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It would be helpful to recall why foreign investment matters, especially as it concerns the fear that Canadian head offices are “hollowed out” in foreign takeovers. A 2006 study from Statistics Canada looked at the claim that head offices were disappearing in Canada due to such takeovers. The claim is false. Between 1999 and 2005, “domestic firms taken over by foreign firms created about as many new head offices as they closed,” noted StatsCan
In fact, on jobs, foreign companies created more head office jobs than did domestic firms in the period surveyed. Foreign-held companies added 21.2% more head office jobs between 1999 and 2005, compared with only a 5.8% increase for domestically controlled firms. Another StatsCan study the previous year, but over a longer period (1973 to 1999), revealed a similar trend: Foreign-owned head offices “had about 25% more head office workers than domestic firms.”
So let us review the argument for FDI:
- Brings in capital which helps to create improvements, which increases prosperity
- Brings in innovative technology and management methods that improve productivity, which increases prosperity.
- Creates more jobs including high paying executive jobs, which increases prosperity
And arguments against FDI…
6 comments:
I seem to recall an American steel company bought a Canadian steel company, then closed it down, a net loss of jobs, not a gain.
About American steel company thing, that's one case, not the entire economy. That's like saying it was hot today and therefore Canada is a tropical country.
I still don't trust foreigners to have Canada's best interests at heart.
There are problems in a country when it does not have its own corporate power located in its borders and with nationalistic purpose. You do lack high level jobs, you lack control, and most of all you lack 'talent development.' I've been in the corporate world for awhile now and I have seen this so many times. Why can Canada not build its own corporate giants and develop its own people's talents??? (real conservative)
12:31 - Are they supposed to, and do they need to?
12:05 - Remember, if we don't let others buy our companies, they won't let us buy theirs. Where would companies like CN Rail be today if that were the case? You can have local companies and foreign direct investment at the same time, since the money flows both ways.
Foreign investment is necessary for any country as it brings an opportunity to expand businesses across the world. It does creates jobs at higher level and provides number of employment opportunities in a country.
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