Three essays on the comparative growth of settler economies

Abstract

The traditional view of the Canadian economy from the late nineteenth century onward has been one of failure relative to the United States. This thesis examines the Canadian experience from the late nineteenth century in relation to other ‘settler economies’. Similarities between these countries include their resource abundance, low population density and European institutions. In the first essay, creation of long-run, sectorally disaggregated, Purchasing Power Parity (PPP) adjusted Canadian/ Australian data reveals that the Canadian economy was characterised by relatively strong and sustained growth in real output per capita and labour productivity. This paper takes a first step in estimating the importance of many potentially relevant factors. Results indicate that acceptance of foreign technology from abroad was a significant determinant of success. From 1870 to World War One, Canada performed particularly well against settler economies like Australia and New Zealand in terms of output and productivity in manufacturing. The second essay looks more deeply at the question of manufacturing success. A novel approach is taken by applying non-parametric frontier analysis to manufacturing census data in order to make cross-country efficiency comparisons. Measures of Total Factor Productivity indicate that nineteenth century Canadian manufacturing was surprisingly efficient relative to Australia, New Zealand and South Africa. The third essay takes a comparative approach in analysing market potential. Historically there has been a predisposition to view settler economies like Canada and Australia as part of a homogeneous ‘periphery’ relative to a British ‘metropole’. This concept serves to mask important differences in the ‘peripherality’ of each country. This study suggests the key geographical factor in explaining relative success amongst settler economies was access to markets. Peripherality is observed by estimating an aggregate measure of distance including adjustments for falling transport costs, tariff barriers and border effects. This aggregate distance estimate is used to form a measure of market potential that can be compared with observed trade behaviour. Focus is on the Australian colonies given their acute isolation. Counterfactuals are then generated to quantify the effects of distance on long-run growth during the period from 1870 to World War One