Just one comment to make in this conversation. Canada, like Australia,
suffers from what some economists call the "Dutch disease". This refers to
the economic effect that followed the discovery of rich gas fields just off
the coast of Holland some five or six decades ago. For a while, the gas
from these fields when pipelined to other countries produced so much
exports profits and widespread prosperity that it had a dampening effect on
the rest of their economy. It was not until the peak of gas production had
passed that the other exporting industries began to revive.
Canada and Australia, with vast natural resources (and Russia also, come to
think of it) can easily become too reliant on exports alone. This,
presumably, is the conclusion that Arthur came to in preparing the data for
the Gray Report. (Russia is well aware of their lack of enough widely-based
home-grown industry compared with other advanced countries. Some Russians
have acknowledged that this is the reason why they pressed so hard for the
2016 Fifa World Soccer Championship. They are now not only going to build a
dozen huge stadia in four different regions from the extreme east to the
west, but also vast extensions to their rail, road and electricity grid
networks which, hopefully, will stimulate much more industry across the
country.
Keith
At 02:05 16/12/2010 -0400, you wrote:
Arthur wrote:
> Remember the Gray report? Herb Gray's report that led to the
> establishment of FIRA.(foreign investment review agency)
>
> I did most of the R and D material for that report.
Cool.
> So, yes, I think that foreign ownership carries with it costs.while
> it brings some benefits.
You don't say how you regard the balance or trade-offs between the
two.
Jim Stanford, in the Globe & Mail:
+ More than half of Canada's incoming foreign investment is in the
mining, oil and gas, and primary metals industries (such as
nickel, aluminum and steel). And foreign hunger in those sectors
explains most of the recent surge in foreign control in Canada. In
this regard, incoming foreign investment is only reinforcing
Canada's status as a resource supplier. That's much different from
European countries, where incoming foreign investment is
concentrated in high-tech, value-added industries.
+ Canadian companies, of course, also invest abroad in their own
foreign subsidiaries. Since 1997, the book value of Canadian
corporate investments abroad has exceeded the book value of
foreign direct investment in Canada. That net balance has eroded
somewhat in recent years (due to mega-takeovers of Alcan, Stelco,
Inco and others), but Canada is still slightly in the black. Some
commentators (such as the University of Calgary's Jack Mintz) thus
conclude that Canada has nothing to fear from foreign investment,
since we're getting as much action abroad as we are giving up at
home.
+ But the foreign investment that leaves Canada looks very different
from the foreign investment that enters. Most Canadian-owned
foreign direct investment abroad is in the financial sector. And
80 per cent of the new foreign investment that's headed out in the
past five years is in banking and finance.
+ In other words, the overall apparent balance in Canadian foreign
investment relationships hides some important structural
imbalances. Canada has been ceding ownership over resource
industries, offset in the statistics by the increasing global
reach of our big banks.
+ Without those banks, Canada's foreign investment position would be
much bleaker. If we consider only the non-financial portion of the
economy (that is, the economy that produces real goods and
services, rather than trading in paper assets), Canada's net
foreign investment position is worse (minus 10 per cent of GDP)
than at any time since the 1970s -- when the Trudeau government
first created the Foreign Investment Review Agency.
http://www.theglobeandmail.com/news/opinions/opinion/a-deliberate-strategic-approach-to-foreign-investment/article1795590/print/
So foreign entities with no reason to hold a high priority for
Canada's interests (or those of a Canadian region) own heaps of
nickel, aluminum, oil and coal (if not potash), while we own various
financial instruments or foreign entities that, in turn, own
financial instruments.
Financial instruments are consentual abstractions, fictions, whose
fictional nature can emerge suddenly and massively subsequent to a
tiny crack in the requisite consentuality. Nickel, oil and potash are
real and tangible.
- Mike
--
Michael Spencer Nova Scotia, Canada .~.
/V\
[email protected] /( )\
http://home.tallships.ca/mspencer/ ^^-^^
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Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2010/12/>http://allisstatus.wordpress.com/2010/12/
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