I have been working on an article surveying the economic history of northern Ontario and thought a summary overview draft of where I am going with it would be a worthwhile post. The entire article is going to be much more detailed but this excerpt below provides a pretty good overview of the direction it is going. Enjoy.
A Very Brief Survey of Northern Ontario Economic History
Livio Di Matteo
Northern Ontario’s
economy began in the 19th century as a booming resource frontier as
a result of favourable international market demand for natural resource commodities which were supplemented by government policy initiatives in transportation and protectionism.
Export-led growth approaches to development suggest that such a growth process
can ultimately expand population and market size leading to self-sustaining
economic growth, but Northern Ontario never made that transition and in the
latter part of the twentieth century and early twenty first century can be
viewed as having undergone arrested development.
Northern Ontario is a vast region of over
800,000 square kilometers covering about 90 percent of Ontario’s land mass. While long the home of a substantial and well
organized indigenous and First Nation population,
industrial economic development of northern Ontario under European settlement began in the 19th century as a
booming natural resource frontier driven by rising international market demand
for natural resource commodities – mainly forest and mineral products –
combined with government policy initiatives in transportation infrastructure and economic
protectionism via what was known as the Manufacturing Condition.
In defining the region, it is important to
note that is geographically, geologically and biologically a distinct region
traditionally defined as the area of Ontario north of the French River – Lake
Nipissing – Mattawa River system. It is
essentially Precambrian shield made up of some of the oldest rocks in North
America and as a result of glaciation scraping its soil consists of shallow
soils with some alluvial soil deposits in areas such as the Clay Belt regions
and a mainly boreal forest ecology consisting largely of coniferous forest.
In defining the region there is the
question of borders as some include the Districts of Muskoka and Parry Sound in
northern Ontario – as indeed they are for the purposes of federal and
provincial regional development policies – while other might consider them not
as the north but the ‘near’ north. There is also the question of thinking about
the north as a region given that it is a very diverse area that in many
respects is not one north but ‘many’ norths.
Geographically, there is the Northwest
consisting of the Districts of Thunder Bay, Rainy River and Kenora while the
other two-thirds of the region is the Northeast consisting of Cochrane,
Timiskaming, Algoma, Sudbury, Nipissing and Manitoulin. There is also the vast sparely populated area
north of 50 which in some respects does not fit into either the northeast or
northwest except by government fiat. And
of course, there is a rural remote north of small towns and Indigenous reserves
as well as an urban north consisting of the five major cities – Thunder Bay, Sault
Ste. Marie, Timmins, Sudbury and North Bay.
And the Northeast is also marked by a strong francophone population
component while the region as a whole has a large Indigenous population.
The themes of Northern Ontario’s economic
development are three-fold: natural resources, transportation and government. Northern Ontario’s economic development can
easily be discussed within the framework of economic staples – products with a
high natural resource content – given the importance of fur, lumber, pulp and
paper and mineral products to the north’s economic history. As for
transportation, this is a key theme given the importance of the Canadian
Pacific (CPR) and Temiskaming and Northern Ontario Railway (TN & O) in
providing access to northern Ontario resources in the 19th and early
20th centuries as well as providing the means for them to exit the
region to world markets. Finally,
government is important given the federal role in providing transportation
infrastructure that accessed and served the North such as the CPR, the
Trans-Canada Highway and the St. Lawrence Seaway as well as the Ontario
government given its parallel regional development program in the 19th
century consisting of the building of the TN & O as well as the
protectionist Manufacturing condition and its own agricultural land settlement
policy.
Given the importance of natural resources
to northern Ontario’s economy, the analytical framework best-suited to
outlining the causal relationships of the development process is the Staples
Approach or more generally, models of export led development. The Staples approach sees a region’s natural
resource base as the most important determinant of both the pace as well as the
patterns of economic growth with the classic exposition provided by Harold
Adams Innis who viewed economic development as springing from the interplay
between an industrial heartland and a resource reducing hinterland. In the case of northern Ontario, it can be
viewed as a resource hinterland not only to the industrial south but also the
rest of the world economy given the international market for its mineral and
forest products. More modern versions of
the Staples Approach see economic development as the process of diversification
around an export base with the degree of diversification a function of what are
termed economic linkages. These linkages
involve producing inputs for the resource export sector or investing in
industries that use the output of the export sector as an input as well as the
final demand for domestically produced consumer products.
