New Horizons in International Business series
Edited by Lorraine Eden and Wendy Dobson
Chapter 2: How to Thrive in an International Economy
A. Edward Safarian My research and teaching interest throughout my career has been the question of optimum national policy development in a small open economy. How best can a relatively small country thrive and pursue its objectives while being part of an international economy and while living next to a very large and dynamic neighbour? That question led to four related studies over the years. I was drawn to economics because of my curiosity and concern about the buﬀeting Canadians took in the Great Depression of the 1930s. The world economy prior to World War I had been highly internationalized in ways we have only managed to achieve again in recent decades. That internationalization was shattered by a decade of depression and a decade or more of war and reconstruction. My doctoral thesis and related published work was on the sharp collapse and relatively slow recovery of Canada’s economy in the 1930s (Safarian, 1959). While inﬂuenced by Keynes, the work was more clearly Schumpeterian. It was decidedly in the ﬁeld of real business cycles. I am not impressed by the kind of monetarist thinking so dominant about this period. Such thinking explains little about the decade of agricultural drought reﬂecting policy decisions made many years earlier on settlement and transport, or the huge overinvestment in a number of major growth sectors such as power, railways, newsprint and automobiles. Within a few years of the collapse, for example, the entire capacity in the newsprint industry was bankrupt. It...
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