Resources and the regional economy: An historical assessment of the forest industry in British Columbia

This thesis provides empirical evidence to assess the long term contribution of the B.C. forest industry to the provincial economy.;Estimates of resource rent are constructed to measure the direct contribution of the resource to provincial income and growth. Measures of rent are constructed for a firm level sample (1906--76) and at an industry level (1918--92). The figures for rent are used to generate estimates of the share of provincial income measures directly attributable to the industrial exploitation of the province's forests. While there were periods during which the direct contribution to provincial income and its growth was nontrivial, in general the growth of forest industry rent did not drive overall economic growth but rather lagged behind.;Rent was low on average and volatile during the years before W.W.II, rose rapidly from roughly 1940--51, then declined unevenly. To investigate the forces which underlie both the broad trends and the variability in rent, a stylized model of the forest industry is applied in an empirical analysis. Broad changes in aggregate rent were the result of changes in rent per unit of B.C. timber. The rapid increase in rent coincided with a marked rise in the price of forest products. The secular decline resulted from the combination of a falling output price and rising costs. An investigation of real harvesting costs indicates that depletion played a role in this increase. The variability of rent is also explored and found to be most strongly influenced by factors reflecting market risk which the B.C. industry could not diversify away from.;The rent measures may not capture the full impact of the forest industry, so the industry's potential role as a leading export sector is also examined. The possibility of a stable long term link between forest exports and provincial income is investigated using cointegration tests. B.C. forest exports and G.D.P. are not cointegrated; their levels are not linked in a deterministic way in the long run. A bivariate VAR is used to examine the short run interaction between the growth of forest exports and provincial G.D.P. The results do not strongly support the view that the forest industry acts as a leading export sector in the provincial economy.