Regional Economic Growth: Theory and Policy by Horst Sieberg; Regional Economic Policies inCanada by T. N. BrewisReview by: Alan GreenThe Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 5, No. 1 (Feb.,1972), pp. 148-150Published by: Wiley on behalf of the Canadian Economics AssociationStable URL: http://www.jstor.org/stable/134005 .

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during 1929 to 1956. The relative positions of the provinces remain fairly con- stant over the period: the Maritimes and Quebec persistently exhibit per capita incomes below the Canadian average, whereas Ontario and British Columbia are persistently above the national average, and the prairie provinces tend to fluctuate about the average. Green finds this stability in relative positions to be "remarkable" given the great changes in the Canadian economy since 1890. In particular, he comments on the peculiar gap between Ontario and Quebec, and speculates that lower educational achievement of the labour force and a larger, lower-productivity A sector lie at the root of the Quebec "problem."

As Green himself readily admits, the problem with this kind of study is its wholly empirical content: differences in provincial per capita incomes are measured, and trends in income differences are described, but unfortunately explanations of provincial income differences are not forthcoming in Green's book (nor in any other book for that matter). There are a few minor errors (for example, an incorrect source for the data in Table 1-4, p. 8, two typographical errors in note 10, p. 110, and Green's interpretation of the data in Table 11-3, page 28 which does not appear to agree with the data which show the ratio of labour force to population declining from 1929 to 1956). Also, the use of 1930-1 census data on average earnings of workers to construct an "adult-male equi- valent" measure to assess differences in provincial labour force quality for 1956 may have been expedient but is disquieting nonetheless. Finally, Green's classification of Canadian economic history into a "frontier phase" from 1890 to 1910 and a "maturity phase" from 1910 to 1956 is not entirely convincing.

These few comments notwithstanding, Alan Green has produced a significant contribution to the stock of quantitative studies of Canadian economic history. However, the teacher of economic history is likely to find the book of limited value to students, especially undergraduates, (it is a technical book which does not lend itself to superficial reading of "results only" by students lacking familia- rity with national accounting concepts) who would probably gain more from consulting Green's article "Regional Aspects of Canada's Economic Growth, 1890-1929," Canadian Journal of Economics and Political Science, XXXIII (May, 1967), 232-45.

PETER GEORGE McMaster University

Regional Economic Growth: Theory and Policy. By HORST SIEBERG. Penn.: International Textbook Company. 1969. Pp. xiii, 217.

Regional Economic Policies in Canada. By T. N. BREWIS. Toronto: The Macmillan Company of Canada. 1969. Pp. 303.

"Poverty amidst plenty" is one of the main problems which confront modern societies as they enter the last third of this century. Although the phrase generally refers to the plight of poor families, it is also applicable to groups within society and extends even to whole regions. It is concern with disparities of the latter type which is the subject of the two books reviewed here. Both books, though

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Reviews of Books!Comptes rendus 149

vastly different in their respective approaches, nevertheless seek answers to the same two basic questions: Why do standards of living of sub-national units differ and why do observed differences persist over long periods of time?

Siebert approaches these problems entirely at the theoretical level. His is primarily a textbook aimed at advanced graduate students with a fairly exten- sive background training in mathematics and growth theory. Presuming such background knowledge, the author proceeds to build spatial factors into the basic growth model. He takes as his job the systematic inclusion of space or regional interaction into the discussion of national and sub-national growth.

The book by Siebert is divided into two main sections. The first builds, step by step, the major determinants of growth in a closed economy. With this in place (and it is largely a review for students with any background in this area), the author opens the model, concentrating on the economic determinants of interregional factor and commodity flows. On the whole, the latter is quite well done and the final union of flows with internally generated determinants of growth is interesting and, although somewhat involved, is handled quite systematically. Basically this first section is good but uneven, i.e., repetitive in places for students with previous training and somewhat brief for students with a thin background.

