A Taxonomy of Linkages
As we discuss Dutch disease and the staples trap, it is good to be reminded that these discussions can benefit by being put in the context of Albert Hirschman’s linkages from commodity/resource/staple export. It so happens that a recent monograph begins with Hirschman and then elaborates on his linkages, and applies them in case studies. The study, titled “One Thing Leads to Another: Promoting Industrialisation by Making the Most of the Commodity Boom in Sub-Saharan Africa” is authored by Mike Morris and David Kaplan of the University of Cape Town and Raphael Kaplansky of the Open University UK and was published in 2012. http://tinyurl.com/CommoditiesBook (I am grateful to my UofT colleague, Gerry Helleiner, for drawing this study to my attention.)
Hirschman talked about Forward Linkage and Backward Linkage (production linkages), and Consumption Linkage (spending of incomes earned in the export sector) and Fiscal Linkage (the government capture of resource rents by royalties and by taxes on corporate profits. and the disposition of these revenues.) The authors of this study add Horizontal Linkage, which would include infrastructure built for the staple which then has powerful spread effects of its own. The point of this taxonomy is to show the complexity of spread or linkage effects, their breadth and their depth, and further dimensions are adumbrated in their case studies, like foreign or domestic ownership, effects on the culture of innovation, skills development, and so on.
As well as being able to specify what is and is not happening with respect to exports – oil, diamonds, timber, gold, copper – from Sub-Saharan Africa (Angola, Botwana, Gabon, Ghana, Nigera, South Africa, Tanzania and Zambia), the authors want to demonstrate that the enhancement of market-generated linkages by government policy is a valid and important development strategy.
For these authors, the Canadian case, which they refer to only in passing, demonstrates the success of the resource-for-export strategy. Given the relatively low income of the countries they are studying, that’s fair enough. But to live here is be conscious of the extent to which the fiscal linkage has been so neglected that the government of Alberta, sited on a swamp of bitumen, is presently pursuing austerity. The regional distribution of linkages within the country – not referred to it these case studies – can be of the first importance, feeding national disunity and constraining national policy. There can also be a maldistribution between different groupings, in our case, the persistent hurt done to aboriginal peoples. And, in the case of bitumen, even if there was no staples trap as our made-in-Canada resource curse, there’s now something much worse, which is the carbon trap and climate change and all that collateral damage.
I’ve digressed far from this study, though what I read it as saying is that there’s nothing inherently wrong with exporting resources. I agree. The issue is rather how responsible we are, what quality of stewardship we practice. That’s where we’re falling dramatically short