As a Canadian I feel compelled to write something about Alice Munro. She is the first Canadian Nobel Prize laureate in literature. Yes, Saul Bellow was born in Montreal but as far as I know his entire body of work was written, published, and about the United States. If his early years in Canada hold a special place in his heart, it is not publicly evident. So for the purposes of the Nobel Prize he is American.
On the other hand Munro's entire body of work is Canadian. In a county as diverse as Canada, I don't think Munro (or anyone for that matter) can completely represent the Canadian experience. However, Munro's work resonates with many Canadians - her books are widely read, and she seems to have achieved a hybrid of popular appeal and academic interest.
In terms of merit, there is much controversy these days as to what constitutes merit in the literary world. Because of this, I'm very disappointed in the Nobel Committe's citation "master of the contemporary short story". It offers no analytic depth into Munro's writings; it simply offers an opinion that Munro is a master of a genre; one which has been neglected by the Nobel Committee.
Personally, I've read some of Munro's short stories but not many. While they didn't immediately cry out "Nobel Winner" there is some substance to the stories. As previously states in these threads, they come in the form of ordinary people experiencing moments of epiphany; brief illuminations into entire worlds of unremarkable small town folks.
These are the kinds of accolades the Nobel Committee should have mentioned in her citation. Munro's subject matter reminds me of Sherwood Anderson's Winesburg, Ohio, which I think is unfairly overlooked in its impact on North American literature.
So while there will be disagreements about the prize going to Munro - I personally find the Nobel Committee to be very inconsistent these days - I don't think Munro is out of line as a Nobel Prize winner, at least not more than other controversial choices of which there are too many to list.