Shawgi Tell noted a couple of days ago that foreign control of corporate
revenues in Canada rose by 1.3 points to 29.8% of the total in 1995, and
that this was the second largest yearly rise ever recorded.
I don't know Shawgi's point of view on this question, but the implication
of his observation is consistant with the usual conception of Canada as a
semi-colony which is slipping further under US domination as a result of
'free' trade agreements. The **nationalist** opposition to MAI that I
questioned last week is also (partially) rooted in such approaches.
What does the data on foreign control really say about this issue? I
prefer to argue this using data on *assets* (a stock variable) rather than
*revenues* (a flow variable), since the latter is heavily influenced
by the business cycle and foreign controlled firms are concentrated in
sectors with higher revenue-to-asset ratios.
Statistics Canada's figure for foreign control of all corporate assets
in Canada rose to 21% in 1995. This increase restored foreign control to
the 21% rate previously reached in 1990, and is only up 0.5 percentage
points since 1988 (the first year for which this data for *all*
industries is available).
In other words there has not been much of a change. While foreign
control rose in *non-financial* sectors to 24.3%, this was partially
offset by a slight drop to 17.6% in *finance and insurance* sectors.
Nor does the data on *US* control of *all* corporate assets indicate any great
increase attributable to the FTA or NAFTA, at least so far. While the
11.4% US control of all corporate assets in Canada in 1995 is a
notable increase over 1994 (when it was 10.8%), it is only 0.4 points
higher than in 1988, the year before the FTA took effect. For most of this
period it has been lower than before 'free' trade.
Perhaps most important, and contrary to the usual assumptions, the
level of foreign control in Canada has **declined substantially** over the
last few decades. The data series on foreign control of *all* industries
only goes back to 1988, but if we assume the trend here has been
similar to that for the *non-financial* half of the corporate economy (for
which the earlier data is available), then the current range of foreign
(and US) control in Canada is lower than it has been for about half a
century!
Foreign control of *non-financial* industries peaked in the early 1970s,
but Canadian capitalists have regained about one-third of all
non-financial assets in Canada since then, and they have retained the
decisive control they have always had over the *financial* half of the
economy. One measure that highlights the strength of Canadian capital is
that Statistics Canada reports that in 1992 they controlled 96.5% of the
assets of the *25 largest enterprises* (corporations grouped under common
control) in Canada.
The rate of foreign control for *all* industries in Canada cited
above (and that for the largest 25 enterprises) is considerably lower
than the *non-financial* rates Canadian nationalists have
traditionally cited for their purposes. However, it is true foreign
control is higher in Canada than in most - but not all - major OECD
countries. Other countries do not collect data on foreign control
comparable to that cited above, but if we use OECD data on the ratio of
the stock of (inward) FDI to GDP as a basis, foreign control in
the UK (!!) and the Netherlands is **higher** than in Canada.
Further, the level of inward FDI should be considered in tandem with that
of outward FDI. *Canadian* capitalists hold more FDI *abroad* per Canadian
than do their competitors in the US, Japan, Germany and France relative to
the latters' populations. In recent years, the flow of Canadian FDI to the
US has *exceeded* US FDI coming into Canada.
I think this is a pretty impressive record, and to bring it back to the
MAI issue, one that makes we wonder why we would want to offer Canadian
capitalists national protection from their foreign competitors.
I live in Canada so I've concentrated on the usual suggestion that
protectionism is more appropriate here than in other imperialist
countries. Since I'm working on a paper on this point I would appreciate
any comments and criticism on at least ***this aspect*** of the debate.
Bill Burgess
University of B.C.
[EMAIL PROTECTED]
home (604) 255-5957
fax c/o (604) 822-6150