Figure 1 outlines the export led/Staples
growth process with an increase in exports generating an increase in the
regional economy’s output/income (Y).
The presence of rising income and economic opportunity in the resource
sector leads to population increase both via natural increase but also
migration into the region. This leads to
an increase in the labour force which feeds back into the generation of
income. As well, the increase in income
leads to an increase in regional saving which fuels investment as well as
external investment flowing into the region to provide the capital stock needed
to expand production of the resource export.
This process continues in a circular fashion until both the income and
population become large enough to provide a market for regionally produced goods
and services on top of the export sector and it is this expansion of regional
manufacturing production as well as services to meet local needs and substitute
for imports that becomes the process of diversification. A failure to grow and develop beyond the
initial export industries that powered development can be seen as incomplete or
arrested development.
Figure
1: A Model of Export-Led Growth
The economic history of northern Ontario can be divided into a number of stages. They are: 1) Pre-European Settlement to 1867, 2) Boom, Colonialism and European Settlement, 1867 to 1913, 3) Consolidation, Depression and War, 1914 to 1945, 5) Post-War boom, 1946 to 1969 and 6) Arrested Development: Economic Dependency and Decline, 1970 to the Present.
The economic development of northern
Ontario followed a process of export-led growth fueled in particular by the
export of mineral and forest products.
International demand and private sector exploitation of the region’s
resource abundance starting in the 19th century was also accompanied
by investment in transportation networks to bring resources out to market and
government policies and initiatives designed to help facilitate development as
well as take advantage of the public sector revenue potential of these
resources. Within this framework then,
the three major engines of northern Ontario economic development are natural
resources, transportation and government.
During each of northern Ontario’s
development periods outlined here, economic growth was most robust during eras
where all three engines came together to provide the impetus for economic
growth and employment creation. The most
robust economic growth and development occurred during the eras from 1867 to
1913 and 1946 to 1969. Both of these
eras coincided with good global economic conditions which fostered a demand for
resource products and led to private capital investment in production
facilities and transportation networks.
Both of these eras also saw a large spending and policy role for
government which facilitated development. The first era also saw northern Ontario as a major source of provincial government revenue.
Growth was poorer in the 1914 to 1945 as a
result of erratic global markets, private sector weakness and the retreat of
government involvement in northern development after the onset of the Great Depression
and yet this was still an era of substantial population growth. Economic growth since 1970 in the region has
essentially stagnated along with population growth as a result of long-term
technological change which reduced the labour intensity of natural resource
extraction in the region. While
government did undertake more interventionist activity in an effort to arrest
northern decline, it has failed to reverse the slow growth nature of the region
given the absence of supporting private sector investment.
Bray, M. and E. Epp, eds. (1984) A Vast and
Magnificent Land: An Illustrated History of Northern Ontario. Ontario Ministry
of Northern Affairs.
Di Matteo, L. (1991) “The Economic
Development of the Lakehead During the Wheat Boom Era: 1900-1914,” Ontario
History, LXXXIII, 4, December, 297-316.
Di Matteo, L. (1999) “Fiscal Imbalance and
Economic Development in Canadian History: Evidence from the Economic History of
Ontario,” American Review of Canadian Studies, Summer, 287-327.
Innis, H.A. (1930/1984) The Fur Trade in
Canada, Toronto: University of Toronto Press.
Miller, T. B. (1985) “Cabin Fever: The
Province of Ontario and its Norths.” In D.C.D.C. MacDonald, ed., The Government and Politics
of Ontario. 3rd ed. Scarborough:Nelson, Canada, 174-191.
Ontario (2011) Places to Grow: Growth Plan
for Northern Ontario. Toronto: Ministry
of Infrastructure and Ministry of Northern Development, Mines and Forestry.
Robinson, D. (2016) Revolution or
Devolution?: How Northern Ontario Should Be Governed. Northern Policy
Institute. Research Paper No. 9, April.
Watkins, M. (1963) “A Staple Theory of
Economic Growth,” Canadian Journal of Economics and Political Science, 29,
141-158.