The second major section covers the theory of public policy. It is quite good. Drawing on the earlier developed growth theory models, Siebert combines this with the goals and instruments of public policy as applied to the area of regional disparities. As an exercise in logical thought in the various "trade-offs" between competing goals, it is valuable not only for students but for policy makers, especially the part which sets out the rigour needed in designing approaches to eliminate regional disparities, e.g. how much inequality is tolerable and what is the best time path to reach this level.

The application of such rigorous analysis to regional policies in Canada, at least after reading Brewis' accounts of the operation of government policies tried in this country, would certainly seem essential. In setting out the discrepancy between what is discussed about regional development policy and what, in fact, emerges, Brewis has done a great service to students in this area. Briefly, as Brewis describes it, development policies have generally surfaced as short run schemes aimed at bolstering local unemployment or as welfare schemes involving direct income transfers. The longer run goals of raising the standard of living, generally by affecting significant structural changes, fell prey to short-run imperatives. To be fair, the latter are sometimes essential, especially where extreme hardship must be relieved quickly, but the persistent failure to set and follow systematically longer term targets is disturbing.

Professor Brewis demonstrates this bias towards a short-run or highly specific approach to regional problems by describing the origin, purposes and early results of three major programmes: the Agricultural and Rural Development Act (ARDA); the Area Development Agency (ADA); and the Atlantic Development Board (ADB). The main lesson which emerges from this review is the failure of the programme designers to perceive the inherent interdependences involved in solving regional problems. Each sclheme focused on a particular problem. The ADA saw regional problems in terms of pockets of high unemployment. Its

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response was to promote an inflow of capital to the depressed area. Alternative solutions, such as encouraging redundant labour (and new capital) to migrate to areas of potentially high growth were ignored. A similar narrow approach was followed by the ADB. This agency chose to concentrate on building up infra- structure, especially power supplies. However, in the absence of a long-term development strategy (made difficult by provincial rivalries), assessment of alternative investments programmes was not undertaken. ARDA may be the one exception. It has evolved from a focus on the physical factors of rural poverty (i.e. improving land use) to a wider concern for rural development. The switch, if carried through, is profound, for it stresses the relocation of underemployed farm labour and the consolidation of farms into efficient production units, both necessary prerequisites to the solution of this problem. Even a brief review such as this, leads one to share with Professor Brewis his hope that the creation of the Department of Regional Development will force policy makers to place the problem of regional growth in a wider perspective.

To bring the regional problem into wider relief, Brewis devotes the first third of his book to a statistical overview of the extent of income inequality (an inter- esting appendix by T. K. Rymes sets out clearly (in terms of regional production accounts), the type of regional statistical information which would (if available in the future) assist researchers and policy makers in assessing the causes and establishing programmes to reduce regional disparities). This discussion of the extent of regional differences is interesting, although rather thin. It would have been even more helpful had Professor Brewis concentrated his outline on the postwar years, and shown systematically changes between regions in their age- sex composition, labour, and output structure, etc., say at two or three poinlts of time. The chief advantage of such an approach would be to give the reader a more systematic view of the regional trends and particularly to introduce the interactions between the sub-national units, i.e., the resource-oriented west versus the manufacturing or older regions in the east.

This minor point aside, Brewis has provided a useful book for all those inter- ested in the problems of regional income inequality in Canada. Siebert's work gives to researchers and policy-makers the essential theoretical basis on which to analyse these problems, particularly the necessity of focusing on the deter- minants of interregional commodity and factor flows. Until we understand how these markets operate, within the Canadian context, attempts at effective policy solutions to regional problems are destined to yield a low return.

ALAN GREEN Queen's University

Canada's Experience with Fixed and Flexible Exchange Rates in a North American Capital Market. By ROBERT M. DUNN, JR. Washington, DC: Canadian-American Committee, sponsored by National Planning Association (USA). Montreal: Private Planning Association of Canada. 1971. Pp. 74. $2.

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