per capita GDP growth from what it would be in the absence of such exports. Staple theory, therefore, contributes toward an explanation of the lack of convergence of real per capita GDP between regions and nations. 1 This stylized fact is a question of fundamental importance that remains to be addressed by economic theory. The staple theory, therefore, serves to complement the recent research in growth economics, which aspires to explain the persistence of differentials in per capita growth rates, and in real per capita GDP. 2 Related to this, staple theory compliments the arguments developed in this book about the importance of differential wage rates and endogenous technical change to modeling differential growth rates and differences and economic development (see Chapters 2 and 3). Also, in the context of the arguments made in this book favoring of high wages as a positive inducement to growth and development, relatively higher wages play an important role promoting stapleled growth that is consistent with economic development.
