The Economic Power of Trade Between Canada and the US

Harold Innis's main thesis is a theory of economic growth and development that was created especially to explain Canada's economic history. The theory's assessment of Canada's unique geographical and historical circumstances was what gave it its distinctiveness to the country (Barnes).et al. (2001). Innis (1956) defined staples as a collection of primary resources that have undergone minimal processing, including minerals, fish, lumber, paper, and fur. The theory of staples is centered on the export of these items to a principal economy and explains the growth (or lack thereof) of the economy. These basics are exported to the main economy where they are then manufactured into finished goods. A staples economy is characterized by its marginalization within the global economy and its reliance on imports from other major cities.Although economic dependency and its negative effects are a part of Innis' staples theory, they should not be confused with dependency theory (see Baran 1957 and Frank 1978). As a result, staples growth is incomplete industrial progress. According to Barnes et al. (2001), economic development centers on bolstering the staples industries rather than promoting economic diversification. The Clark-Fisher hypothesis, which follows the typical trajectory of economic development (primary resources → manufacturing → services), is hindered because producers prioritize exports and are frequently foreign-owned,

with little regard for the development of the local economy (Watkins 1963).

This specific type of development is known as the staples trap, even though there are additional issues that arise with inhibited economic development (a lack of consumption diversity, variable employment rates by trade, and productivity gaps). However, it should be highlighted that an economy is not just forced to remain in the first of the three stages of economic development. The internal belief that a nation's role in the global economy is derived from its production of staples is a contributing factor to the growth of staples and the trap that goes along with it (Carey 1975; Watson 1977). This belief leads to governments and other organizations supporting the growth of staples and reinforcing the trap.As a result, inside the staples economy, a specific production culture arises that supports its own existence (Barnes et al. 2001).Even though economic dependency and a lack of internal economic development are detrimental, there are, of course, reasons why such a pattern of development arises, even though it is ultimately not the best for the staples economy. Due to the significant fixed costs associated with staples manufacturing, foreign-owned enterprises must be involved from the outset of development. These foreign-owned companies are frequently engaged in other stages of the production process that involve the staples goods, and these stages are typically pre-existing in the principal economy rather than the staples economy. These stages include research and development, the creation of machinery to extract the staples goods, and manufacturing processes that use the staples goods as inputs. This results in a commensurate loss of local authority over businesses, rendering governments in the staple economy helpless to meet the demands of foreign-owned companies for favorable business environments and infrastructure, which typically fund their existence (Gunton 2003).

Because of this, the staples economy continues to be dependent on its principal. The staples trap is this.

Even though Innis' theory of staples was created to explain the development of the Prairies and eastern Canada, other staple sectors have also been the subject of recent research, including mining, fishing, coal (Gunton 2003), mining, forestry, mining, and forestry (Hayter and Barnes 1990; Wallace 1996; Parker 1997; Hayter 2000; Barnes et al. 2001). While the theory of staples is useful for comprehending the nature of economic change in Canada's regions, it is interesting to apply it to contemporary Canada, as the country's economy has shifted towards the manufacturing and service sectors, especially after World War II.In reality, the manufacturing industry that accounts for the majority of Canada's exports (cars and components) has been the subject of in-depth research by economic geographers such as John Holmes (1983, 1992, 1993, 1996, 2000).Furthermore, the "new staple economy" has begun to take shape (see Britton 1996). Grain has become ethanol, ores have become metals, and raw logs have become prefabricated houses in the new staple economy. These shifts, however, are a sign that people are emerging from the staples trap because they entail a shift from minimally processed to intermediate and final consumer commodities. More value being added to Canadian production as a result, and if these changes are taking place, the items shouldn't be referred to as "staples." The production process still uses the same raw materials; instead, more value-added work is now done in the host nation rather than the home country.Therefore, is staples theory still applicable to assess Canada's economy if staple items are becoming less significant for the country's economic growth and development

automobiles and components have climbed to over 25 percent of exports)? Indeed.

An affordable labor force has resulted from the Canadian government's provision of medical health care and, later, the relatively low value of the Canadian currency (15–20 percent labor expenses savings over the United States, hereinafter referred to as US). Consequently, the US—Canada's largest trading partner in the automotive sector—is home to the high-value-added production of body stampings, engines, and transmissions, while Canada draws a disproportionately large share of labor-intensive automotive production, such as final assembly and specific labor-intensive automotive parts. A "distinctive pattern of trade between Canada and the United States" (Holmes 1993, 26) resulted from this geographical separation of labor and operations, with Canada experiencing an international trade deficit in automotive parts and an international trade surplus in autos. Furthermore, because the headquarters of the three major manufacturers were located in the US, the decision-making processes were geographically divided. Staples theory predicts this pattern of development, but it's exclusive to the manufacturing industry.This article examines Canadian industry-wide international trade patterns with the US, as opposed to doing a case study of manufacturing in a specific industry and location. Even though Canada trades with other nations, the US accounts for the great majority of its trade, which has been constantly rising. Thus, the prevailing