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The Great Lakes Economy Looking North and South.

Designed to update an earlier publication on the economy of the Great Lakes states, this book presents a collection of 15 papers, each of which examines a particular aspect of the region's economy. Some authors deal with very specific economic issues relating to the Great Lakes states, other tie issues together and identify linkages within the region.

All the papers present wide-ranging statistical data in a very readable form, but the book is much more than a collection of statistics. The authors analyze their subjects in real terms; they trace their history and development, identify successes and failures, measure performance and point to trends for the future.

If anything can be learned from the past as a basis for future action, then this document not only provides a wealth of information, but also assesses its worth relative to future action. Although written mainly from a U.S. perspective, a binational flavour has been added by the inclusion of data and commentary on the role of the Province of Ontario in the region.

The evolution of the region provides a fascinating read: the exploitation of natural resources, the development of agriculture, the establishment of manufacturing to complement these industries and, as the economy expanded, the development of a transportation network throughout the Great Lakes to serve it. This classic development pattern quickly made the region a major force in the North American economy. The legacy of this development, however, is not all positive. Depletion of natural resources, environmental concerns, specialization of manufacturing, declining population have in recent years presented major challenges to the area. State "smokestack chasing" competition did not achieve the prosperity it intended and, in the face of competition from other regions of the U.S. and the rest of the world, has now given way to more cooperation in the region.

From the perspective of a Canadian and, more specifically, an Ontarian living adjacent to the Great Lakes, the chapters of greatest interest are the ones addressing the relationships, both cooperative and competitive, between the Great Lakes states and Ontario. Ontario's economy is compared with that of the Great Lakes states and the conclusions drawn are that Ontario's economy, particularly the manufacturing sector, has, over the longer term, easily outperformed the state economies in the region. The caveat here is that the data presented only go to the mid-to-late eighties. Whether the conclusions are still valid after two years of recession is debatable, particularly as they apply to Ontario where the recession has taken a very heavy toll on the manufacturing industry.

One chapter deals with the U.S.-Canada Free Trade Agreement (FTA) and its impact on the Great Lakes economy. At the time the paper was written, the FTA had only been in place for two years; consequently, the evidence available on its impact was limited. The data presented show Canada enjoying a trade surplus over the Great Lakes States, mainly as a result of the Auto Pact trade. A point should be made here, however, that the Auto Pact has been in existence since 1966 and Canada had enjoyed trade surpluses long before the FTA. Also, the trade surpluses after FTA were smaller than in the years before it. From a Canadian viewpoint, therefore, the jury on the impact of the FTA is still out. The author gives some recognition to this controversy. While there may be business and intellectual support for the FTA, the government opposition parties and the majority of the general public in Canada blame the FTA for a variety of ills. Many of these, however, can just as easily be attributed to the current severe recession.

Despite the negative view of the FTA among Canadians, Chapter 13 claims that the FTA also has encouraged considerable cross-border cooperation, spawning many agreements for interaction on matters such as global trade, tourism, transportation and infrastructure improvement, etc. Personal observation would suggest that, during the recession experienced since the book was published, the Canadian pessimism about "sleeping with an elephant" is even stronger as jobs dry up, stories of companies moving to the U.S. abound and headlines complain of U.S. intransigence on FTA issues. So--just as it is too early yet to prove the benefits of the FTA, only time will tell whether the cooperative ventures instanced by the author will lead Ontario, despite the political and cultural differences, to being part of the vision of a powerful Great Lakes regional trading bloc competing with the rest of the world.

To summarize, The Great Lakes Economy Looking North and South is a comprehensive resource document providing a new starting point for analysts interested in the Great Lakes region. It will be of interest to those currently involved in both the public and private sectors. State, provincial and local governments should find the publication valuable in considering their economic development strategies, and it also will be useful as a reference to the many joint agencies in the region.

The Great Lakes Economy is available free, one copy per order, from the Federal Reserve Bank of Chicago, 230 S. LaSalle St., Chicago, IL 60604 (312/322-5111).
COPYRIGHT 1992 Government Finance Officers Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Gregg, Malcolm
Publication:Government Finance Review
Article Type:Book Review
Date:Oct 1, 1992
Words:851
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