Regional Inequality, Structural Change, and Economic Growth in Canada. 1890-1956

Abstract

In a recent article, Williamson' has outlined, for a number of countries, the relationship between national development and changes in regional inequality which accompany this growth. Although the discussion was largely descriptive, Williamson attempted to test the hypothesis that regional inequality passes through three distinct stages as an economy moves from early development to maturity. Briefly, in the early stage of development, regional inequality widens. This is followed by a period of stable, high-level inequality, and finally a marked secular trend towards regional equality sets in as development proceeds. The arguments for the initial widening and the final narrowing of regional inequality have been set out by Williamson and will not be repeated here.2 One of the chief weaknesses of Williamson's paper, clearly recognized and lamented by the author, is the lack of a historical series for a sufficient number of countries to adequately test this hypothesis. The author is left with only three countries where long-term series on national and regional income are available, plus a scattering of additional countries where regional shares of the agricultural workers in the total labor force can be used as proxies for regional income inequality. The purpose of this paper is to extend the number of units of observation by one. To do this, regional (here provincial) estimates of gross value added (gross because depreciation is included) for selected years (i.e., 1890, 1910, 1929, and 1956) were made. As a result of the method used in deriving these estimates, it is also possible to observe the structural change in output for each region and the economy as a whole, thus permitting some initial analysis of the causes of these spatial inequalities.