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Thread: Alberta vs. Saskatchewan

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    Default Alberta vs. Saskatchewan

    So why has Alberta's economy long out-performed that of Saskatchewan?


    Note: This paper contains a lot of interesting history and analysis and is well worth reading beyond the teaser quotes I've placed below:


    Mostly Harmless: Socialists, Populists, Policies and the Economic Development of Alberta and Saskatchewan

    J.C. Herbert Emery
    Ronald D. Kneebone Department of Economics and Institute for Advanced Policy Research University of Calgary
    April 28, 2005


    “The CCF-NDP has been a curse on the province of Saskatchewan and have unquestionably ******** our economic development, for which our grandchildren will pay.”(Colin Thatcher, former Saskatchewan MLA, cited in MacKinnon 2003)

    ...


    As the experience of many resource-dependent economies has shown, government policies can play a key role in encouraging or discouraging investment. This is especially so for policies introduced early in the development process and in economic activities where profits are higher when production is spatially concentrated (agglomeration economies). Tax policies and regulations can encourage or discourage location decisions and in this way give spark to (or extinguish) agglomeration economies. Tyre (1962) asserts that ideological and policy divergence after the Great Depression was the reason for the economic rise of Alberta, the under-performance of Saskatchewan’s economy, and the reason why there are no large corporations in Saskatchewan. The perception persists to this day that socialist policies enacted by Saskatchewan’s government have had more to do with Saskatchewan’s perceived under-performance than energy endowments in Alberta.1

    Our analysis shows that while the rhetoric of the leaders of the two provinces may have differed, in practice there has been little difference in the policies pursued by the governments of the two provinces with respect to the development of natural resources.
    Financial constraints and market forces limit the ability of socialist governments in small open economies to be public entrepreneurs while times of abundance encourage in even right-wing governments to move into the role of public entrepreneur. While the perception exists that Saskatchewan’s socialism aided Alberta’s dominant economic position by driving entrepreneurs to that province, ultimately,...


    ...

    The devastation wrought by the Depression was severe in both provinces but the responses to the hardship ascribed to policymakers in the two provinces differed. In Saskatchewan, the Depression was interpreted as showing that outside forces – both economic (the collapse of world trade and grain prices) and natural (drought) -- were largely responsible for individual circumstances and this reinforced the judgement that a collective approach was required to answer them. In Alberta, while a similar experience was had, the interpretation was different: The problem of the Depression was the failure of economic institutions, in particular the financial system. The emphasis on individual responsibility in Alberta required that the Depression be explained by a failure of institutions, not the need for collective action. The fact these failed institutions were federal and ‘eastern’ (central Canada) would also play a role as it reinforced the sense of betrayal caused by the fact the federal government chose to withhold from Alberta and Saskatchewan (and Manitoba), until 1930, what had been extended to all other provinces; control over natural resources.
    ...

    The difficulty with this belief... is that it does not seem to be an accurate depiction for the populations of the two provinces by 1941. Figure 1 shows the distribution of each province’s population in 1941 according to birthplace. The majority of each province’s population was Canadian born and the majority of those populations were living in the province of their birth in 1941. ...

    http://economics.ca/2005/papers/0289.pdf



    Last edited by KC; 07-12-2016 at 11:50 AM.

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