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this is really a naieve way of looking at things - merely assuming that is how many shares canadians own, regardless of where the head office of company is located, who controls companies, whether canadian companies are mere branch plants.

imagine if in 1957, GM had wanted to buy out toyota, and essentially japanese investors had sold off all the shares of toyota and and bought general motors shares. japan would be a much poorer country - the US would be relatively richer because GM would still dominate the US and world markets in the way that it did in the 60s and 70s. the same could be said for RCA and Sony or Panasonic.

If all that were happening were that Canadian "minority" owners of shares were exchanging shares foreigners would would still have a minority position, then this would simply be a matter of diversification.

Why is it that Japan has numerous car manufacturers, Sweden had Saab and Volvo, or Korea has Hyundai (and kia and Daewoo - and they had no auto industry before the 1960s), and Canada had nearly 1000 companies that disappeared? ever wonder why our levels of R&D are so low? ever wonder why canada has so few recongiseable brand names? these and other problems are a result of us thinking that foreign ownership is good, and allowing our economy and industries to be so heavy integrated into the US economy.

"Foreign-controlled plants and firms are also more innovative, more R&D intensive and use more advanced technologies"

except that the R&D typically is done elsewhere. They may be more innovative and have advanced technologies, but on average it is because of the sectors they are involved in - they tend to be big, global companies in secotrs where r&d is important. canadian owned companies include everything, companies big and small alike(like the corner store) and are in areas where innovation and r&d are typically low - resource extraction, agriculture, retail, services, etc. if you looked at, say, american owned or based companies, and compared the operations of those companies to the entire US economy, you would no doubt find that they are more r&d intensive, etc.

canada has higher levels of foreign ownership than any other industrialised country of our size or bigger. yet, productivity lags, r&d levels are low, and despite "free-trade" and other policies that were supposed to solve these things, the situation is not improving. it reminds me of when doctors use to bleed people when they were sick, which only made them weaker and sicker - those who want more foreign ownership and control of our economy are only going to make things worse - more bad medicine.

south korea and japan are examples of countries that have restircited foreign ownership, and developed worldclass export oriented industries. we allow foreign ownership with few strings or restirctions (other than token revue that only delays the inevitable), and the areas of the economy where we haven't allowed it, we have allowed ourselves to become uncompetitive, because we allow highly concentrated ownership and vertical integration.

rather than relying on manufacturing and services to generate exports, we are highly dependent on resource exports (like energy) when we should be discouraging resource dependence and encouraging canadian owned businesses to be more export oriented. reduce resource and energy exports, restrict foreign ownership and investment, and let the dollar fall for a few years, and see how we will suddenly develop some impressive companies!

we should also reduce immigration as part of this programme, but that is another complex debate.


I am providing some pertinent economic stats as well as the source links, for those countries that you listed with auto R&D, namely US, Japan, S. Korea, Sweden, and with Germany thrown in, as well as Canada and I am throwing in Australia as another country without auto R&D. Based solely on these numbers, which would you rather be in? How about your second choice? Canada seems to need to work on its unemployment rate, which looks to me to be a social insurance problem and a labor law problem, if you freed things up your unemployment rate would surely go down. I also suggest radically cutting your corporate tax rate, something the US ought to do too but insists on shooting itself in the foot on. In the meantime US businesses continue to offshore to more favorable climes.

Are you still unduly impressed with Japan, South Korea and Sweden? Germany isn't looking too hot either in my opinion, and Japan has a horrific national debt it may have nightmares paying off. Auto R&D may sound sexy, but it seems irrelevant to economic prosperity.

All figures are US$ for 2006, except US debt seems to be 2005 for some reason.

United States: per capita GDP $43,500; GDP Growth 3.4%; Unemployment 4.8%; debt as % of GDP 64.7

Canada: per capita GDP (PPP of course) 35,200; GDP growth 2.8%; Unemployment 6.4%; Debt as % of GDP 65.4

Japan: per capita GDP (PPP) 33,100; GDP growth 2.8%; Unemployment 4.1%; Debt as % of GDP 176.2

Australia: per capita GDP (PPP) 32,900; GDP growth 2.8%; Unemployment 4.9%; Debt as % of GDP 14.1

Sweden: per capita GDP (PPP) 31,600; GDP growth 4.2%; Unemployment 5.6%; Debt as % of GDP 46.4

Germany: per capita GDP (PPP) 31,400; GDP growth 2.2%; Unemployment 7.1 or 10.8, see link for details; Debt as % of GDP 66.8

South Korea: per capita GDP (PPP) 24,200; GDP Growth 4.8%; Unemployment 3.3%; Debt as % of GDP 31.9

P.S. Sorry, I had links for each of them, but got caught in a spam filter! If you go to the top of the page of the first link you can select your country of choice.

By the way, if I got my choice I would pick the US first and Canada second and Australia third, almost completely by the book as determined by per capita GDP.

However I'd pick Ireland above them all actually, they are really doing awesome, I'm jealous. I didn't list Ireland however because one could argue they are a small country growing thanks to superior corporate tax competition, although they are doing other things smartly too.

The reason canadian firms have lower levels of R&D and lower productivity has nothing to do with foreign investment levels. It has everything to do with lower education levels of canadians in general and our selection of educational programs (arts vs applied sciences). We also have a relatively uneducated managerial class compared to Europe. Allowing foreign ownership will not change any of these cultural traits. The only benefit I could see from this is if Canada allowed more international managers into Canada to run these outfits, but our tax regime discourages top-notch professionals from working too long in Canada.

I'm glad to hear someone come out in favour of liberal capital markets! The blogosphere is full of economic natioanalists railing about how we've "sold out," etc., etc. The Star (not surprising) had an editorial last week about it. I had to send them a letter, which they generously published: http://www.thestar.com/opinion/article/208652

I was rethinking the issue along the same lines of lickedcat (that Canada doesn't have the proper human capital):

Is it possible that the purchase of Canadian companies and the rise of foreign ownership is a simple case of comparative advantage? Head office jobs need educated managers, a highly developed financial sector including accounting, and other professionals that are relatively less abundant in Toronto than New York, London, Tokyo, etc. These locations have significant external economies of scale in the "head office" industry, is it any wonder that ownership is often concentrated there? I don't know if there's any empirical work done on this, but it's something to think about.

According to this logic, policies to ensure Canadian ownership are no different than protecting inefficient industries from foreign competition.

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