Ottawa needs tighter controls on resource wealth, says Nobel prize winner – by Richard Blackwell (Globe and Mail – April 10, 2014)

posted in Canada Mining, Canadian Media Resource Articles |

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The federal government needs to take a stronger role in ensuring the benefits of Canada’s resource-based economy flow to all its citizens, one of the world’s most respected economists said Thursday.

Joseph Stiglitz, a Nobel prize winner and a professor at Columbia University, said Canada has done relatively well in making sure that resource wealth is used to benefit all its citizens, but Ottawa needs to do more if it wants to be in the top ranks or resource-intensive nations.

He was speaking in Toronto at a press conference launching a conference sponsored by the Institute for New Economic Thinking and the Centre for international Governance InnovationInnovation.

Generally, economists talk of a “resource curse” where countries with an abundance of resources tend to perform poorly, Prof. Stiglitz said. That’s because the domestic currency tends to be high, impairing manufacturing and exports, and the resource sector can be subject to wide fluctuations in commodity prices.

Over all, resource-based countries also tend to have more inequality among their citizens, he said, despite the fact that there is substantial income that could be used for the benefit of society as a whole.

If governments put the effort into investinginvesting in people, social programs, infrastructure and technology, they can make sure this inequality is mitigated, he said, citing Norway as an example of a country that does this more effectively than any other.

Canada, he said, “is better than the worst, but not up to the best.”

Canada has used its resource wealth to invest in a valuable public health system, and a good education system, he said, but has not made the same broad investmentsinvestments in innovation as Norway.

Right-wing ideology that suggests marketsmarkets will take care of themselves and bring growth, is not supported by the evidence, he said.

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